In our increasingly globalised world, it is critical that competition agencies co-operate among each other and understand each other's methodologies and timescales. It does not mean that all agencies will come to the same conclusion - they each have to assess competition within their specific jurisdictions and this can lead to different results (for example, the US authorities permitted the proposed General Electric/Honeywell merger but the EU authorities did not).
On 20 September 2012, in a very welcome move, the European Commission signed a Memorandum of Understanding ("MOU") with two of China's competition authorities, namely the National Development and Reform Commission ("NDRC") and the State Administration of Industry and Commerce ("SAIC"). The NDRC is responsible for enforcing the rules against price-related infringements while the SAIC is responsible for dealing with non-price related infringements. The third agency, the Ministry of Commerce ("Mofcom") is responsible for merger review. As the EU already signed a MOU with MOFCOM in 2004, this means that there are now agreements in place between the EU and all of the China's competition agencies. The 2012 MOU did not start co-operation between the EU and the SAIC and NDRC because they already work together on an informal basis but this puts the co-operation on a firmer foundation for the future.
The MOU states that its primary objective is to strengthen "cooperation and coordination between the two Sides in the area of competition legislation" and the "ultimate aim is to increase mutual understanding and awareness of current and forthcoming trends and expected developments in competition legislation and its enforcement in their respective jurisdictions in theunderstanding that competition legislation is an important factor in ensuring consumer welfare and in providing a level playing field as well as legal certainty for the business community in the market."
The MOU was an inevitable step for at least three reasons. First, the increasing globalisation of trade and competition issues means that the two jurisdictions need to co-ordinate even more. China is already the EU's second biggest trading partner, there was a need to facilitate greater co-operation between the two trading blocs. Secondly, the Chinese agencies are developing their expertise and involvement in competition matters since the adoption on 30 August 2007 of the Anti-Monoply Law and both China and the EU were keen to co-operate in competition matters. And, thirdly, the EU felt the need to co-operate with the Chinese agencies given that it already has arrangements in place with the likes of the US and Canadian agencies.
The EU's Competition Commissioner, Joaquín Almunia, was very upbeat about the MOU and said: “the memorandum of understanding is an important step and a sign of our commitment to further deepen our already excellent relations with the Chinese antimonopoly enforcement authorities. It will give new impetus to our cooperation with China in the enforcement of our respective competition laws.”
The MOU should increase the authorities’ cooperation on competition enforcement including in cartels and abuse of dominance cases. However, the MOU does not cover concentrations (i.e., mergers, acquisitions and concentrative joint ventures).
The two Chinese agencies and the EU's Competition Directorate General for Competition will also discuss competition legislation so one can anticipate further co-operation, dialogue and exchange of ideas on actual and proposed legislation. This would typically lead to growing convergence of ideas.
Interestingly, the parties to the MOU will also share non-confidential information regarding global competition investigations. In specific terms, the MOU provides that should "the two Sides pursue enforcement activities concerning the same or related matters, they may exchange non-confidential information, experiences [and] views on the matter and coordinate directly their enforcement activities, where appropriate and practicable." Article 3.1 of the MOU provides that "cooperation between the Sides…is subject to the respective laws of each Side's jurisdictions" while Article 3.2 goes on to provide an important qualification: no "Side is required to communicate information to the other if such communication is prohibited by the laws or regulations of the Side possessing the information or would be incompatible with the interests of the Side in the application of its laws. In so far as information is communicated, the recipient should, to the extent consistent with its laws, maintain the confidentiality of any such information communicated to it in confidence."
It will be interesting to see how the new agreement will operate in practice because the MOU emphasises the "importance of cooperation and coordination between the [two] Sides in the enhancement of an effective, transparent and non-discriminatory enforcement of the competition legislations of both jurisdictions". It is also noteworthy that the agreement is said to be voluntary and does not create binding international legal obligations.
On the Chinese side, the agreement was signed by Zhang Ping, Chairman of the Chinese National Development and Reform Commission and Fu Shuangjan, Vice Minister of the State Administration of Industry and Commerce. It is interesting to note that the MOU was signed, on behalf of the EU, by the High Representative of the Union for Foreign Affairs and Security Policy (Catherine Ashton) in her capacity as Commission Vice-President. This is an indication of the growing role of the EU's High Representative of the Union for Foreign Affairs and Security Policy, this role is become ever more like the EU's Foreign Minister.