China Antitrust Gets Global

In an interesting Editorial, the Financial Times discussed yesterday recent rulings of Chinese authorities demonstrating their willingness to enforce Chinese anti-monopoly law  in respect of global deals. Indeed, the FT reports that two out of three of the deals had only secondary implications in China (other reports on the deals can be found here and here).

 As the Editorial notes, an interesting consequence is that Chinese law will only be another legislation purporting to reach global deals:

The three rulings … show that Beijing will not hesitate to intervene in largely extra-territorial deals. That means China has joined the US and the European Union as a global competition referee, providing M&A lawyers with a fresh set of problems to wrestle with.

What is too bad for M&A lawyers, of course, is that you cannot really pick up one of the relevant laws. The traditional choice of law methodology does not work. Each forum is concerned with the protection of its own market, and does not really consider applying foreign law. You could give a variety of rationales for that result, but the most common is probably that antitrust laws are mandatory rules.

So your options are either to develop a regime for the resolution of conflicts of mandatory rules, or hope that the authorities of the relevant markets will conclude agreements on the application of their laws, as the U.S. and the E.U. have done. I wonder whether there is any similar agreement with China.

Comments on this entry are closed.

  • Denis Morozov May 7, 2009, 7:50 am

    Among rationales in favour of the choice of law methodology is a concept of Antitrust delict law (Jurgen Basedow) and a private inforcement of those mandatory rules when one might insist on applicability of foreign regulation as in the case of unfair competition. I believe that European trend (not to say “practice”) is yet to be borrowed by other legal orders.
    May I ask what “agreements on the application of their laws, as the U.S. and the E.U. have done” stands for in respect of US-EU agreement?

  • Gilles Cuniberti May 7, 2009, 8:13 am

    I was referring to the 23 September 1991 Agreement between the United States of America and the European Communities Regarding the Application of Their Competition Laws (as interpreted by letters of May and July 1995). I am not an antitrust specialist, so I am not sure how effective the Agreement has been, but the parties have stated that it “has contributed to coordination, cooperation, and avoidance of conflicts in competition law enforcement”.

  • Denis Morozov May 7, 2009, 9:36 am

    Thank you very much for the reference and for the article, Mr. Cuniberti. Hopefully it is an emerging issue and we will see signifficant developement of practice soon.