Presumption of Losses Suffered by a Business Operator Due to the Implementation of a Horizontal Monopoly Agreement; Burden of Proof and Determination of Liability for Damages Where Non-Monopoly Factors Are Claimed for a Price Increase

— (2024) Zui Gao Fa Zhi Min Zhong No. 456

[Gist of the Judgment]

1. Where, during the implementation of a horizontal monopoly agreement or within a reasonable period after the agreement is terminated, a business operator concludes and performs a relevant contract with an implementer of the monopoly agreement concerning the goods or services covered by the monopoly agreement, it may be presumed, absent rebuttal evidence, that the business operator has suffered losses due to the implementation of the horizontal monopoly agreement.

2. Where an implementer of a horizontal monopoly agreement claims that the transaction price formed in the course of implementing a horizontal agreement fixing or changing commodity prices was partly caused by non-monopoly factors such as rising raw material costs, it shall prove the existence of such non-monopoly factors and be able to distinguish, by reasonable methods of economic analysis, the degree of influence of monopoly factors and non-monopoly factors on the transaction price. If the implementer of the monopoly agreement cannot prove the existence of non-monopoly factors, the people's court shall not take them into account when calculating the amount of damages; if the implementer of the monopoly agreement can prove the existence of non-monopoly factors but cannot clearly distinguish the degree of influence of monopoly factors and non-monopoly factors, the people's court may, taking into account the facts of the case as a whole, in principle presume that monopoly factors played the dominant role and determine liability for damages accordingly.

[Keywords]

civil; horizontal monopoly agreement; fixing commodity prices; calculation of losses; burden of proof

[Basic Facts]

Guangxi Construction Engineering * Construction Engineering Group Co., Ltd. (hereinafter "* Construction Company") alleged that: in April 2014, Chongqing Jian* Concrete Co., Ltd. (hereinafter "Jian* Company") and Chongqing Jiang* Building Materials Co., Ltd. (hereinafter "Jiang* Company") reached a horizontal monopoly agreement concerning commercial concrete (i.e., ready-mixed concrete). In March 2017, * Construction Company and Jian* Company concluded the purchase and sale contract in suit, under which Jian* Company would supply commercial concrete to * Construction Company. In August 2018, Jian* Company proposed a price increase, and * Construction Company, in order to ensure completion of the project, was forced to sign the supplementary agreement in suit in September 2018, raising the unit price of commercial concrete by RMB 90 per cubic meter. Jian* Company's monopolistic conduct caused serious economic losses to * Construction Company; it therefore requested a judgment ordering Jian* Company to compensate * Construction Company for losses of RMB 467,325 and the corresponding losses from the occupation of funds.

Jian* Company argued that: although Jian* Company had objectively engaged in monopolistic conduct, that conduct was unrelated to Jian* Company's increase of the commercial concrete price, and the price increase was due to factors such as rising raw material prices for commercial concrete.

The court found upon trial that: in March 2017, the purchase and sale contract in suit concluded between * Construction Company and Jian* Company specified the unit prices of commercial concrete of different grades. In August 2018, Jian* Company sent a Price Adjustment Letter, and * Construction Company did not agree to the adjustment; in September 2018, * Construction Company and Jian* Company signed the supplementary agreement in suit, raising the unit prices of commercial concrete of all grades by RMB 90 per cubic meter on the basis of the prices in the purchase and sale contract in suit. From November 2018 to April 2020, Jian* Company sold a total of 5,192.5 cubic meters of commercial concrete to * Construction Company, and * Construction Company paid for the commercial concrete in full at the aforementioned increased prices. In June 2021, the market regulation administration of a certain city issued an administrative penalty decision, finding that Jian* Company and Jiang* Company had reached and implemented, from April 2014 to March 2019, a horizontal monopoly agreement fixing sales prices and dividing the commercial concrete sales market. The administrative penalty decision has become effective.

On November 13, 2023, the court of first instance rendered a civil judgment: (1) Jian* Company shall compensate * Construction Company for losses of RMB 467,325; (2) the other claims of * Construction Company are dismissed. After the judgment was pronounced, Jian* Company appealed on the grounds that * Construction Company had not proved that Jian* Company's monopolistic conduct caused it economic losses, and that the adjustment of the unit price of commercial concrete was affected by market factors such as rising raw material prices and rising transportation costs. On October 29, 2024, the Supreme People's Court rendered Civil Judgment (2024) Zui Gao Fa Zhi Min Zhong No. 456: the appeal is dismissed and the original judgment is upheld.

[Opinions of the Court]

The effective judgment of the court held that: the issue in dispute in this case is whether it was appropriate for the court of first instance to order Jian* Company to compensate * Construction Company for losses of RMB 467,325 caused by its implementation of the horizontal monopoly agreement.

First, the purchase and sale contract and supplementary agreement in suit were concluded and fully performed as agreed during the period in which Jian* Company and Jiang* Company implemented the horizontal monopoly agreement; they were affected by the accused horizontal monopoly agreement from the outset and were not concluded and performed under normal and fair conditions of market competition. The increase in the unit price of commercial concrete borne by * Construction Company was precisely the result of Jian* Company's implementation of the accused horizontal monopoly agreement. In such circumstances, it can be reasonably presumed that * Construction Company suffered losses due to the accused horizontal monopoly agreement. Whether the conclusion of the purchase and sale contract and supplementary agreement in suit by * Construction Company constituted a voluntary and genuine expression of intent does not affect the finding that * Construction Company has discharged its burden of proving that it suffered losses due to the accused horizontal monopoly agreement.

Second, regarding the specific calculation of the amount of damages in this case. Based on economic principles and general rules of market transactions, the direct economic losses caused to a counterparty by the implementation of a horizontal monopoly agreement fixing or changing commodity prices may normally be calculated on the basis of the difference between the non-competitive price reached between the counterparty and the monopolistic operator and the competitive market price of that commodity or the competitive market price of substitute commodities. Where there is no competitive market price for that commodity in the relevant market and no competitive market price for substitute commodities, the losses may be calculated at discretion based on the commodity prices in the relevant market before and after and during the implementation of the monopolistic conduct. In this case, it is difficult to obtain the competitive market price of commercial concrete in the relevant market or the competitive market price of substitute commodities, and there is no evidence that, before or after the implementation of the accused horizontal monopoly agreement, Jian* Company had commercial concrete prices formed with counterparties through free market competition. The commercial concrete prices agreed in the purchase and sale contract and supplementary agreement concluded between Jian* Company and * Construction Company were both "fixed prices" resulting from Jian* Company's implementation of the horizontal monopoly agreement. Given that * Construction Company only claimed losses for the difference between the unit prices of commercial concrete agreed in the supplementary agreement and the purchase and sale contract, it was not improper for the court of first instance to find that the direct economic losses caused to * Construction Company by Jian* Company's accused horizontal monopolistic conduct were at least no lower than the total price difference obtained by multiplying the unit price difference of RMB 90 per cubic meter between the supplementary agreement in suit and the purchase and sale agreement in suit by the total quantity of 5,192.5 cubic meters of commercial concrete purchased by * Construction Company, i.e., RMB 467,325.

Finally, Jian* Company claimed that the increase in the price of commercial concrete was caused by non-monopoly factors such as rising raw material costs. Jian* Company should bear the burden of proof in this respect, proving that monopoly factors and non-monopoly factors objectively coexisted and reasonably distinguishing the degree of influence (proportion of contribution) of each factor on the actual transaction price; otherwise, it should bear the adverse consequences of failing to discharge the burden of proof. Jian* Company did not adduce evidence on this point, so it was not improper for the court of first instance to calculate the losses caused to * Construction Company by the horizontal monopolistic conduct in suit based on the increase in the unit price of the goods traded between the parties, i.e., RMB 90 per cubic meter of commercial concrete.

[Related Index]

Article 17, paragraph 1, items 1 and 3, and Article 60, paragraph 1 of the Anti-Monopoly Law of the People's Republic of China (Article 13, paragraph 1, items 1 and 3, and Article 50 of the Anti-Monopoly Law of the People's Republic of China effective as of August 1, 2008 apply to this case)

Article 44, paragraphs 1 and 2 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Monopoly

Source：Intellectual Property Court of the Supreme People's Court News；2026-10-23；https://ipc.court.gov.cn/zh-cn/news/view-6191.html