[co-author: Ken Dai]
On May 9, 2025, the Tianjin Municipal Administration for Market Regulation (“Tianjin AMR”) announced administrative penalties against four manufacturers of dexamethasone sodium phosphate (“DSP”) active pharmaceutical ingredients (“APIs”) for engaging in a horizontal monopoly agreement.1 The total fines and confiscated gains imposed on three of the companies amount to RMB 354 million (approximately $49 million). The penalty decision against the fourth company is pending, as the case is still under administrative hearing. Notably, one individual—identified as the key organizer of the cartel—was fined RMB 5 million (approximately $694,000), representing the largest known antitrust fine imposed on a natural person in China to date.
DSP is used in the treatment of COVID-19 and experienced a surge in demand during the pandemic. Starting in 2021, four API manufacturers, under the coordination of an individual named Guo Xiangguo, entered into price-fixing agreements and jointly raised prices. The cartel allegedly employed supply disruptions as a means to manipulate market conditions, resulting in a sharp increase in API prices over a two-year period and, in turn, led to increased prices for finished formulations—ultimately harming patients' access to essential medication.
This is the first time Chinese antitrust enforcement has penalized an individual for organizing a horizontal monopoly agreement. Moreover, corporate executives from the implicated firms were also fined, signaling an evolving trend toward dual liability for both enterprises and responsible individuals. The enforcement approach taken in this case provides meaningful compliance guidance and a strong deterrent signal to the pharmaceutical industry.
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Factual Background and Alleged Anticompetitive Conduct
According to the published penalty decisions, the case centers on Guo Xiangguo’s orchestration of a horizontal monopoly agreement among four pharmaceutical companies that produce DSP APIs.
Beginning in October 2021, Guo approached executives at Tianjin Tianyao Pharmaceuticals Co., Ltd. (“Tianjin Pharma”), Zhejiang Xianju Pharmaceutical Co., Ltd. (“Xianju Pharma”), Jiangsu Lianhuan Pharmaceutical Co., Ltd. (“Lianhuan Pharma”), and Xi’an Guokang Ruijin Pharmaceutical Co., Ltd. (“Ruijin Pharma”), aligning market behavior in order to raise prices for the API.
On November 20, 2021, Guo convened representatives of the four companies in Tianjin, where they agreed to cease price competition and jointly raise prices. In the months that followed, Guo held multiple follow-up meetings with senior executives from the companies to coordinate pricing strategies, including the scale and timing of price increases. As a result, the price of the API was gradually pushed above RMB 13,000 per kilogram.
To reinforce the effects of the price-fixing agreement, the companies also engaged in coordinated supply restrictions, including supply disruptions, to tighten market availability and exert additional pressure on buyers. Guo further stabilized the arrangement by orchestrating bulk “backstop” purchases of the API through affiliated entities under his control, reducing the perceived risk of oversupply and incentivizing cartel adherence.
The cartel operated for over two years, substantially distorting competition in the API market. It also had a negative impact on healthcare costs, contributing to higher expenditures from the national medical insurance fund and limiting patient access to treatment.
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Legal Basis and Enforcement Focus
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First Enforcement of Article 19 Against a Natural Person for Organizing a Monopoly Agreement
This case represents the first known application of Article 19 of China’s Anti-Monopoly Law (“AML”), as amended in 2022, to impose administrative penalties on a natural person for organizing a monopoly agreement. According to the penalty decision, Guo Xiangguo was not an employee or representative of any of the four implicated companies. Nonetheless, he served as a “coordinator”, facilitating the negotiation and implementation of the price‑fixing cartel. For this conduct, the Tianjin AMR imposed a fine of RMB 5 million.
This is the first instance in which Article 19 has been applied in practice to an individual. Under the revised AML, Article 15 clarifies that “undertakings” include natural persons, thereby subjecting them to liability for monopolistic conduct. In addition, Article 56(1) allows for a fine of up to RMB 5 million in cases where the undertaking has no turnover in the preceding fiscal year.
Although Guo did not trade in his own name or operate through a corporate entity, the authority imposed the statutory maximum. The case affirms that natural persons acting as cartel coordinators—regardless of formal status—may be held directly liable under the AML.
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Leniency Remains a Key Enforcement Tool in Horizontal Cartel Cases
Among the four sanctioned API producers, Tianjin Pharma received the most substantial fine reduction—80%—after voluntarily disclosing its participation in the cartel and submitting key evidence during the investigation. In contrast, Xianju Pharm did not apply for leniency and received the highest monetary sanction of all parties.
Under the Provisions on Prohibition of Monopoly Agreements, the first undertaking to proactively report cartel conduct and provide significant evidence may receive full immunity or a reduction of no less than 80% in fines. The second and third applicants may be eligible for reductions of 30–50% and 20–30%, respectively, depending on their cooperation and the timing of their disclosure.
Notably, leniency remains available even after an investigation has commenced. According to the State Council’s Guidelines on Application of Leniency Program in Horizontal Monopoly Agreement, companies may apply at any stage before the formal penalty notice is issued—even if the authority has already discovered crucial evidence. In practice, a company’s timely risk assessment, prompt action, and credible evidence submission often determine the extent of leniency available.
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Dual Liability for Undertakings and Executives: A Normalizing Enforcement Trend
In addition to corporate fines, Tianjin AMR also imposed administrative fines on directly responsible individuals under Article 56 of the AML. Zhang Yusong, Chairman and Legal Representative of Xianju Pharma; Zhang Huabin, General Manager and Legal Representative of Ruijin Pharma; and Liu Xin, General Manager of Tianjin Pharma—each were fined RMB 600,000.
This case marks the second application of Article 56 against natural persons since the April 2025 horizontal monopoly agreement case involving Shanghai Sine United Medicine Co., Ltd. and others. It underscores the ongoing implementation of the “enterprise + individual” dual‑liability mechanism, reinforcing the legal consequences for company executives who bear decision-making responsibility for anti-competitive conduct.
This approach strengthens the deterrent effect of enforcement and signals heightened compliance expectations for corporate governance. By holding decision-makers personally responsible, the enforcement regime incentivizes companies to identify risks early, improve internal controls, and prevent anticompetitive conduct at its source.
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Repeat Violations Highlight the Need for Substantive Compliance
This case marks the fourth antitrust penalty imposed on Tianjin Pharma and its affiliates in recent years. In 2021, the company was fined RMB 44 million by the Tianjin AMR for colluding with rivals to allocate markets and fix prices for fluocinolone acetonide APIs. In 2023, a subsidiary was penalized in Tianjin for abusing dominance in the carmustine injection market, while a sub-subsidiary was fined in Shanghai for entering into a price-fixing and market allocation agreement involving fluorouracil injections.
These cases involved both horizontal agreements and abuse of dominance across various legal entities within the corporate structure, exposing recurring weaknesses in the group’s internal controls. For pharmaceutical companies with complex structures and broad product portfolios, group-wide compliance systems and executive accountability mechanisms are essential to mitigate enforcement risk.
Seventeen years after China’s AML came into effect, many companies—particularly in sectors like pharmaceuticals—have established compliance programs under increasing regulatory pressure. Yet in practice, these programs often remain superficial. In some cases, companies respond to suspected violations by concealing or destroying evidence, rather than addressing governance weaknesses or reassessing management accountability and business conduct.
This case reflects a broader shift toward substantive compliance. It demonstrates that fair competition must not only be a policy objective, but a principle embedded in corporate governance, risk management, and strategic decision-making.
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Heightened Scrutiny in the Pharmaceutical Sector: Cartels Enter a More Sophisticated, Concealed Phase
This case reflects the continued intensity of antitrust enforcement in China’s pharmaceutical sector—a priority area for regulators given its public health relevance and repeated exposure to cartel behavior. In 2023, pharmaceutical fines reached RMB 1.77 billion—81.8% of total antitrust penalties—making it the most heavily sanctioned sector.
Historically, APIs have been a focal point for enforcement. Structural conditions such as high market concentration, entry barriers, and lack of generic drug innovation capacity have made API markets especially prone to collusion and dominance abuse. In a 2020 case involving calcium gluconate APIs, the authority imposed the statutory maximum fine of 10% for egregious violations and non-cooperation, and even initiated criminal proceedings against the company’s legal representative , reflecting the intensity of enforcement in this area.
In recent years, enforcement has also expanded to finished drugs and medical devices, with resale price maintenance (RPM) drawing increasing attention. A notable case is the 2021 RPM case against Yangtze River Pharmaceutical, which was fined RMB 764 million for implementing vertical price restrictions across its corporate group.
Meanwhile, horizontal cartels are becoming more concealed and coordinated. In this case, the four companies agreed to communicate indirectly through Guo Xiangguo, who relayed pricing schedules and implementation plans to each firm individually. This structure reduced traceability and heightened the challenge for investigators.
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Outlook: End-to-End Accountability and Continued High-Pressure Enforcement
As a landmark case under intensified pharmaceutical antitrust enforcement, this ruling exemplifies critical trends—individual organizer liability, dual penalties for executives, strategic leniency application, and increasingly covert collusion—marking a shift toward more precision-oriented, specialized, and uncompromising oversight.
On one hand, enforcement authorities are deepening the application of the AML. Article 19 was invoked for the first time to sanction a natural person orchestrating collusion independently, while Article 56 penalties targeted complicit executives, signaling unambiguous intent to pursue accountability at all levels. On the other hand, the leniency program’s flexible deployment continues to incentivize early reporting and dismantle cartels efficiently.
More importantly, the case highlights emerging enforcement challenges—sophisticated evasion, decentralized coordination, and heightened concealment—are accelerating a transition to technology-driven, data-enabled enforcement. Regulators are likely to invest further in evidence analysis and systemic monitoring to address these complexities.
Looking ahead, enforcement in China’s pharmaceutical sector is expected to remain forceful. Authorities are likely to pursue high-impact cases with greater focus on deterrence, and will continue to emphasize personal accountability—including for external organizers and senior executives—as a core element of antitrust strategy.
Note List
1. On May 9, 2025, with the exception of Jiangsu Lianhuan Pharmaceutical Co., Ltd., whose penalty decision is still at the hearing stage, the remaining penalty decisions had all been published on the official website of the Tianjin AMR. https://scjg.tj.gov.cn/tjsscjdglwyh_52651/xwdt/xzcfxxgs/sjxzcfxx/
