On July 27 2011 the US Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC) signed a memorandum of understanding with China's three antitrust enforcement agencies – the Ministry of Commerce, the National Development and Reform Commission and the State Administration for Industry and Commerce.

The memorandum is intended to promote communication and cooperation on antitrust issues between the agencies in the two countries. It provides for cooperation on two levels: country to country (with all five agencies participating) and agency to agency. In addition, the memorandum outlines several specific areas for cooperation, such as:

  • information exchange and advice about enforcement and policy developments;
  • trainings and workshops;
  • feedback on proposed laws, regulations and guidelines; and
  • cooperation on specific cases or investigations.

The signing of the memorandum illustrates the importance that the US antitrust authorities attach to Chinese antitrust developments, and to a certain extent entails recognition of the Chinese antitrust agencies' increasing sophistication. In the words of FTC Chairman Jon Leibowitz, the Chinese antitrust agencies "have risen in prominence and have quickly developed many of the important analytical techniques used by leading antitrust agencies around the world". In a way, the memorandum leaves a distinct mark in Chinese antitrust history, just a few days before the third anniversary of the entry into force of China's Anti-Monopoly Law on August 1.

From the business side, the key issue will be when, and how closely, US and Chinese antitrust agencies cooperate in individual cases and how much case-specific information is exchanged between them.

While leaving their extent and limits open, the memorandum states that the information exchanges must comply with domestic law. This means that in the short term, the agencies could exchange information only with the consent of the parties involved. However, the memorandum press release also speaks somewhat ambiguously of "[c]ooperation on specific cases or investigations, when in the investigating agencies' common interest". Further, the memorandum's preamble sates that the US and Chinese antitrust agencies intent to set up a 'long-term cooperation', and in the signing ceremony, DOJ Assistant Attorney General Christine Varney pointed out that the memorandum was just a first step for US-China antitrust cooperation. Hence, the memorandum has the potential to make companies rethink their strategies for cases with simultaneous procedures before the US and Chinese antitrust agencies.

For further information on this topic please contact Adrian Emch or Jun Wei at Hogan Lovells' Beijing office by telephone (+86 10 6582 9488), fax (+86 10 6582 9499) or email ([email protected] or [email protected]). Alternatively, contact Andrew McGinty at Hogan Lovells' Shanghai office by telephone (+86 21 6138 1688), fax (+86 21 6279 269510) or email ([email protected]).