On July 27, 2011 the competition agencies of the United States and the People’s Republic of China signed a Memorandum of Understanding (MOU) for the purpose of fostering cooperation in the enforcement of their competition laws and policies. The agreement was entered into by the United States Department of Justice and Federal Trade Commission on the one hand, and China’s Ministry of Commerce, National Development and Reform Commission and State Administration for Industry and Commerce, on the other. Cooperation under the agreement became effective upon signing.
The MOU sets forth a two-part advisory framework for cooperation. The first part is a joint dialogue among senior officials at each of the agencies regarding competition policy. The agencies will convene the joint dialogue “in principle” once annually. In order to facilitate these discussions, ad hoc working groups may be established under the joint dialogue, working either in tandem with the joint dialogue or separately, per agreement. The second part of the cooperative framework envisions individual agency-to-agency communication at the senior or staff level, separate from the joint dialogue.
The MOU identifies a number of areas for competition law cooperation between the agencies, including:
- Providing regular updates regarding policy and enforcement developments.
- Establishing training programs, workshops, study missions and internships.
- Sharing experiences and advice regarding enforcement and policy.
- Offering commentary on laws, regulations, rules and guidelines.
- Exchanging ideas regarding multilateral competition law.
The agreement also specifically recognizes the possibility for cooperation on investigations of the same or related matters when U.S. and Chinese competition agencies share a common interest. It is expected that such cooperation will center on merger review since those most commonly implicate cross-border considerations. Thus, this provision could set the stage for the type of joint investigation and enforcement the United States has already conducted with the European Commission.
The agencies are not expected to share information where such disclosure would be prohibited by law or contrary to an agency’s interests; however, any information exchanged in confidence between the two countries’ agencies should be kept confidential. Furthermore, as an advisory agreement, the MOU does not create legally binding rights or obligations. Nor does it alter the existing law in either country.
Although China’s Anti-Monopoly Law only became effective in August 2008, cooperation between the U.S. and China on antitrust issues dates back approximately thirteen years when China first began to develop that law. During the drafting process the United States had repeated opportunities to advise and comment. Since then, U.S.-Chinese cooperation has “steadily strengthened,” according to the Department of Justice’s Antitrust Division.
The MOU with China is a continuation of the United States’ policy of concluding cooperation agreements with other antitrust regimes around the world. These agreements recognize that due to globalization, competition agencies in multiple jurisdictions increasingly investigate the same proposed merger or the same conduct. The importance of and concern for ensuring consistent results, particularly with respect to the remedies imposed, has led the United States to conclude eight international antitrust agreements and one other MOU.
Another concern is that China and other emerging economies could use newly enacted antitrust legislation as a means to promote their own trade interests. The Department of Justice has observed that MOUs cannot cure such problems, but they do provide a “first step.” Perhaps for this reason, the United States is currently pursuing a similar MOU with India.
The U.S.-China MOU on antitrust cooperation clearly continues a larger trend toward greater harmonization and convergence in global antitrust policy. Further, because the agreement formalizes and extends a previously informal system of cooperation between the two countries, it also represents the “next chapter” in U.S.- Chinese information sharing on antitrust matters. Ultimately, the potential for greater legal certainty and information flow between the world’s two largest economies as a result of this antitrust agreement should result in concrete benefits for both Chinese and American businesses as well as consumers.