Shanghai Hankook RPM lawsuit sees court take rare step of pulling files from earlier probe

6 April 2018 10:20am

3 April 2018. Analysis by Yang Yue.

A Shanghai court hearing an antitrust lawsuit against South Korean tire maker Hankook's local sales operation has been handed dossiers from an earlier antitrust investigation involving the company, MLex has learned.

It is understood that the plaintiff, Wuhan Hanyang Guangming, a distributor for Shanghai Hankook Tire Sales, asked the Shanghai Intellectual Property Court to reach out to the Shanghai Price Bureau for case materials in addition to the publicized penalty decision on the regulator's website.

The granting of such a request is rare in the Chinese justice system, a legal landscape in which observers say plaintiffs bear a heavy evidentiary burden of proof, making civil litigation difficult and discouraging consumers and companies from filing suits.

​In the earlier Shanghai Hankook case, the local branch of China’s National Development and Reform Commission fined the company 2.17 million yuan ($345,000) in April 2016 for engaging in minimum resale price maintenance, which is prohibited by the country's Antimonopoly Law.

The penalty decision in that case said Shanghai Hankook had been punished for striking RPM agreements with its distributors in Shanghai; it is not yet evident how exactly materials provided by Shanghai antitrust enforcers can help with a case lodged by Wuhan Hanyang Guangming, which is based in Hubei Province, although the investigation documents are expected to provide points of reference.

The content of penalty decisions released to the public is usually relatively simple, providing only limited information, but case-closure reports by antitrust enforcers are much more detailed. Regulators also collect large amounts of evidence during investigations, which may be useful in antitrust lawsuits.

It is unclear how many documents from the earlier case the court has received.

Legal issues

According to Article 64 of China’s Civil Procedure Law, parties in legal disputes are responsible for providing evidence to support their allegations. Article 64 also says courts should investigate and collect evidence if a party or its representatives are unable to collect it on their own due to objective circumstances, or if the court considers doing so necessary for the purposes of adjudication.

But the legal system still lacks detailed rules to clarify procedures and parties' respective responsibilities in cases involving such information transfers. Legal practitioners have long called for a mechanism to be set up to regulate those transfers.

Meanwhile, the sharing of the investigation documents may raise concerns over the protection of confidential business information, as the dossiers may include details of core commercial considerations such as pricing strategies. It is understood, however, that the court has already taken those issues into consideration in handling the current suit against Shanghai Hankook.

Wuhan Hanyang Guangming, a distributor for Shanghai Hankook, lodged its case against Shanghai Hankook at the Shanghai IP Court in 2016, accusing the company of engaging in RPM, in violation of Article 14 of the Anti-Monopoly Law and also Article 17, which deals with abuses of market dominance.

The Hubei-based distributor is seeking compensation of more than 30 million yuan.

A three-day pre-trial hearing of the lawsuit was held at the Shanghai court last July, as MLex reported. It is said that the court is due to hold further hearings in the case soon.

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