The Supreme People's Court rendered a final judgment in a horizontal monopoly agreement case, establishing that where a business operator enters into or performs contracts with a party to a horizontal monopoly agreement concerning the goods or services covered by the monopoly agreement during its implementation or within a reasonable period after termination, the operator shall be presumed to have suffered losses due to the horizontal monopoly agreement in the absent of rebutting evidence.
In March 2017, Company A, a construction company, signed a commercial concrete (i.e., ready-mix concrete (RMC)) sales contract with Company B, a concrete company, under which Company B was to supply RMC to construction projects designated by Company A. The contract stipulated the unit prices for different grades of RMC. In August 2018, Company B sent a price adjustment notice to Company A, proposing an increase in prices. Company A disagreed with the adjustment and demanded Company B to continue supplying concrete at the originally agreed prices in the contract. In September 2018, the two parties signed a supplementary agreement, raising the unit prices for all grades of RMC by CNY 90 per cubic meter on top of that in the original contract. After the supplementary agreement took effect, Company B supplied a total of 5,192.5 cubic meters of RMC to Company A by April 2020, and Company A paid for the concrete at the increased prices. In June 2021, a local market supervision authority issued an administrative penalty decision, finding that Company B and Company C, a building materials company, had reached and implemented a horizontal monopoly agreement between April 2014 and March 2019 to fix the prices of RMC and divide the sales market. During this period, only Company B and Company C were actually producing and selling RMC in the region. In April 2023, Company A filed a lawsuit, claiming that Company B's implementation of the horizontal monopoly agreement had caused it losses and seeking compensation.
The court of first instance held that Company B participated in reaching and implementing a horizontal monopoly agreement to fix the price of commercial concrete and divide the sales market for RMC, which deprived Company A of its bargaining power and right to choose RMC. It was highly probable that this caused losses to Company A. The court determined that the losses should be calculated based on the price difference between the increased price and the originally agreed price, ordering Company B to compensate Company A for losses totaling CNY 467,325 (i.e., CNY 90 per cubic meter multiplied by 5,192.5 cubic meters). Company B appealed, arguing that Company A did not prove its losses were caused by the accused horizontal monopoly agreement and that the supplementary agreement has specified that the price increase was due to rising raw material costs.
The Supreme People's Court, in its second-instance judgment, held: The sales contract and supplementary agreement between Company A and Company B were signed and performed during the implementation of the horizontal monopoly agreement between Company B and Company C. These contracts were influenced by the accused monopoly agreement from the outset and were not concluded or performed under normal, fair market competition conditions. The price increase borne by Company A was a direct result of Company B's implementation of the alleged monopoly agreement. Under these circumstances, it was reasonable to presume that Company A suffered losses due to the monopoly agreement.
Regarding the calculation of losses, since the competitive market price for RMC or substitute goods in the relevant market could not be ascertained, and there was no evidence showing that Company B had ever offered prices formed through free market competition before or after the implementation of the monopoly agreement, the prices stipulated in the original contract and supplementary agreement were both part of the "fixed prices" under the monopoly agreement. Given that Company A only claimed losses based on the price difference between the supplementary agreement and the original contract, the first-instance court's calculation of the direct economic losses - at least equal to the total price difference (CNY 90 per cubic meter multiplied by 5,192.5 cubic meters, totaling CNY 467,325) - was appropriate.
Company B argued that the price increase was wholly or partially due to non-monopolistic factors such as rising raw material costs. However, it bore the burden of proving the existence of such non-monopolistic factors or demonstrating the coexistence of monopoly and non-monopolistic factors, as well as reasonably distinguishing their respective impacts on the transaction prices. Failing to do so, Company B is obligated to bear the adverse consequences of insufficient evidence. Company B did not provide evidence in the regard, nor did it distinguish or explain the extent to which monopolistic factors (as opposed to non-monopolistic factors) contributed to the damages. The first-instance court's calculation of the losses based on the increase in the unit price of the traded goods was appropriate. Accordingly, the appeal was dismissed, and the original judgment was upheld.
This judgment clarifies the presumption of losses for business operators contracting with the party to horizontal monopoly agreements during the implementation period and specifies the burden of proof and legal consequences when the party to the monopoly agreement claims price increases are due to non-monopolistic factors. It reduces the evidentiary burden and difficulty of proof for plaintiffs in horizontal monopoly disputes, thereby actively safeguarding the legitimate rights and interests of victims of monopolistic conduct.
(2024) Zui Gao Fa Zhi Min Zhong No. 456
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