China’s First Antitrust Enforcement Case Concerning Individual Penalties For Collusion

16 April 2025

KWM China’s insights on China’s first antitrust enforcement case involving penalties against an individual for collusion.

On 21 March 2025, China’s antitrust enforcement authority imposed administrative penalties against three pharmaceutical companies for engaging in price-fixing and market division agreements, with fines and confiscations amounting to 223 million RMB (approximately AU$ 48,110,644). This case marked the first instance in China where a penalty has been issued against an individual for collusive conduct, serving as a reminder that antitrust compliance is necessary at both the organisational and individual level.

An investigation conducted by the enforcement authority between January 2020 and December 2023 revealed that the 3 pharmaceutical companies colluded to inflate the price of a commonly used aesthetic by up to 11 to 21 times, and coordinated market segmentation by sharing distributors and agreeing not to compete for existing clients. Company X was found to have led organisation of the collusive agreements, while its sales manager (known as Individual A) was found to have led negotiations with the other companies. Individual A was fined 500,000 RMB (AU$107,500).

This decision also demonstrates the impact of the Leniency Guidelines for Horizontal Monopoly Agreements in promoting self reporting for collusive conduct. Company X received an 80% reduction of fines for being the first to report the misconduct to the authorities and provide evidence of the collusion. The decision is therefore a timely reminder of the benefits of self-reporting and being first in line for leniency.

For more information on key takeaways from the decision, have a read of the original insights prepared by some of our KWM China colleagues below.

I. Case Overview

The investigation by the enforcement authority revealed that from January 2020 to December 2023, 3 pharmaceutical companies in China colluded to inflate the price of Methanesulfonic Acid Neostigmine Injection (a commonly used aesthetic) by 11 to 21 times and coordinated market segmentation by sharing distributors and agreeing not to compete for existing clients (e.g., public and private hospitals nationwide). The investigation also revealed that Company X played a leading role in organising the collusive agreements and a sales manager (Individual A) from Company X’s sales department spearheaded the negotiations with the other two companies and oversaw the implementation of the agreements.

The penalty decision also highlighted that during the investigation Company X was the first to report the misconduct to the authorities and provided important evidence of collusion. As a result, pursuant to the Leniency Guidelines for Horizontal Monopoly Agreements, the fines against Company X were reduced by 80%.

Penalty Details

Parties Involved	Penalties	Key Considerations for Penalties
Company X	10% of 2023 sales revenue, reduced by 80% because of leniency Confiscation of illegal gains	deemed as the leading organizer of the collusive agreements the first to self-report the misconducts and provided key evidence
Sales Manager of Company X (Individual A)	Fine of 500,000 RMB	Directly responsible for negotiating and implementing the agreements Cooperated fully with the investigation
Other Two Companies	4% of 2023 sales revenue respectively Confiscation of illegal gains	not deemed as the leading organizer of the agreements Actively cooperated with the investigation and reduced drug prices post-enforcement

II. Key Takeaways

1. Be alert to potential individual liability for monopoly agreement violations

The 2022 amendments to the Anti-Monopoly Law of the People’s Republic of China (AML (2022)) significantly enhanced penalties for antitrust violations that corporations may face. Notably, AML (2022) also introduced an individual liability clause, which states:

‘legal representatives, principal responsible persons, and directly liable personnel of business operators who bear personal responsibility for concluding monopoly agreements may be fined up to RMB 1 million.’

This case marks the first application of the above individual liability clause by the antitrust enforcement authorities. This case also demonstrated the authority’s commitment to penalise both the corporations as well as responsible individuals in order to deter potential antitrust misconducts. In light of this case, KWM China advise that corporate management should heighten antitrust compliance awareness among employees in high-risk roles (e.g., sales, pricing, and market strategy teams). Potential means for achieving this purpose include strengthening internal compliance mechanisms, enhancing employee training, introducing employee compliance pledges, etc.

2. Applying leniency through self-reporting to seek reduced penalties

If a corporation discovers its potential involvement in collusive agreements, it may proactively apply for leniency to seek reduced or waived penalties. Article 56 of AML (2022) establishes the leniency regime, stipulating:

‘Where a business operator voluntarily reports to the antitrust enforcement authority details about a monopoly agreement and provides important evidence, the authority may, at its discretion, mitigate or exempt the operator from penalties.’

China’s Leniency Program outlined by the Leniency Guidelines for Horizontal Monopoly Agreements includes a marker system which incentivizes corporations to self-report antitrust misconducts as early as possible. The first applicant will obtain a provisional “first-in marker” with 30-60 days to provide evidence of collusive conducts in order to secure “first-in marker”. The party that secures a “first-in marker” is eligible for an 80%-full reduction of fines. For the “second-in marker”, penalties may be reduced by 30% to 50%, and for the “third-in marker”, by 20% to 30%.

In this case, Company X was the first to report the misconducts to the authority, leading to an 80% reduction of its penalty (from the basis of 10% of its 2023 sales revenue). This case demonstrates that self-reporting is an important mechanism for corporations to mitigate potential consequences of collusive conducts in China, granted that there are many factors to consider in applying leniency, including timing of self-reporting and whether the applicant can provide evidence of misconducts. Based on KWM China’s experiences, effective communication with the enforcement authorities will also be key to a favourable result.

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