Rainbow v. Johnson & Johnson: RPM Litigation in China

Mar 19, 2014

Edgeworth partner Dr. Fei Deng and co-author Dr. Su Sun commented on the parties’ economic analyses and the judges’ decision in China’s first resale price maintenance (RPM) case, Rainbow v. Johnson & Johnson, in their article published in the March 2014 issue (Vol. 18, No. 1) of the Distribution newsletter, published by the Distribution and Franchising Committee of the ABA Section of Antitrust Law.

In Rainbow v. Johnson & Johnson, the Shanghai High Court set an important precedent of applying the rule of reason approach to RPM cases in China. Rainbow v. Johnson & Johnson is further notable for its holding that a distributor has standing to challenge an RPM agreement even when the distributor signed the agreement and for the decision’s holdings on admissibility of evidence and on the role played by contract law in assessing antitrust damages. 

In their article, Drs. Deng and Su evaluated and commented on the analyses conducted by the parties’ economic experts and the court’s decision. They concluded that although some of the High Court’s reasoning may be subject to debate, the lengthy and carefully drafted decision reflects the Chinese judiciary’s increasing sophistication in adjudicating complex antitrust cases. As such, both plaintiffs and defendants engaged in antitrust litigation in China need to formulate legal theories and strategies carefully, and have them supported by strong factual evidence and solid economic analysis.

Dr. Deng also previously commented on Rainbow v. Johnson & Johnson in Chinese in her article published at Caixin.com. 

Read the article from the Distribution newsletter.

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