Hitachi Metals Wins Appeal in Landmark Antitrust Ruling by China’s Supreme People’s Court

In one of the few antitrust cases to appear before China’s Supreme People’s Court (SPC), a Compass Lexecon expert team provided testimony and analysis on behalf of Hitachi Metals (now Proterial) in their successful appeal of a first instance decision charging Hitachi Metals with abuse of dominance.

Hitachi Metals is a leading producer of magnetic materials headquartered in Tokyo, Japan. In December 2014, four Chinese producers (plaintiffs) of sintered neodymium-iron-boron (NdFeB) magnets alleged that Hitachi Metals had abused its dominant position in the patent licensing market for the sintered NdFeB essential patents held by Hitachi Metals, by refusing to license patents to the plaintiffs. In the first instance judgment, the Ningbo Intermediate People’s Court sided with the plaintiffs. Hitachi Metals appealed the decision and brought the matter to the SPC in July 2021.

Executive Vice President Dr. Vanessa Yanhua Zhang was retained by Hitachi Metals to provide expert reports and testimony in the appeal. Dr. Zhang testified that the relevant product market, in this case, should be the technology market of sintered NdFeB magnets rather than the narrower patent licensing market for the sintered NdFeB essential patents owned by Hitachi Metals. Dr. Zhang further testified that Hitachi Metals did not have a dominant position in the relevant market and therefore its actions did not constitute an abuse of market dominance.

On December 14, 2023, the SPC completely overturned the lower court’s verdict, finding that Hitachi Metals did not abuse its market dominance. In its decision, the SPC’s conclusion largely aligned with the economic analysis of Dr. Zhang, finding that the relevant product market should be the technology market of sintered NdFeB magnets and that Hitachi Metals did not have a dominant position in the relevant market.

Dr. Zhang was supported by Rita Li, Cecilia Li, and Richard Zhao, along with Dr. Yumin Li, and Dr. Xiaolan Zhou. The expert team worked closely with attorneys Dr. Hao Zhan and Dr. Ying Song from Anjie Broad Law Firm.