Chinanews.com, November 18th. The State Administration for Market Supervision published on the 18th the "Anti-Monopoly Guidelines of the Anti-Monopoly Committee of the State Council on the Field of APIs".
The full text is as follows:
Anti-monopoly Guidelines of the Anti-Monopoly Committee of the State Council on the Field of APIs
(Issued by the Anti-Monopoly Committee of the State Council on November 15, 2021)
Chapter One General Provisions
And basis for the first item
In order to prevent and stop monopolistic activities in the field of APIs, further clarify the rules of market competition, maintain the order of market competition in the field of APIs, and protect the interests of consumers and the public interest, in accordance with the "Anti-Monopoly Law of the People's Republic of China" (hereinafter referred to as "Anti-Monopoly Law") ) And other laws and regulations, formulate this guide.
The second related concept
(1) APIs refer to the raw materials used in the production of various drugs that meet the requirements of relevant laws and regulations on drug management and are the effective ingredients in drugs.
The raw materials used in this guideline include chemical raw materials and Chinese herbal medicines.
(2) Drugs refer to substances used to prevent, diagnose, and treat human diseases, to purposely regulate human physiological functions, and to stipulate indications or functional treatments, usage and dosage, including traditional Chinese medicine, chemical medicine and biological products, etc. .
(3) API operators refer to all types of enterprises engaged in the production and operation of APIs with the approval of relevant supervision and management departments.
(4) An API manufacturer refers to an enterprise that has been approved by the relevant supervision and management department to produce and sell APIs by means of chemical synthesis, animal and plant extraction, and biotechnology.
(5) A drug substance distribution enterprise refers to an enterprise that has been approved by the relevant supervision and management department and does not produce drug substance, but only engages in the business and sales of drug substance.
(6) Pharmaceutical production enterprise refers to an enterprise that has been approved by the relevant supervision and management department and obtained a pharmaceutical production license to produce and sell pharmaceuticals.
(7) Pharmaceutical distribution enterprise refers to an enterprise that has been approved by the relevant supervision and management department and obtained a pharmaceutical business license to engage in pharmaceutical business sales.
The third basic principle
Anti-monopoly law enforcement agencies adhere to the following principles for anti-monopoly supervision in the field of APIs:
(1) Protect fair competition in the market.
Adhere to the same treatment and equal treatment of market players, strengthen regulation and supervision in accordance with the law, focus on preventing and stopping monopolistic activities in the field of APIs, protecting fair competition in the market, maintaining a good order of competition, supporting the innovation and development of API operators, and enhancing international competitiveness.
(2) Scientific and efficient supervision in accordance with the law.
The basic system, regulatory principles, and analytical framework determined by the Anti-Monopoly Law and related supporting laws, regulations, and guidelines are applicable to market entities in the field of APIs.
The anti-monopoly law enforcement agency strengthens competition analysis and legal argumentation based on the specific circumstances of cases in the field of APIs, continuously strengthens and improves anti-monopoly supervision, and enhances the pertinence and scientific nature of anti-monopoly law enforcement.
(3) Pay attention to protecting the interests of consumers.
Anti-monopoly law enforcement agencies severely crack down on various types of API monopolies, promote companies to improve operational efficiency, maintain market competitive prices, guide and encourage API operators to use more resources for process improvement, quality and efficiency improvements, and promote APIs Effective supply and stable supply of medicines protect the interests of consumers.
(4) Continue to strengthen legal deterrence.
Anti-monopoly law enforcement agencies continue to increase law enforcement in the field of APIs, and those who knowingly violate the Anti-Monopoly Law deliberately implement or take measures to evade investigations shall be severely dealt with in accordance with the law, strengthen legal deterrence, and effectively curb monopolistic activities in the field of APIs , Focus on improving people's livelihood and well-being.
Article 4 Definition of Relevant Market
The API industry chain covers production, transportation, distribution and other links, involving various business types. The definition of relevant commodity markets and geographic markets needs to follow the general principles determined by the Anti-Monopoly Law and the Guidelines of the Anti-Monopoly Committee of the State Council on the Definition of Related Markets. At the same time, it considers the characteristics of the API industry and conducts a specific analysis in combination with individual cases.
(1) Related commodity market
The basic method for defining the market of related commodities in the field of APIs is substitution analysis.
When defining the relevant market in a case, it is possible to conduct a demand substitution analysis based on factors such as the product characteristics, quality standards, use, and price of the API.
When necessary, supply substitution analysis can be conducted based on factors such as market entry, production capacity, transformation of production facilities, and technical barriers.
Depending on the specific circumstances, it may be necessary to further subdivide the relevant commodity market into an API production market and an API distribution market.
Since APIs have a special effect on the production of drugs, an API generally constitutes a separate related commodity market, which may be further subdivided according to specific circumstances.
If there is a substitution relationship between different types of APIs, it may be determined that multiple types of APIs constitute the same relevant commodity market based on specific circumstances.
(2) Relevant geographic markets
The definition of relevant geographic markets in the field of APIs adopts demand substitution and supply substitution analysis.
Different countries have different qualifications and regulatory standards for the production and distribution of APIs.
For the production and distribution of APIs in China, API operators shall organize production in accordance with the approved process, strictly abide by the drug production quality management specifications and the drug management quality management specifications, and ensure that the production and operation processes meet the legal requirements; imported APIs need to obtain relevant Chinese regulations. Approval by the supervision and management department.
Therefore, the relevant geographic market for the production and distribution of APIs is generally defined as the Chinese market.
According to the characteristics and costs of the transportation of different APIs, the geographic market for specific types of APIs may be defined as a certain geographic range.
Chapter II Monopoly Agreement
The "Anti-Monopoly Law" prohibits operators from reaching and implementing monopoly agreements.
To identify monopoly agreements in the field of APIs, Chapter III of the Anti-Monopoly Law and the Interim Provisions on Prohibition of Monopoly Agreements apply.
Monopoly agreements clearly listed in Articles 13 and 14 of the Anti-Monopoly Law shall be prohibited in accordance with law; monopoly agreements that meet the conditions set forth in Article 15 of the Anti-Monopoly Law shall be exempted in accordance with the law.
Article 5 Form of Monopoly Agreement
Monopoly agreements in the field of APIs refer to agreements, decisions or other concerted actions by operators to exclude or restrict competition.
Agreements and decisions can be in written or oral forms.
Other coordinated behaviors refer to the fact that the operators have not clearly entered into an agreement or decision, but have substantially coordinated behavior through other means, except for parallel behaviors such as price follow-up by the relevant operators based on independent intentions.
Article 6 Horizontal Monopoly Agreement
It is forbidden for API operators with a competitive relationship to reach a horizontal monopoly agreement as stipulated in Article 13 of the Anti-Monopoly Law.
The following behaviors of API operators generally constitute monopoly agreement behaviors prohibited by Article 13 of the Anti-Monopoly Law:
(1) The raw material drug manufacturer and other business operators that have a competitive relationship negotiate the production quantity, sales quantity, sales price, sales target, and sales area of the raw material through joint production agreements, joint purchase agreements, joint sales agreements, joint bidding agreements, etc. Wait;
(2) API manufacturers communicate and coordinate sensitive information such as API sales prices, production capacity, production and sales plans through third parties (such as API distributors, downstream drug manufacturers), trade fairs, industry conferences, etc.;
(3) An API manufacturer and other API operators that have a competitive relationship reach an agreement not to produce or sell APIs, and other API operators to provide compensation;
(4) The raw material drug distribution company communicates and coordinates with other competing raw material drug operators on the purchase quantity, purchase object, sales price, sales quantity, sales object, etc.
There is no significant difference between the API field and other fields and industry horizontal monopoly agreements in terms of competition analysis, and this guide will not be further detailed.
Article 7 Vertical Monopoly Agreement
It is forbidden for API operators and their counterparties to reach a vertical monopoly agreement as stipulated in Article 14 of the Anti-Monopoly Law.
The following actions of API operators generally constitute monopoly agreement actions prohibited by Article 14 of the Anti-Monopoly Law:
(1) Directly fix the resale price and limit the minimum resale price (hereinafter referred to as the resale price limit) for API distributors, drug manufacturers, etc., through contractual agreements, oral agreements, written letters, emails, price adjustment notices, etc. ；
(2) Adopt methods such as fixed distribution company profits, discounts and rebates to impose disguised resale price restrictions on API distribution companies, pharmaceutical manufacturers, etc.;
Resale price restrictions on API distributors and pharmaceutical manufacturers are threatened by providing incentives such as rebates, priority supply, and support, or threats of canceling rebates, reducing discounts, or even refusing to supply or dissolving agreements, etc. It will be considered as a supervision and punishment measure for the implementation of a vertical monopoly agreement.
The implementation of geographic restrictions or customer restrictions by API operators may constitute a monopoly agreement prohibited by Article 14 of the Anti-Monopoly Law.
Among them, the geographical restriction means that the API operator restricts the counterparty of the transaction to only supply to one or several downstream API distribution companies in a specific distribution area, and the downstream API distribution company does not sell to other distribution areas; customer restrictions refer to the API The business operator restricts the counterparty of the transaction to only sell or not sell the API to specific API distributors and pharmaceutical manufacturers.
Geographical restrictions and customer restrictions may lead to market segmentation and price discrimination, weaken the competition in the API market, and may also make it difficult for other API distributors or drug manufacturers to obtain relevant product supplies, and keep the prices of APIs and drugs at a high level.
Under normal circumstances, the implementation of a vertical monopoly agreement by a single API operator will restrict intra-brand competition and harm the interests of API distributors and pharmaceutical manufacturers.
Especially if multiple or even all operators in the relevant market adopt similar vertical monopoly agreements, competition in the API market will be significantly weakened, harming the interests of API distributors and drug manufacturers, and making the prices of APIs and related drugs significantly higher than The level of competition hurts the market competition of APIs and related drugs.
Article 8 Determination of concerted acts
To identify synergistic behavior in the field of APIs, direct evidence can be used to determine whether there is any implementation of synergistic behavior.
If direct evidence is difficult to obtain, you can determine whether the operators are aware of relevant information in accordance with the provisions of Article 6 of the Interim Regulations on Prohibition of Monopoly Agreements and indirect evidence consistent with logic to determine whether there is a concerted behavior among the operators.
The operator can provide contrary evidence to prove that there is no concerted behavior.
Article 9 Hub and Spoke Agreement
Operators may not organize API operators to reach a monopoly agreement or provide them with substantive assistance in reaching a monopoly agreement.
Competitive API operators may use vertical relationships with other operators, or be organized and coordinated by other operators, to reach a hub-and-spoke agreement that has the effect of a horizontal monopoly agreement.
Analyze whether the agreement is a monopoly agreement regulated by Article 13 of the Anti-Monopoly Law, mainly considering whether the API operator should know or know that other operators have signed the same, similar or cooperative agreement with the same API distributor .
Article 10 Exemption
If an API operator claims that its agreement can be applied to Article 15 of the Anti-Monopoly Law, it is necessary to submit evidence that its agreement meets the statutory conditions stipulated in Article 15 of the Anti-Monopoly Law.
The anti-monopoly law enforcement agency makes a judgment according to the specific circumstances of the case.
Article 11 Leniency System
Anti-monopoly law enforcement agencies encourage operators in the field of APIs that participate in horizontal monopoly agreements to actively report on the situation of horizontal monopoly agreements and provide important evidence, and at the same time stop suspected illegal acts and cooperate with investigations.
The anti-monopoly law enforcement agency can mitigate or waive penalties for business operators who meet the requirements for leniency.
The specific standards and procedures for business operators to apply for leniency shall be governed by the "Interim Provisions on Prohibition of Monopoly Agreements" and the "Guidelines for the Application of Leniency System in Horizontal Monopoly Agreement Cases of the Anti-Monopoly Commission of the State Council."
Article 12 Industry Association
Industry associations must not organize API operators to reach monopoly agreements, nor provide conveniences for API operators to reach monopoly agreements.
Chapter III Abuse of Dominant Market Position
The "Anti-Monopoly Law" prohibits operators with dominant market positions from engaging in behaviors that abuse their dominant market positions to eliminate or restrict competition.
To identify the abuse of dominant market position in the field of APIs, Chapter 3 of the Anti-Monopoly Law and the Interim Provisions on Prohibition of Abuse of Dominant Market Position apply.
Under normal circumstances, it is first necessary to define the relevant market, analyze whether the operator has a dominant market position in the relevant market, and then analyze whether it constitutes an abuse of the dominant market position according to the case.
Article 13 Determination of market dominance
To determine whether an API operator has a dominant position in the relevant market, it should be analyzed based on the factors and circumstances that determine or presume that the operator has a dominant market position as stipulated in Articles 18 and 19 of the Anti-Monopoly Law.
Combined with the characteristics of the API industry, the following factors can be specifically considered:
(1) The market share of API operators;
(2) Relevant market competition conditions;
(3) Actual production capacity and output of API operators;
(4) The ability of the API business operator to control the API sales market or purchase market;
(5) The financial resources and technical conditions of the API operator;
(6) The degree of dependence of the counterparty of the transaction on the API operator;
(7) The number of actual and potential transaction counterparties, and the ability of transaction counterparties to check and balance API operators;
(8) The degree of difficulty for other API operators to enter the relevant market.
When evaluating the market share of an API distribution company, factors such as its sales, sales volume, inventory, and the distribution company's control of the production company's sales volume can be considered.
When there is evidence that an API operator has actual control over other operators, the market share of the API operator and the operator under actual control are generally combined for calculation.
Article 14: Common abuses of market dominance
From the perspective of law enforcement practice, common abuses of market dominance in the field of APIs include selling APIs at unfairly high prices, refusing to trade with counterparties, restricting counterparties to trading with them, tying products, or attaching non-compliance to transactions. Reasonable transaction conditions, differential treatment to counterparties in transactions with the same conditions, etc.
Article 15 Unfairly high prices
An API operator with a dominant market position abuses its dominant market position and sells APIs at unfairly high prices, which not only eliminates and restricts market competition, pushes up the market prices of APIs and related drugs, and damages the legitimate rights and consumption of counterparties. It also causes the national medical insurance fund to be wasted.
To analyze whether the above behavior is constituted, the following factors can be considered:
(1) The selling price is significantly higher than that of other operators selling the same type of API or comparable APIs under the same or similar market conditions, and the cost changes during the relevant period;
(2) The sales price is significantly higher than the price of the raw material medicine sold by the same operator in other regions with the same or similar market conditions;
(3) When the market environment is stable and the cost (purchase price) is not significantly affected, increase the selling price of APIs beyond a reasonable range;
(4) When the cost (purchase price) is increasing, the price increase of the sales of raw materials is significantly higher than the cost increase;
(5) Selling APIs at high prices through other operators through transfer tickets and other methods.
Article 16 Refusal to deal
An API operator with a dominant market position abuses its dominant market position, refuses to sell APIs without proper reason, eliminates or restricts market competition, affects the normal supply of drugs, and harms the legitimate rights and interests of counterparties and consumers.
To analyze whether the above behavior is constituted, the following factors can be considered:
(1) Without a valid reason, in the process of conducting transactions with the counterparty, substantially reduce the current sales volume with the counterparty or delay or interrupt the existing transactions with the counterparty;
(2) Refusing to start a new transaction with the counterparty without a valid reason;
(3) Refusing to trade with the counterparty after underwriting the API without a valid reason;
(4) Setting restrictive conditions without justifiable reasons, in a disguised form, making it difficult for the counterparty of the transaction to conduct transactions with it.
Article 17 Restricted Transactions
An API operator with a dominant market position abuses its dominant market position. There is no legitimate reason to restrict the counterparty of the transaction to only trading with it or only with the designated operator, eliminating or restricting market competition and affecting the normal supply of drugs. Damage the legitimate rights and interests of the counterparty and the interests of consumers.
To analyze whether the above behavior is constituted, the following factors can be considered:
(1) Without proper reason, the counterparty of the transaction is restricted to only purchase or sell APIs from it, and may not conduct transactions with other operators;
(2) There is no legitimate reason to restrict the counterparty to the transaction to only purchase or sell APIs from the business operator designated by it;
(3) Without justified reasons, the trading counterparty shall not be allowed to trade APIs with specific operators.
Article 18 Tying
An API operator with a dominant market position abuses its dominant market position, does not have a legitimate reason to sell products, eliminates or restricts market competition, and damages the legitimate rights and interests of counterparties and consumers.
To analyze whether the above behavior is constituted, the following factors can be considered:
(1) Tying other APIs;
(2) Tying of pharmaceutical excipients, packaging materials, medical equipment, etc.;
(3) Tying drugs;
(4) Tying other commodities.
Article 19 Additional unreasonable trading conditions
An API operator with a dominant market position abuses its dominant market position, attaches unreasonable trading conditions to transactions involving APIs, eliminates or restricts market competition, and harms the legitimate rights and interests of counterparties and consumers.
To analyze whether the above behavior is constituted, the following factors can be considered:
(1) Require drug manufacturers to deliver all or part of their drugs for sale;
(2) Require pharmaceutical manufacturers to sell pharmaceuticals in accordance with designated transaction objects, prices, quantities and other conditions;
(3) Require pharmaceutical production enterprises or distribution enterprises to provide pharmaceutical revenue sharing;
(4) Request to provide an unreasonable security deposit, or add other unreasonable expenses in addition to the price of the raw material;
(5) Impose unreasonable restrictions on the contract period, payment method, transportation and delivery method of API sales;
(6) Impose unreasonable restrictions on the sales area and sales target of APIs or drugs;
(7) Attach other unreasonable trading conditions that have nothing to do with the subject matter of the transaction.
Article 20 Differential Treatment
An API operator with a dominant market position abuses its dominant market position and does not have a legitimate reason to impose different trading conditions on counterparties with substantially the same conditions, eliminate or restrict competition, and harm the legitimate rights and interests of counterparties and consumers.
Analyze whether it constitutes the above behavior, and under the same trading conditions, the following factors can be considered:
(1) The transaction prices or discounts granted for APIs are obviously different;
(2) The quality and grade of the API are obviously different;
(3) The payment method and delivery method of the raw material drug transaction and other conditions that affect the counterparty of the transaction to participate in market competition are obviously different.
Article 21 Other abuses of market dominance
If an operator in the field of APIs purchases products at unfairly low prices, sells products at prices below cost, and other abuses of market dominance identified by the Anti-Monopoly Law Enforcement Agency of the State Council, it shall be based on Chapter 3 and the “Anti-Monopoly Law”. Analysis of the Interim Provisions on Prohibition of Abuse of Dominant Market Position.
Article 22 Joint abuse of market dominance
Two or more API operators are responsible for the division of labor and cooperate with each other to implement the monopolistic behaviors stipulated in this chapter, which may constitute a joint abuse of market dominance.
In determining that two or more API operators have a dominant market position, factors such as market structure, relevant market transparency, degree of homogeneity of relevant commodities, and consistency of operator behavior should also be considered.
Chapter IV Concentration of Undertakings
《反垄断法》禁止经营者实施具有或者可能具有排除、限制竞争效果的经营者集中。原料药行业经营者集中的反垄断审查与其他行业并无显著差别，达到《国务院关于经营者集中申报标准的规定》(以下简称《规定》)中申报标准的经营者集中，应当事先向国务院反垄断执法机构申报，未依法申报的不得实施集中。国务院反垄断执法机构依据《反垄断法》《规定》和《经营者集中审查暂行规定》，对原料药领域的经营者集中进行审查，并对违法实施的经营者集中进行调查处理。
第二十三条 未达申报标准的经营者集中
由于部分原料药品种市场规模相对较小，经营者年度营业额可能没有达到《规定》中的申报标准。但当该品种原料药经营者数量较少，在相关市场的市场份额和市场集中度较高时，经营者实施的集中具有或者可能具有排除、限制竞争的效果，参与集中的经营者可以主动申报。
原料药领域的经营者集中未达到《规定》的申报标准，但有证据表明该经营者集中具有或者可能具有排除、限制竞争效果的，国务院反垄断执法机构应当依法进行调查。
第二十四条 经营者与执法机构的商谈
对于可能符合本指南第二十三条情形的经营者集中，鼓励原料药经营者在实施集中前，尽早就相关问题与反垄断执法机构进行商谈。
第五章 滥用行政权力排除、限制竞争
《反垄断法》禁止行政机关和法律法规授权的具有管理公共事务职能的组织滥用行政权力排除、限制竞争。滥用行政权力排除、限制原料药市场竞争的行为，由反垄断执法机构依据《反垄断法》等相关法律、法规处理。
第二十五条 滥用行政权力限定交易或者限制商品自由流通行为
行政机关和法律法规授权的具有管理公共事务职能的组织从事下列行为，排除、限制原料药市场竞争，属于《反垄断法》所禁止的行为：
(一)限定或者变相限定单位或者个人经营、购买、使用其指定的经营者提供的原料药；
(2) Setting discriminatory standards and policies for foreign API operators, adopting discriminatory technical measures, or adopting administrative licensing, filing, checkpoints, and shielding methods specifically for foreign API operators to restrict foreign API operators Enter the local market and hinder the free circulation of raw materials from other places;
(3) By setting discriminatory qualification requirements, review standards, or not publishing information in accordance with the law, exclude or restrict foreign API operators from participating in local tendering and bidding activities;
(4) Adopt unequal treatment with local API operators and other methods to exclude or restrict foreign API operators from investing or setting up branches locally.
Article 26 Abuse of administrative power to force business operators to engage in monopolistic behavior
The compulsory or disguised compulsion of API operators to engage in monopolistic activities by administrative agencies and organizations authorized by laws and regulations to manage public affairs is prohibited by the Anti-Monopoly Law.
Article 27 Fair Competition Review
Administrative agencies and organizations authorized by laws and regulations that have the function of managing public affairs formulate market access and exit, industrial development, investment promotion, bidding and bidding, government procurement, business practices, qualification standards, and other economic activities involving market entities in the field of APIs Regulations, regulatory documents, other policy documents, and specific policy measures in the form of "one matter, one discussion" shall be subject to fair competition review in accordance with the provisions of the State Council.
Chapter VI Supplementary Provisions
Article 28 Scope of Application
This guideline applies to upstream chemical raw materials and pharmaceutical intermediates required for the production of APIs and pharmaceutical excipients.
Article 29 Interpretation of the Guidelines
This guide is interpreted by the Anti-Monopoly Committee of the State Council and will be implemented as of the date of promulgation.