Camphor, a kind of medicinal article with antiseptic, insect repellent and other functions common in life, has a wide range of uses. Recently, the Jiangsu Provincial Market Supervision Bureau announced a monopoly case involving the domestic medicinal camphor API market, and the price of camphor products involved in the case increased by up to 50%.
In June 2021, the Jiangsu Provincial Market Supervision Bureau made an administrative penalty decision on the conclusion and implementation of a monopoly agreement between Wuzhou Huangpu Chemical Pharmaceutical Co., Ltd. (hereinafter referred to as Wuzhou Huangpu), Suzhou Youhe Technology Co., Ltd. (hereinafter referred to as Suzhou Youhe) and Jiangsu Jiafu Pharmaceutical Co., Ltd. (hereinafter referred to as Jiangsu Jiafu), with a total amount of about 16.8842 million yuan.
After the enterprise stops production, it negotiates with the opponent to divide the sales market
According to the administrative penalty decision, the Jiangsu Provincial Market Supervision Bureau received a clue from the State Administration for Market Regulation in July 2019 and launched a case investigation in September of the same year.
According to the difference in source, camphor can be divided into two categories: natural camphor and synthetic camphor, and synthetic camphor is divided into industrial grade and medicinal grade. Domestic enterprises with synthetic camphor production approvals and on sale are Wuzhou Huangpu and Suzhou Youhe, and natural camphor has Jiangsu Jiafu.
During the investigation, the Jiangsu Provincial Market Supervision Bureau commissioned a professional research institution to discuss the interchangeability of natural camphor and synthetic camphor. The results showed that although the source and ingredients were different, the vast majority of medicinal standards and literature reports were not used separately, and the use of synthetic camphor was limited to individual prescriptions. Camphor (hereinafter referred to as CP camphor) products that meet the standards of the Chinese Pharmacopoeia (CP) should include both natural camphor and synthetic camphor, which can be used interchangeably in most cases.
It can be seen that natural camphor and synthetic camphor have a relatively close substitution relationship, and the products sold by the three enterprises belong to the same related market, that is, the domestic medicinal camphor API market, and the enterprises involved constitute a direct competitive relationship in the domestic market business activities.
The subsequent agreement signed between Wuzhou Huangpu and Suzhou Youhe further confirms this. In November 2017, Suzhou Youhe stopped producing camphor due to environmental protection and entrusted Wuzhou Huangpu to process industrial-grade camphor. In March 2018, in addition to signing a commissioned processing contract, the two parties also signed a supplementary agreement.
The supplementary agreement requires that Suzhou Youhe need to assist Wuzhou Huangpu to develop the CP camphor market after stopping production and switching to wholesale and retail services, so that its sales volume in 2018 will increase by 50%. If the increase is less than 50%, the commissioned processing fee will increase by 10,000 yuan per ton; if the increase is less than 27%, the commissioned processing contract will be automatically cancelled. At the same time, if the average retail price of CP camphor, including tax, drops below 200,000 yuan / ton, then the processing contract must also be negotiated again.
After the signing of the agreement, the market share of Wuzhou Huangpu in 2018 increased by 59.2%, and the average sales price increased from 172,400 yuan / ton to 251,700 yuan / ton. In order to perform the contract, Suzhou Youhe once proposed that the inventory quantity was insufficient and close to the expiration date when the customer inquired, and it was consistent with the quotation of Wuzhou Huangpu, prompting the customer to finally place an order with Wuzhou Huangpu.
The agreement signed by the two parties also shows that its customers may flow to Jiangsu Jiafu after Suzhou Youhe stops production. From the perspective of sales volume, after the suspension of suzhou youhe, the sales volume and market share of the other two companies have increased, which once again shows the fungibility of natural camphor and synthetic camphor.
Regulators believe that the two contracts involve industrial-grade camphor and CP camphor, respectively, and that neither is part of the same market. The purpose of the supplementary agreement signed by the two parties is obviously to be bound by the entrusted processing contract, stipulating that Suzhou Youhe will help Wuzhou Huangpu expand its market share and maintain a selling price of not less than 200,000 yuan / ton.
This act essentially belongs to the division of the CP camphor sales market, which violates the provisions of article 13, paragraph 1 of the Anti-Monopoly Law, which prohibits business operators with competitive relationships from entering into the following monopoly agreements: (3) dividing the sales market or raw material procurement market.
The sales prices of the three companies have risen continuously, up to 50%
In addition, the three companies involved also inquired about each other's market conditions and negotiated sales prices through meetings, WeChat, telephone and other means. During the 2018 Shanghai Pharmaceutical Exhibition, the three companies communicated on maintaining price stability and not engaging in vicious competition, and also proposed to notify each other in advance when selling inventory at low prices.
In the face of customer inquiries, the three parties also negotiated quotations many times. For example, Suzhou Youhe and Jiangsu Jiafu have communicated many times to a customer's quotation since 2018. In order to cooperate with Jiangsu Jiafu's winning bid, Suzhou Youhe quoted a higher price than the market price at the request of Jiangsu Jiafu. In the transaction reached on October 31, 2018, Jiangsu Jiafu raised the transaction price from 209 yuan / kg to 284 yuan / kg, and has maintained it above 280 yuan / kg ever since. When the customer inquired on October 11, Jiangsu Jiafu informed himself of the quotation of 310 yuan / kg.
According to the sales data, the sales prices of the three enterprises have risen continuously, and the time and magnitude of price increases have shown strong consistency. The average sales price of Wuzhou Huangpu in 2018 increased by 46.0% compared with the previous year, and Suzhou Youhe rose by 50.4%. Jiangsu Jiafu adopted a strategy where the actual selling price was lower than the communicated price, with the average sales price in 2018 rising by 27.9% compared with the previous year.
The above-mentioned acts are fixed or changed prices, which directly harm the rights and interests of downstream enterprises and consumers, and violate the provisions of article 13, paragraph 1 of the Anti-Monopoly Law, which prohibits business operators with competitive relationships from reaching the following monopoly agreements: (1) fixing or changing commodity prices.
Paragraph 1 of Article 46 of the Anti-Monopoly Law stipulates that where a business operator reaches and implements a monopoly agreement, the Anti-Monopoly Law Enforcement Agency shall order it to stop the illegal act, confiscate the illegal gains, and impose a fine of not less than 1% but not more than 10% of the previous year's sales. At the same time, Article 49 makes it clear that when determining the specific amount, the anti-monopoly law enforcement agency shall consider factors such as the nature, extent and duration of the illegal act.
Accordingly, Wuzhou Huangpu was confiscated about 2.7208 million yuan of illegal gains, and fined about 6.0542 million yuan for 5% of the sales volume of the previous year, totaling more than 8.7749 million yuan.
Due to the fact that Suzhou Youhe took the initiative to admit illegal facts, provide a large amount of factual evidence, and take a series of measures such as timely self-examination and rectification to reduce the harmful consequences in the process of law enforcement, according to the relevant provisions of Article 27 of the Administrative Punishment Law on leniency or mitigating punishment in accordance with the law, the company was confiscated about 1.2084 million yuan of illegal gains, and fined about 2.9085 million yuan for 3% of the sales volume of the previous year, totaling more than 4.1168 million yuan.
In addition, the measures taken by Jiangsu Jiafu to reduce the actual selling price below the communication price objectively played a role in weakening the implementation effect of the monopoly agreement, which was in line with the relevant statutory mitigating situation. Therefore, Jiangsu Jiafu was confiscated 3.1931 million yuan of illegal gains, and fined about 799,300 yuan for 1% of the sales volume in the previous year, totaling more than 3.9923 million yuan.
Written by: Nandu reporter Huang Huishi
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