On 29 November 2011, a delegation from China's Ministry of Commerce (Mofcom) met with representatives of the main U.S. antitrust authorities in Washington to discuss developments in relation to their respective merger control regimes, and opportunities for enhanced cooperation on antitrust issues. Representatives who attended the meeting included Mofcom's Vice Minister, Gao Hucheng, Chairman of the U.S. Federal Trade Commission (FTC), Jon Leibowitz, and the Acting Assistant Attorney General of the Department of Justice (DOJ) Antitrust Division, Sharis Pozen.
The meeting comes four months after the FTC and DOJ signed an MOU with China's three antimonopoly agencies (including Mofcom, whose Anti-Monopoly Bureau is responsible for merger reviews) in July 2011. Largely codifying existing practices, the MOU contemplates ongoing high-level consultations amongst the signatory agencies, cooperation in areas such as development of competition policy, and the exchange of experiences and knowledge on competition law enforcement. Perhaps more notably, the MOU also specifically recognised the possibility of cooperation on matters in relation to which the China and U.S. agencies share a common interest.
The 29 November meeting is understood to be the first time that representatives of the FTC and Mofcom have met since the MOU was signed. Perhaps the most significant outcome of the meeting was agreement on a set of principles that can guide cooperation between the relevant U.S. and China antitrust authorities when they are reviewing the same merger. The Guidance for Case Cooperation between the Ministry of Commerce and the Department of Justice and Federal Trade Commission on Concentration of Undertakings (Merger) Cases ("Guidance for Case Cooperation") includes the following notable elements:
- It provides that when Mofcom and one of the relevant U.S. authorities are both reviewing a particular merger, and each deems it appropriate and permissible under their respective laws, they may decide to exchange information regarding the merger.
- It contemplates that the types of information that may be exchanged relate to issues such as (i) the timing of their respective investigations, (ii) market definition, (iii) theories of competitive harm, (iv) evaluation of competitive effects, (v) economic analysis, and (vi) remedies.
- It expressly states that the contemplated cooperation will not prejudice each authorities' independent decision-making with respect to its cases.
- It notes that the relevant authorities should, to the extent consistent with their respective laws, maintain the confidentiality of any information communicated to them in confidence during the course of case cooperation.
It is interesting to note that although Mofcom has been taking an active stance in communicating with leading European competition authorities such as the OFT and European Commission, it has not adopted any major formal cooperation arrangements with these bodies in recent times1 . This is despite the fact that China's two other main antimonopoly agencies, the State Administration of Industry and Commerce (SAIC) and the National Development and Reform Commission (NDRC), have recently signed MOUs on competition law cooperation with the U.K. Office of Fair Trading (OFT).
This may be surprising to some readers, given that Mofcom appeared to be most heavily influenced by European methodologies and guidance when formulating its approach to merger review during the initial period after commencement of the Anti-Monopoly Law (AML) in August 2008. However, although senior Mofcom officials continue to hold regular meetings with their counterparts in Brussels and London, anecdotal evidence suggests that Mofcom review practice is increasingly drawing on the approaches of other mature antitrust regimes beyond Europe, and in particular the U.S. regime. In this context, and noting that the FTC and DOJ has been very active in providing capacity building assistance to the Chinese antitrust authorities in recent times, news of adoption of the Guidance for Case Cooperation between the U.S. authorities before any similar arrangement with European authorities is not entirely unexpected.
Adoption of the new Guidance relating to case Cooperation is the latest of several recent developments in relation to China's merger control regime that have been welcomed by most foreign observers as having the potential to facilitate greater transparency and/or alignment with the review standards of leading foreign regimes. These developments included the commencement in September 2011 of Mofcom's Interim Provisions on Evaluation of Impact of Concentrations of Business Operators on Competition, which explain Mofcom's approach to the evaluation of transactions under China's merger review system and include a focus on several widely recognised "theories of harm" and analytical tools for assessing the impact of mergers, an increasing level of detail in published merger control decisions, and anecdotal evidence of heightened scrutiny of transactions between domestic companies in China.