7th China Competition Policy Forum

Despite the escalating trade war between the US and China, senior officials from 14 competition agencies and international organisations gathered in Beijing in late July to mark the 10th year of China’s Antimonopoly Law enforcement. The two-day event, organized by the Expert Advisory Board of the State Council’s Antimonopoly Commission (AMC), welcomed more than 300 participants, from enforcers and practitioners to company executives and antitrust academics. The China Competition Policy Forum has become an important annual event on the international antitrust calendar. This year’s theme – Competition Policy in a New Era – produced a wealth of critical information on worldwide regulatory developments and legal precedent, which PaRR has compiled in a comprehensive report capturing the highlights and insights delivered by antitrust experts from the lectern and on the sidelines. 

China’s antitrust consolidation to reduce overlapping functions, says SAMR deputy minister

China’s ongoing antitrust consolidation aims to remove the duplication of functions previously undertaken by three different agencies while establishing a unified, highly efficient and authoritative antitrust regime, according to a senior official from the State Administration for Market Regulation (SAMR).

Delivering a keynote speech at the 7th China Competition Policy Forum in Beijing today (31 July), Gan Lin, the deputy minister of the SAMR in charge of antirust, said that China has consistently made efforts to improve antitrust enforcement during the past 10 years and will continue to strengthen the fundamental position of competition policy in the country’s economy.

This year marks the 10th anniversary of China’s Antimonopoly Law (AML), which was adopted in 2007 and took in force in 2008. Over the past ten years, the AML was enforced by three separate agencies, with the Ministry of Commerce (MOFCOM) overseeing merger reviews, the National Development and Reform Commission (NDRC) regulating pricingrelated monopoly behavior and the State Administration for Industry and Commerce (SAIC) supervising non pricing-related monopoly conduct.

Over the past 10 years, China has reviewed 2,283 mergers valued at around CNY 4 trillion. Among those cases, China blocked Coca Cola buying Huiyuan Juice in 2009 and the P3 shipping alliance in 2014. A total of 36 cases have been cleared with conditions, including Microsoft’s acquisition of Nokia, and the Dow and Dupont merger of equals, said Gan.

The average review time for mergers in 2017 was 50% shorter than in 2013 and all simple cases can be completed in the initial stage, i.e. 30 days.

Over the same time period, China has also investigated 163 monopoly agreement cases including the roll-on/roll-off shipping cartel; 12 Japanese auto parts manufacturers for cartel conduct; 54 cases concerning the abuse of dominance, including Qualcomm and Tetra Pak. The overall financial penalties amounted to over CNY 11bn.

Breaking geographic segmentation and industrial monopolies were key tasks on the three antitrust agencies’ agenda, said Gan. A total of 183 cases involving administrative monopoly have been investigated across 12 provinces in the country.

Looking forward, Gan said China will continue to enhance antitrust enforcement in areas such as telecommunications, semiconductors and agrochemicals. Industries closely connected to people’s everyday lives like electricity, water, gas supply, education and medical services will also be watched closely for any potential monopoly behavior.

With the SAMR undertaking a unified antitrust function, it will further promote amendment of the AML and supplementary regulations and guidelines. The SAMR will continue to strengthen enforcement of the Fair Competition Review System, to remove non-competitive government policies while regulating new ones.

Meanwhile, all antitrust cooperation agreements signed by the previous three agencies with other jurisdictions will continue to be effective and cooperation will be further enhanced, said Gan.

EC merger chief lauds cooperation with China

The European Commission (EC) has had full cooperation with China’s Ministry of Commerce (MOFCOM) on more than 40 mergers since 2009, according to a senior EC official.

Speaking at the 7th China Competition Policy Forum in Beijing on 31 July, the EC’s DG Comp merger chief Carles Esteva Mosso said that China has become the third most important partner for the EC in complex merger cases, adding that this cooperation would continue in the years ahead.

The two jurisdictions have discussed most aspects of the merger review process, including simplified procedures, notifications and procedures for the review of concentrations in recent years, Esteva Mosso said.

There has also been discussion of draft guidelines on leniency, the suspension of investigations, exemptions, fine calculations and IPR-related guidelines, he added.

In June 2017, the EU signed a memorandum of understanding with China’s National Development and Reform Commission (NDRC) on antitrust enforcement which allows for full cooperation on issues ranging from enforcement to subsidy control.

The secret to successful cooperation between the EU and China is to share and discuss issues of common interests in a mutually respectful manner and allow both sides to learn from each others’ experiences, Esteva Mosso said.

Full cooperation between EU and China is very important in tackling common challenges that both sides face in the years ahead, Esteva Mosso added.

Both sides need an effective enforcement system that provides sufficient investigative tools, speedy decision making and transparent, procedural fairness, Esteva Mosso said. Striking the right balance between these aspects is not easy, he added.

The EU competition system places a high value on the principle of openness. Esteva Mosso said, adding that in recent years China has increased its transparency. Openness and transparency enhance predictability and respect of the law and therefore contribute to full and effective enforcement. Procedural fairness ensures that parties can present their concerns and help authorities make better decisions, Esteva Mosso said.

“We believe the most important value is [the] speedy resolution of cases,” he said. Speed is an important focus of DG Comp’s merger proceedings, he said, adding that China has been making particular progress in speeding up decision making. Some additional efforts need to be made to speed up the resolution process and reduce risks to businesses, according to Esteva Mosso. 

Eye on Europe

Acquisitions by Chinese companies in Europe have been on the rise, Esteva Mosso said. Citing DG Comp statistics, he said Chinese investment into Europe has increased significantly since 2011, reaching a relatively constant level of around EUR 6bn to EUR 8bn per year.

Attention needs to be paid to the impact of state-owned enterprises (SOEs) on competition, Esteva Mosso said, adding that some tools need to be created to ensure a fair competitive environment.

Esteva Mosso praised China’s Fair Competition Review System — a process to review new government policies for potentially anticompetitive effects — and said the EU faces similar challenges and it has a special department to take care of this issue.

Recently, more and more mergers require bilateral or multiple cooperation among agencies, Esteva Mosso said. This is why multiple or bilateral cooperative frameworks such as the Organisation for Economic CoOperation and Development (OECD) and International Competition Network (ICN) platforms are needed to allow authorities to share their experiences.

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