Enforcement actions yet to pick up pace
Administrative enforcement aspects of the AML remain underdeveloped, such as cartel and abuse of dominant market position. But new measures and rules that are being finalised by the National Development and Reform Commission (NDRC) and the State Administration of Industry and Commerce (SAIC) - the other two AML enforcement authorities - have shed some light on future regulatory enforcement policy.
"Many companies, particularly foreign companies, are closely monitoring the development of the draft rules and enforcement actions. Some have already instructed law firms to help them review their business practices in China and adjust to the new AML environment as indicated by the draft rules, and to make necessary changes to their operations and procedures to ensure compliance," says Xue Yi, a partner of Zhong Lun in Beijing. The new implementing rules are expected to be in place by the end of this year. They will make important clarifications relating to ambiguous concepts and provisions in the AML and will provide practical guidance on AML compliance. Yet, as few formal actions have been taken it is difficult to predict how NDRC and SAIC will enforce the law.
However, the market is certain that enforcement actions will be robust - and if that proves true, firms are expected to see a surge in their anti-trust workloads.
On the private litigation front, only a handful of cases have been heard by the courts so far - but they represent the first steps in judicial enforcement of the AML. The results of the cases, nonetheless, demonstrate that it is difficult for plaintiffs to win in court. Zhan Hao, a partner of Grandall's Beijing office, says that the major challenge facing plaintiffs is the burden of proof.
The Civil Procedural Law doesn't have a discovery process that allows plaintiffs to have access to evidence that is necessary to prosecute AML offences. Another major issue that may have discouraged companies from taking up anti-trust litigation actions to date is the question of damages. It's still unclear how much of a damages award a plaintiff can receive: therefore it's hard to predict whether the outcome of a law suit is beneficial.
However, many key questions and issues in prosecuting anti-competitive conducts in the people's courts will soon be addressed. The Supreme People's Court's judicial interpretation of AML is reportedly to be published at the end of 2010.
"The bulk of our firm's anti-trust and competition mandates in Europe are concerning cartels and abuse of dominance. We represent clients in a range of complex anti-trust investigations and litigation," says Freshfields' Han. "Although we haven't seen much work from these fronts in China, as it's still early days for the regime, we would expect to see new implementing rules to come out and real enforcement actions to be initiated over the next few years. We are optimistic about this practice in China and will continue to grow our legal team here," he says. ALB
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