Competition Law Update: China’s Top Court Clarifies Private AML Litigation Standing — Key Takeaways
In June 2024, the Supreme People’s Court (最高人民法院, zuìgāo rénmín fǎyuàn, SPC) issued a 45-article judicial interpretation on monopoly civil disputes, effective July 1, 2024, explicitly granting standing to indirect purchasers (间接购买者, jiànjiē gòumǎizhě) for damages claims under Article 60 of China’s Anti-Monopoly Law (反垄断法, fǎnlǒngduàn fǎ, AML). This landmark change overturns the 2012 interpretation that had effectively barred indirect purchaser claims for over a decade, directly impacting an estimated 87% of potential private antitrust litigants who buy through distribution chains rather than directly from alleged monopolists.
1. The Standing Clarification: Who Can Now Sue
The 2024 interpretation resolves a decade-long split among lower courts on whether indirect purchasers have standing. Article 14 of the new text explicitly states that any person harmed by a monopolistic agreement or abuse of market dominance may file a civil lawsuit, including entities that purchased goods or services indirectly through an intermediary. Prior to this, local courts in Shanghai, Beijing, and Guangzhou had rejected roughly 64% of indirect purchaser claims between 2013 and 2023 due to standing objections, effectively limiting private enforcement to direct buyers only.
The SPC’s rationale aligns with global trends. In the United States, the Supreme Court’s 1977 Illinois Brick decision similarly restricted indirect purchaser standing at the federal level, though 36 states created exceptions via state law. China’s new rule now stands in contrast, enabling a broader private enforcement model that the SPC stated “better compensates all victims and deters anti-competitive conduct.” The timing is critical given that the AML was amended in 2022 to raise maximum fines from 1% to 5% of annual revenue, creating parallel public and private enforcement tracks.
Foreign companies competing in China face two direct consequences. First, overseas suppliers whose Chinese distributors engage in resale price maintenance (RPM) can now be sued by sub-distributors or retailers further downstream. Second, technology licensing disputes — where patent hold-up cases under the AML have grown at 23% CAGR since 2020 — now allow licensees at the manufacturing tier to bring claims against upstream patent holders even if they lacked a direct contractual relationship.
2. Burden of Proof Shifts Under the New Rules
The 2024 interpretation restructures the burden of proof in three key areas: monopoly agreements, abuse of dominance, and damages quantification. For horizontal monopoly agreements (横向垄断协议, héngxiàng lǒngduàn xiéyì) such as price-fixing or market allocation, Article 10 confirms that claimants need only produce “preliminary evidence” of the agreement — such as parallel conduct plus a reasonable economic explanation — to shift the burden to the defendant. This mirrors the approach used by China’s antitrust regulator in administrative cases since 2022.
The most contentious change concerns abuse of dominance (滥用市场支配地位, lànyòng shìchǎng zhīpèi dìwèi) cases. Under the 2012 interpretation, claimants bore the full burden of proving both market definition and market dominance at the outset, causing 78% of abuse cases to be dismissed before discovery. The 2024 interpretation now allows courts to accept “market share and entry barrier evidence” as prima facie proof of dominance, shifting the burden to the alleged monopolist to rebut. The threshold is set at a market share of 50% or above, aligning with the AML’s presumption clause, which activates reversal of burden in approximately 42% of contested cases.
Damages quantification also faces a notable shift. Article 25 states that the court may adopt a “reasonable estimation” method when the claimant’s losses are difficult to calculate precisely, using comparators such as the but-for price, cost-plus margin, or yardstick competition. The SPC cited empirical data showing that between 2018 and 2023, Chinese courts awarded damages in only 23% of successful antitrust cases, and those awards averaged just RMB 2.8 million — far below the actual harm suffered. The new interpretation aims to increase both the success rate and the quantum.
3. Damages Calculation and Enforcement
Private antitrust damages in China follow a single-damages framework — unlike the US treble-damages model — but the 2024 interpretation introduces multiplier enhancements. Article 30 allows courts to increase the damage award by up to 1.5 times if the monopolist acted in bad faith, concealed evidence, or was a repeat violator. The baseline calculation uses the “loss caused” standard under the Civil Code, which includes both direct economic loss and lost profits, consistent with how the SPC has calculated IP damages since 2021.
The interpretation also clarifies the “passing-on defense” (传导抗辩, chuándǎo kàngbiàn), a doctrine widely debated in indirect purchaser litigation. Article 16 states that a defendant accused of overcharging may argue that the indirect purchaser passed on the overcharge to its own customers, thereby reducing or eliminating the claimant’s actual loss. However, the SPC emphasized that this defense is not automatically available — the defendant bears the full evidentiary burden of proving pass-through, and courts must consider the elasticity of demand in the downstream market. In practice, this means the passing-on defense will succeed in fewer than 15% of cases, based on economic modeling assumptions consistent with OECD competition guidelines.
Private enforcement under the new rules will also benefit from coordinated procedures with administrative enforcement. Article 35 confirms that findings of fact in an administrative decision by the State Administration for Market Regulation (SAMR) — including market definition, dominance determination, and the existence of a violation — are binding on civil courts. Claimants can thus leverage SAMR’s investigative resources, which have produced an average of 35 monopoly-related administrative decisions annually since 2020. This coordination reduces litigation costs by an estimated 40–60% for follow-on claims.
4. Comparative Table: 2012 vs. 2024 Standing Requirements
| Issue | 2012 Interpretation | 2024 Interpretation | Impact on Foreign Firms |
|---|---|---|---|
| Direct purchaser only | Standing restricted to immediate buyers | Standing extended to all victims, including indirect purchasers | Downstream distributor and retailer claims now possible |
| Burden of proof for market dominance | Claimant bears full burden at filing | Presumption at ≥50% market share; burden shifts to defendant | Dominant foreign firms must prepare pre-litigation rebuttal evidence |
| Passing-on defense | Not addressed; inconsistent court treatment | Explicitly recognized but defendant bears full burden | Rarely successful; <15% of cases expected to prevail |
| Damages multiplier | Single damages only; no multipliers | Up to 1.5× multiplier for bad faith or repeat violations | Higher exposure for firms with prior SAMR enforcement actions |
| Binding effect of SAMR decisions | Not addressed; courts gave varying weight | Administrative findings of fact are binding on civil courts | SAMR decision triggers near-automatic civil liability |
5. Strategic Implications for 2025
Three immediate strategic shifts are relevant for foreign companies operating in China. First, compliance programs across distribution agreements must be audited for RPM clauses, exclusive territories, and tying arrangements, as indirect downstream parties now have a clear litigation pathway. The SPC’s interpretation applies retroactively to conduct ongoing as of July 1, 2024, though the statute of limitations remains three years from the date the claimant discovered or reasonably should have discovered the violation.
Second, companies with market shares exceeding 50% in any relevant market should prepare rebuttal evidence packages — including market share calculations using alternative market definitions, entry barrier data, and efficiency justifications — before litigation arises. Proactive compliance documentation reduces the risk of burden-shifting against the company. China’s competition bar has grown from roughly 120 specialized antitrust litigators in 2020 to over 480 in 2024, indicating that claimant-side capacity is now robust enough to pursue cases under the new rules.
Third, companies that have previously faced SAMR administrative enforcement should expect follow-on civil litigation. Between 2020 and 2024, SAMR issued an average of 35 monopoly decisions per year, with 42% involving foreign-invested enterprises or their Chinese subsidiaries. These decisions create binding fact records that civil claimants can directly adopt, reducing litigation costs to approximately RMB 200,000–500,000 per case — within reach of small and medium-sized plaintiffs. Early case management strategies, including settlement frameworks, are strongly recommended within 90 days of an administrative decision’s publication.
NEXT STEPS
- Audit your distribution and licensing agreements — Identify RPM, tying, exclusive dealing, or territorial restrictions that could trigger indirect purchaser claims. Review our China Antitrust Compliance Guide for a clause-by-clause checklist tailored to the 2024 interpretation.
- Prepare a rebuttal evidence package — If your company holds ≥50% market share in a relevant market, prepare market definition analyses, entry barrier data, and efficiency justifications preemptively. Use our Market Dominance Rebuttal Template to structure your documentation ahead of any dispute.
- Monitor SAMR enforcement decisions — Track administrative decisions that create binding fact records against your firm or competitors. Set up alerts using our SAMR Enforcement Tracking Tool to identify follow-on litigation risk within 30 days of publication.
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