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China – Guangdong AIC Imposes Penalties On Huizhou Daya Bay Yiyuan Purified Water For Abuse Of Dominance.

7 February, 2014

 


On Dec. 16, 2013, the Guangdong provincial Administration for Industry and Commerce (AIC) issued a Written Decision of Administrative Penalty to penalize Huizhou Daya Bay Yiyuan Purified Water (Huizhou) for abuse of dominance through bundled sales.

 

After concluding that Huizhou has a dominant market position, Guangdong AIC determined that the company conducted bundled sales through the following activities: (1) It required some real estate companies (the Complainants) to sign water supply engineering agreements that contain not only terms for temporary water supply service to construction sites, but also terms requiring the Complainants to engage Huizhou to work on the residential water meter projects; (2) In situations where some real estate companies were firmly opposed, Huizhou agreed to sign water supply engineering agreements without terms for residential water meter projects, but required them to sign a letter promising in the future to sign agreements with Huizhou for residential water meter projects and acknowledging Huizhou’s right to cut water supply in case of a breach of the promise letter; and (3) Huizhou also required Complainants to sign bundled agreements with a third party in areas where Huizhou is not qualified to sign such agreements.

 

The AIC also determined that Huizhou’s bundled sales were not reasonably justified because: (1) they are not a common business practice; (2) they were compelled against the Complainants; (3) they were not within the permitted scope of the relevant local administrative regulations; and (4) there is no basis for Huizhou’s claim that the bundled sales enhance water safety. The AIC also concluded that Huizhou’s bundled sales caused harm to competition.

 

The penalties imposed include the following: (1) an order for Huizhou to cease illegal activities, (2) confiscation of illegal gains amounting to RMB 860,236 ($142,138), and (3) a fine of 2 percent of Huizhou’s annual sales revenue for the last year, amounting to RMB 2,363,597 ($390,541).

 

Orrick

 

For further information, please contact:

 

Robert A. Rosenfeld, Partner, Orrick

rrosenfeld@orrick.com

 
Homegrown Competition & Antitrust Law Firms in China

 

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