Antitrust Law Daily Wrap Up, ANTITRUST NEWS: China Makes Strides on Competition Cooperation, Convergence: Ohlhausen, (May 10, 2013)

By Tobias J. Gillett, J.D., LL.M.

FTC Commissioner Maureen K. Ohlhausen delivered a speech yesterday before the Competition Committee of the U.S. Council for International Business in Washington, D.C., in which she contended that Chinese competition authorities have made progress toward greater cooperation and convergence with more established competition regimes, such as those in the U.S. and the European Union, and laid out lessons for U.S. enforcers.

Ohlhausen began her speech, entitled "Taking Notes: Observations on the First Five Years of the Chinese Anti-Monopoly Law," by highlighting the need for cooperation and convergence among competition authorities, particularly with respect to China’s rapidly growing economy.

She noted seven principles for cooperation identified by the U.S. Department of Justice Antitrust Division, including "(1) agency transparency and accountability, (2)mindfulness of other jurisdictions’ interests, (3) broader and deeper engagement by agencies across jurisdictions, (4) dialogue on all aspects of international competition and enforcement, (5) respect for different legal, cultural, and political paradigms, (6) trust in different agencies’ actions, and (7) greater convergence of competition regimes." She observed that, although global consensus might not be possible, increased convergence would lower transaction costs for businesses and make compliance easier.

The Commissioner identified the elements necessary for a modern competition authority, including: (1) "competition-based factors should guide antitrust policy and enforcement decisions"; (2) "competition enforcement decisions should focus on achieving welfare goals informed by industrial organization economics"; (3) "the competition regime must abide by commonly-accepted timing requirements, merger reporting thresholds, and other best practices in merger notification and review"; (4) the authority should promote transparency in "analysis of mergers, acquisitions, and conduct cases, as well as in the dissemination of data for cleared and abandoned transactions and other enforcement decisions"; and (5) the "agency should aspire to international cooperation in both multilateral and bilateral settings."

Having set forth important principles for and elements of a modern competition authority, Ohlhausen proceeded to discuss the degree to which China’s enforcement of its Anti-Monopoly Law (AML) satisfied those requirements. She observed that the AML recognizes non-competition factors, including "the effect of the proposed deal on the development of the national economy, and any other factors determined by the State Council Anti-Monopoly Enforcement Authority," and that Chinese competition agencies may have relied on non-competition factors in their analyses. She suggested engagement with the Chinese authorities to promote greater convergence toward a focus on competition.

Ohlhausen was encouraged by recent Chinese Ministry of Commerce (MOFCOM) enforcement decisions, which employed more sophisticated economic analysis. These decisions indicated that China was moving toward greater reliance on industrial organization economics. She also saw recent MOFCOM regulations as appearing to move toward the U.S. and European Union approaches to merger review and notification procedures, potentially "offering businesses greater procedural certainty on remedies procedures." She considered recent MOFCOM efforts to increase transparency, which included releasing information on all cases cleared without conditions since 2008 and a speech by the Director General explaining the rationales behind its big decisions in 2012, to be "impressive."

Although she acknowledged that Chinese competition authorities would probably not yet meet the Antitrust Division’s principles for international cooperation, she suggested that "they are changing quickly and appear to be genuinely intent on cooperating with other nations’ enforcement agencies, both on a bilateral and multilateral basis." She noted China’s "many international cooperation agreements," as well as its memorandum of understanding with the FTC and the Antitrust Division; the Guidance for Case Cooperation issued by the FTC, the DOJ, and MOFCOM; and China’s participation in the OECD Competition Committee as an observer and in UNCTAD as a member.

Ohlhausen closed her speech by setting forth lessons she believes U.S. enforcers should take away. She contended that China has made genuine efforts to modernize its competition authorities, and that U.S. enforcers can achieve positive results by "engag[ing] the Chinese authorities through outreach, cooperation efforts, and technical assistance." She also suggested that competition agencies should be "more cautious, transparent, and analytically meticulous in their own work, because emerging market authorities are watching."

As examples, Ohlhausen cited her dissents in In re Robert Bosch GmbH and In re Motorola Mobility LLC and Google Inc., in which the FTC imposed limitations on the ability of holders of standard-essential patents to obtain injunctive relief. She noted her criticisms of the lack of transparency and guidance in the decisions, which she believed lacked clarity, could create conflict with other federal institutions, and potentially create two different standards for FTC and DOJ enforcement under the antitrust laws and for FTC enforcement under Section 5 of the FTC Act.

She suggested that the settlements could create "potentially confusing precedent for foreign enforcers," could "send the wrong message to our foreign counterparts that we do not place a very high value on intellectual property rights," and did not adequately explain "why these cases are the exception rather than the norm."

News: Antitrust FederalTradeCommissionNews