Presumption of Losses Suffered by Operators from the Implementation of Horizontal Monopoly Agreements; Burden of Proof and Determination of Liability Where Price Increases Are Alleged to Involve Non-Monopoly Factors

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

[Adjudication Essentials]

1. During the period of implementation of a horizontal monopoly agreement and within a reasonable period after its termination, where an operator concludes and performs a relevant contract with the implementer of that monopoly agreement concerning the goods or services covered by the agreement, absent rebuttal evidence, it may be presumed that the operator suffered losses as a result of the implementation of the horizontal monopoly agreement.

2. Where the implementer of a horizontal monopoly agreement asserts 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, through reasonable economic analysis methods, to distinguish the degree of impact of monopoly factors and non-monopoly factors on that transaction price. If the implementer 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 can prove the existence of non-monopoly factors but cannot clearly distinguish the degree of impact of monopoly and non-monopoly factors, the people’s court may, in light of the facts of the case, 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 Jiangong 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 ready-mixed concrete. In March 2017, Construction Company and Jian Company concluded the sales contract at issue, under which Jian Company was to supply ready-mixed concrete to Construction Company. In August 2018, Jian Company proposed a price increase; to ensure project completion, Construction Company was compelled in September 2018 to conclude a supplemental agreement, raising the unit price of ready-mixed concrete by RMB 90 per cubic meter. Jian Company’s monopolistic conduct caused Construction Company serious economic losses, and Construction Company sought an order that Jian Company compensate losses of RMB 467,325 and corresponding financing costs.

Jian Company argued that although it had objectively implemented monopolistic conduct, that conduct was unrelated to the upward adjustment of ready-mixed concrete prices, and the price increase was affected by rising raw-material costs and other factors.

The court found after trial that: the March 2017 sales contract between Construction Company and Jian Company stated unit prices for different grades of ready-mixed concrete. In August 2018, Jian Company sent a Price Adjustment Letter, which Construction Company rejected; in September 2018, the parties concluded a supplemental agreement raising unit prices for all grades by RMB 90/m³ above the sales-contract prices. From November 2018 to April 2020, Jian Company sold Construction Company a total of 5,192.5 m³ of ready-mixed concrete, and Construction Company paid in full at the increased prices. In June 2021, a municipal market regulation administration issued an administrative penalty decision finding that Jian Company and Jiang Company had, from April 2014 to March 2019, concluded and implemented a horizontal monopoly agreement fixing sales prices and dividing the ready-mixed concrete sales market. That penalty decision had taken effect.

On 13 November 2023, the first-instance court rendered a civil judgment: (1) Jian Company shall compensate Construction Company for losses of RMB 467,325; (2) Construction Company’s other claims are dismissed. After pronouncement, Jian Company appealed, arguing that Construction Company had not proved economic losses caused by Jian Company’s monopolistic conduct and that the unit-price adjustment was affected by market factors such as rising raw-material and transport costs. On 29 October 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 affirmed.

[Court Opinion]

The effective judgment held that the focus of dispute was whether it was appropriate for the first-instance court to order Jian Company to compensate Construction Company RMB 467,325 for losses caused by implementing the horizontal monopoly agreement.

First, the sales contract and supplemental agreement at issue were concluded and fully performed during the period in which Jian Company and Jiang Company implemented the horizontal monopoly agreement; from the outset they were affected by the challenged horizontal monopoly agreement and were not concluded or performed under normal, fair market competition. The unit-price increase borne by Construction Company was precisely the result of Jian Company’s implementation of the challenged horizontal monopoly agreement. In these circumstances, it may reasonably be presumed that Construction Company suffered losses because of the challenged horizontal monopoly agreement. Whether Construction Company’s conclusion of the contracts reflected a voluntary and true intention does not affect the finding that Construction Company had discharged its burden of proving losses from the challenged monopolistic conduct.

Second, as to specific calculation of damages: based on economic principles and ordinary market transaction rules, direct economic losses caused to a counterparty by implementing a horizontal monopoly agreement fixing or changing commodity prices may ordinarily be calculated by the difference between the non-competitive price agreed with the monopolist and the competitive market price of that commodity or of substitutable commodities. Where neither such competitive market price nor that of substitutable commodities exists in the relevant market, calculation may be made in light of commodity prices in the relevant market before and after, and during, the monopolistic conduct. In this case it was difficult to obtain competitive market prices for ready-mixed concrete or substitutable commodities in the relevant market, and there was no evidence that before or after the challenged conduct Jian Company had ready-mixed concrete prices formed with counterparties through free market competition. The prices in the sales contract and supplemental agreement were both “fixed prices” under Jian Company’s horizontal monopoly agreement. Given that Construction Company claimed losses only for the unit-price difference between the supplemental agreement and the sales contract, the first-instance court’s finding that direct economic losses were at least no less than RMB 90/m³ multiplied by total purchases of 5,192.5 m³, i.e. RMB 467,325, was not improper.

Finally, Jian Company asserted that the price rise was caused by non-monopoly factors such as rising raw-material costs; Jian Company bore the burden to prove that monopoly and non-monopoly factors coexisted objectively and to reasonably distinguish each factor’s degree of impact (proportion of effect) on the actual transaction price, failing which it would bear the adverse consequences of failing to prove. Jian Company offered no such proof, and the first-instance court’s calculation of losses based on the RMB 90 per cubic meter increase was not improper.

[Related Index]

Article 17(1)(1) and (3) and Article 60(1) of the Anti-Monopoly Law of the People’s Republic of China (this case applied Article 13(1)(1) and (3) and Article 50 of the Anti-Monopoly Law as in force from 1 August 2008)

Article 44(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 Monopoly Disputes

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