Officials from the Federal Trade Commission and the Department of Justice today signed an antitrust memorandum of understanding with the Chinese antitrust agencies, creating "a framework for long-term cooperation."
Agency leaders pledged to hold a joint dialogue on competition policy, to cooperate in specific cases “when in the investigating agencies’ common interest,” and conduct training programs and workshops.
Antitrust Division head Christine Varney and FTC Chairman Jon Leibowitz both traveled to China to sign the agreement, which comes almost three years to the day after China’s antimonopoly law went into effect.
“As competition law enforcement agencies, we seek to stop anticompetitive conduct and we all have a strong interest in seeking to ensure that the results of our investigations are consistent, particularly with regard to the remedies that we impose on anticompetitive conduct,” Varney said in a speech today in Beijing, according to her prepared remarks. “As we increase our exchanges and cooperation as contemplated by this Memorandum of Understanding, our confidence and trust in one another should grow as well.”
The U.S. business community, however, has been skeptical about China’s antitrust law, which divides enforcement authority among three agencies: the Ministry of Commerce, which handles review of mergers and acquisitions; the National Development and Reform Commission, which enforces the law against price-related anticompetitive conduct; and State Administration for Industry and Commerce, which is responsible for non-price-related anticompetitive conduct.
In a hearing last year before the House Judiciary Committee, Squire, Sanders & Dempsey partner Shanker Singham, testifying on behalf of the U.S. Chamber of Commerce, noted that “certain members of the Chinese administration” have viewed the law as an opportunity to invoke “regulatory procedures to block foreign acquisitions of Chinese companies and to allow Chinese regulators to secure jurisdiction over global M&A activity.”
In 2009, Chinese regulators blocked their first deal, denying Coca-Cola's $2.4 billion bid to acquire Huiyuan Juice, China's leading fruit juice maker.
At the same hearing, Latham & Watkins partner Tad Lipsky noted that on one hand, “China’s enactment of a competition law represents an important symbolic endorsement of free markets, competition, economic progress and the spirit of enterprise.” But at the same time, he cautioned, “it becomes extremely difficult to predict how U.S. business operations that come in contact with China might be affected.”