29 September, 2012
On 20 September 2012, the European Commission’s Directorate-General for Competition (DG COMP) signed a Memorandum of Understanding (“MoU“) on cooperation in the area of anti-monopoly law with China’s National Development and Reform Commission (“NDRC“) and State Administration for Industry and Commerce (“SAIC“).
DG COMP is in charge of enforcing the full range of antitrust rules under European Union law; in contrast, NDRC and SAIC are the authorities in China responsible for antitrust enforcement against cartels, other monopoly agreements and abuses of dominance – but not for merger control, for which the Ministry of Commerce (“MOFCOM“) has jurisdiction. MOFCOM is not part of the MoU, but has “terms of reference” for its dialogue with DG COMP since 2004, with content similar to the MoU.
Web of MoUs
The MoU is the latest of a series of international cooperation agreements with foreign antitrust regulators signed by NDRC and SAIC in the last few years. In 2011, for example, both NDRC and SAIC agreed with the UK’s Office of Fair Trading on separate MoUs, followed by a joint MoU with the US Federal Trade Commission and Department of Justice, as well as MOFCOM later that year. Likewise, in 2012, NDRC signed a MoU with the Korean Fair Trade Commission, while SAIC agreed on a cooperation agreement with Australia’s Competition and Consumer Commission.
In turn, the European Commission has signed MoUs with antitrust authorities in many jurisdictions around the world. In particular, the European Commission has established very close working relationships, for example, with the US, Canadian, Japanese and Brazilian authorities. Just yesterday, the US and Indian antitrust authorities signed an MoU.
No breakthrough
With two and half pages, the MoU is relatively short. Its “primary objective” is to strengthen cooperation and coordination in the area of competition legislation. Given that NDRC and SAIC frequently and publicly request comments on their draft antitrust legislation, the MoU does not seem like a breakthrough document.
Cooperation in individual cases
Still, the scope of the MoU also covers the exchange of views on “experience in the enforcement of [competition] legislation.” If broadly interpreted, this formulation would not appear to close the door to information exchanges in specific cases. Indeed, the MoU contemplates the situation where the European Commission and NDRC or SAIC would “pursue enforcement activities concerning the same or related matters.” In that situation, the MoU empowers the authorities to exchange their views on the matter and coordinate directly their enforcement activities, where appropriate and practicable.
Impact on companies
For businesses, one of the key questions related to the MoU may be whether the possibility of cooperation with the European Commission on specific matters will lead to an increasing amount of cases brought by NDRC and SAIC against foreign companies.
So far, there is no public information available that the two authorities have cooperated with the European Commission on specific matters. Also, a large number of NDRC’s and SAIC’s past investigations have focused on price fixing, market partitioning and bid rigging by local companies at the provincial or city level in China, rather than worldwide anti-competitive practices.
At this point, it is too early to tell how key clauses in the MoU – such as that on the cooperation “concerning the same or related matters” – will be interpreted and whether the MoU will become a “game changer.”
That said, even if NDRC and SAIC started to exchange information on their “experience” or share their “views” on specific matters with the European Commission, companies involved in such matters can draw some comfort – the authorities are only entitled to share non-confidential information.
