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Microsoft’s software license contracts with its Chinese end users provide that all disputes arising therefrom are subject to U.S. law and should be resolved in U.S. federal courts. Based on this clause, Mr. Dong, a lawyer in Beijing, requested the State Administration for Industry and Commerce (“SAIC”) to start antitrust investigation on Microsoft China.
According to Microsoft China’s in-house counsel, the software license contract used in China is based on the global form of Microsoft, which applies to all countries where Microsoft has business, and does not seem to violate PRC law.
International private law experts in China commented that China did allow application of foreign law in contracts involving foreign factors; however, it is arguable whether Microsoft’s software license contracts with Chinese end users have foreign factors. The key issue is who is the other party to such contracts. In fact, Microsoft is selling its software in China through its Chinese subsidiary (i.e., Microsoft China), which is obviously a company incorporated in China. With Chinese parties on both sides (Microsoft China and Chinese end users), plus the fact that the software sales and license transactions occurred within the territory of China, no foreign factors are seen in such contracts, according to the interviewed Chinese law expert. Application of U.S. law in such contracts is thereby baseless under PRC law.
In addition, from the consumer protection perspective, PRC law provides that product providers, when using form contracts, should not increase obligations on consumers. Given the choice of U.S. law as applicable law and U.S. federal courts as forum for dispute resolution will foreseeably increase the litigation cost and burden on consumers, this clause is also deemed as impairing consumers’ rights in China.
It is reported that the SAIC will pay more attention to such practice of Microsoft and engage investigation when necessary.
Showing posts with label Antitrust. Show all posts
Showing posts with label Antitrust. Show all posts
Thursday, December 4, 2008
China Granted Conditioned Approval to Inbev’s Takeover of Anheuser Busch
Since the PRC Anti-monopoly Law came into effect on August 1, 2008, the Anti-Monopoly Bureau (“AMB”) under the Ministry of Commerce (“MOFCOM”) has received over 10 applications for antitrust review of concentration of business operators. According to MOFCOM, 13 of such applications have been formally accepted, eight of which have been granted decisions. One of the most widely reported examples is the Belgian brewer Inbev’s $52 billion takeover of Anheuser Busch Inc. (“AB”).
This takeover is reported to be subject to antitrust reviews in three jurisdictions, i.e., Belgium, U.S. and China where both parties have their respective strong market positions.
The AMB of China approved the proposed takeover, but imposed the following four conditions on the new company’s post-takeover investment in China:
- it shall not increase AB’s current 27% shareholding in Tsingtao Brewery;
- it shall not increase Inbev’s current 28.56% shareholding in Zhujiang Brewery;
- it shall not seek to hold any stake in China Resources Snow Brewery or Beijing Yanjing Brewery; and
- it shall notify MOFCOM if there are any changes to its controlling shareholders or the shareholders of such controlling shareholders.
Inbev must report to MOFCOM and obtain its approval before implementing any change to the above conditions.
This takeover is reported to be subject to antitrust reviews in three jurisdictions, i.e., Belgium, U.S. and China where both parties have their respective strong market positions.
The AMB of China approved the proposed takeover, but imposed the following four conditions on the new company’s post-takeover investment in China:
- it shall not increase AB’s current 27% shareholding in Tsingtao Brewery;
- it shall not increase Inbev’s current 28.56% shareholding in Zhujiang Brewery;
- it shall not seek to hold any stake in China Resources Snow Brewery or Beijing Yanjing Brewery; and
- it shall notify MOFCOM if there are any changes to its controlling shareholders or the shareholders of such controlling shareholders.
Inbev must report to MOFCOM and obtain its approval before implementing any change to the above conditions.
Tuesday, November 4, 2008
Beijing: Supreme People’s Court Commented on Implementation Issues of Anti-Monopoly Law
The long-awaited PRC Anti-monopoly Law (“AML”) has left quite a number of implementation questions unanswered; and recently, the head of Administrative Tribunal of the Supreme People’s Court of China responded to some of those questions with respect to administrative lawsuits that may be brought under AML.
Who has the jurisdiction?
Pursuant to the AML and the PRC Administrative Litigation Law, people’s courts that have jurisdiction over AML-related administrative lawsuits are relevant intermediate or higher people’s courts located where defendants reside.
Who can be defendants?
AML set up two-level institution. One is a Anti-monopoly Commission under the State Council, which is to coordinate anti-monopoly related work at a national level, and research for, make, and publish anti-monopoly related policies and regulations. The other is institutions which are responsible for enforcement of AML, i.e., the Ministry of Commerce (“MOFCOM”), the National Development and Reform Commission (“NDRC”), and the State Administration for Industry and Commerce (“SAIC”), and their respective counterparts at provincial level.
Given that the second-level institutions are those who will enforce AML in daily practice, and take specific administrative acts, they are potential defendants in AML-related administrative lawsuits.
What acts can be sued?
Under the PRC Administrative Litigation Law, only specific administrative acts (as opposed to administrative rules for general application). Therefore, specific administrative acts related to AML (including, without limitation, administrative licensing, penalties, decisions, approvals, and enforcement) can be cause of actions for AML-related administrative lawsuits.
Who bears the burden of proof?
As a general rule under the PRC Administrative Litigation Law, defendants bear the burden to prove that their specific administrative acts are in compliance with applicable laws, and facts that are not recorded at the time of conducting administrative acts should be excluded as inadmissible. If defendants do not produce evidence or delay in producing evidence without justification, it is deemed that disputed administrative acts lack corresponding evidences.
Who has the jurisdiction?
Pursuant to the AML and the PRC Administrative Litigation Law, people’s courts that have jurisdiction over AML-related administrative lawsuits are relevant intermediate or higher people’s courts located where defendants reside.
Who can be defendants?
AML set up two-level institution. One is a Anti-monopoly Commission under the State Council, which is to coordinate anti-monopoly related work at a national level, and research for, make, and publish anti-monopoly related policies and regulations. The other is institutions which are responsible for enforcement of AML, i.e., the Ministry of Commerce (“MOFCOM”), the National Development and Reform Commission (“NDRC”), and the State Administration for Industry and Commerce (“SAIC”), and their respective counterparts at provincial level.
Given that the second-level institutions are those who will enforce AML in daily practice, and take specific administrative acts, they are potential defendants in AML-related administrative lawsuits.
What acts can be sued?
Under the PRC Administrative Litigation Law, only specific administrative acts (as opposed to administrative rules for general application). Therefore, specific administrative acts related to AML (including, without limitation, administrative licensing, penalties, decisions, approvals, and enforcement) can be cause of actions for AML-related administrative lawsuits.
Who bears the burden of proof?
As a general rule under the PRC Administrative Litigation Law, defendants bear the burden to prove that their specific administrative acts are in compliance with applicable laws, and facts that are not recorded at the time of conducting administrative acts should be excluded as inadmissible. If defendants do not produce evidence or delay in producing evidence without justification, it is deemed that disputed administrative acts lack corresponding evidences.
Thursday, October 30, 2008
Beijing: First Antimonopoly Case in China
In stark contrast with the common perception that Chinese “hate” and “avoid” litigation, plaintiffs in China are much more fast-paced nowadays.
On the date when China’s first comprehensive competition statute, PRC Antimonopoly Law, took effect, a plaintiff, Mr. Fangping Li (who is a lawyer), brought China Netcom, a mega State-owned telecom company, into the courtroom.
Mr. Li claimed that China Netcom has “abused its dominant market position by applying differential treatments to counter-parties to transactions who have the same qualifications with respect to transaction price and other transaction terms, without any justification” (Article 17(6) of PRC Antimonopoly Law).
According to Mr. Li, he, as a non-Beijing permanent resident, had no choice but to opt for the pre-paid services of China Netcom when installing his land line telephone in Beijing. Unexpectedly, the difference following that choice is much more than when to pay the fees (pre-paid vs. monthly billing after actual use). In his claim, Mr. Li enlisted 8 items of preferential treatment or services that Netcom provided to monthly billing customers only. This seems unfair to Mr. Li, who decided to arm himself with the weapon provided under the new law (Article 50 of PRC Antimonopoly Law entitles those who suffer losses by one’s monopolistic conduct to file civil lawsuits) even though he only claimed nominal damage of RMB 1.
On September 18, 2008, the Beijing Chaoyang People’s Court accepted this case, and it had this latest development on October 29. After the judge clarified with the plaintiff that this was an antitrust claim, the case was transferred to Beijing No. 2 Intermediate People’s Court, which has the jurisdiction over antimonopoly cases pursuant to a recently-issued judicial interpretation.
This is the first antimonopoly case in China. Though formally accepted and transferred to proper jurisdiction, the case has much to be seen with respect to where it goes and how the long-awaited new law will be enforced.
On the date when China’s first comprehensive competition statute, PRC Antimonopoly Law, took effect, a plaintiff, Mr. Fangping Li (who is a lawyer), brought China Netcom, a mega State-owned telecom company, into the courtroom.
Mr. Li claimed that China Netcom has “abused its dominant market position by applying differential treatments to counter-parties to transactions who have the same qualifications with respect to transaction price and other transaction terms, without any justification” (Article 17(6) of PRC Antimonopoly Law).
According to Mr. Li, he, as a non-Beijing permanent resident, had no choice but to opt for the pre-paid services of China Netcom when installing his land line telephone in Beijing. Unexpectedly, the difference following that choice is much more than when to pay the fees (pre-paid vs. monthly billing after actual use). In his claim, Mr. Li enlisted 8 items of preferential treatment or services that Netcom provided to monthly billing customers only. This seems unfair to Mr. Li, who decided to arm himself with the weapon provided under the new law (Article 50 of PRC Antimonopoly Law entitles those who suffer losses by one’s monopolistic conduct to file civil lawsuits) even though he only claimed nominal damage of RMB 1.
On September 18, 2008, the Beijing Chaoyang People’s Court accepted this case, and it had this latest development on October 29. After the judge clarified with the plaintiff that this was an antitrust claim, the case was transferred to Beijing No. 2 Intermediate People’s Court, which has the jurisdiction over antimonopoly cases pursuant to a recently-issued judicial interpretation.
This is the first antimonopoly case in China. Though formally accepted and transferred to proper jurisdiction, the case has much to be seen with respect to where it goes and how the long-awaited new law will be enforced.
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