Is China Giving Carte Blanche for Anti-Competitive Conduct by PRC Companies Doing Business Overseas?

Is China Giving Carte Blanche for Anti-Competitive Conduct by PRC Companies Doing Business Overseas?

by Yasue (Becky) Nao Koblitz and Ling Zhang

On June 29, 2012, MOFCOM and other agencies issued a "Implementation Opinion" (which contains broad sweeping policy statements). PRC companies should be careful not to interpret this Opinion as carte blanche for anti-competitive behavior while investing overseas. The Opinion contains broad sweeping policy statements regarding Chinese foreign investment. From the perspective of U.S. companies, what should they keep on their radar screen?

Excerpt:

PRC companies should be careful not to interpret as carte blanche for anti-competitive behavior a recent policy statement by the Chinese government encouraging PRC companies to coordinate their activities and cooperate with each other while investing overseas. The statement also highlights the need for foreign companies to be on guard for possible anticompetitive conduct by their PRC business partners (and competitors).

On June 29, 2012, thirteen agencies-including the three agencies responsible for enforcing China's Anti-Monopoly Law ("AML"): the Ministry of Commerce ("MOFCOM"), National Development and Reform Commission ("NDRC") and the State Administration for Industry and Commerce ("SAIC")-issued a jointly drafted "Implementation Opinion" entitled "Encouragement and Guidance on Private Capital's Healthy Development." The Opinion contains broad sweeping policy statements regarding Chinese foreign investment. It is one of many follow-up opinions to the policy statement of May 2010 issued by the State Council regarding the development, management and regulation of private investment, which is considered to be one of the milestone policy statements after the 2005 statement on private investment. Although strictly speaking State Council and agency opinions are not law, the provincial governments and Chinese companies are well advised to and do take such statements seriously.

Under the first heading of the Implementation Opinion, entitled "To Strengthen Macro Guidance on Private Enterprises' Outbound Investments", there is language potentially ripe for misinterpretation: "The government intends to guide the enterprises to intensify the coordination and cooperation among each other to prevent disorderly and malicious competition."

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Yasue (Becky) Nao Koblitz is Special Counsel in the Corporate practice group in the firm's Beijing office. Ms. Koblitz's 20-plus years of legal experience spans three continents and broad areas of expertise. She was born and raised in Tokyo, Japan and attended Stanford University and American University Law School in the United States. Becky began her legal career with the U.S. Department of Justice's Antitrust Division, and moved on to corporate law in Berlin, Germany, where she spent much of the last decade practicing real estate, finance and corporate law. Becky is returning to her "antitrust roots" in the Beijing office where she will manage and develop the antitrust, competition law and white-collar practices.

Ms. Ling Zhang is an associate in the Corporate Practice Group in the firm's Beijing office.