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Asian Antitrust

Divergence Then and Now: What Does the U.S./EU Experience Tell Us About Convergence With MOFCOM?

George S. Cary, Elaine Ewing, article to be released in “William E. Kovacic – An Antitrust Tribute, Vol. II”, Institute of Competition Law 2013.

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Today, more than one hundred countries have antitrust laws. But the globalization of antitrust enforcement is not without risk. The proliferation of antitrust laws necessarily increases the risk that a particular jurisdiction will block a procompetitive deal or require an inappropriate – and even anticompetitive – remedy. Worse than mere divergent outcomes is when a country uses the antitrust process to benefit its own companies and consumers at the expense of global competition. For agencies that are so inclined, merger control provides significant scope to pursue protectionist goals. Fortunately, these situations have not been the norm. But the potential is real, and there are worrying signs that these concerns are not purely theoretical.

In the five years since the AML was introduced, China’s Ministry of Commerce has issued a number of decisions that appear to depart from international norms by imposing behavioral remedies that reflect a view about antitrust law directly counter to other major jurisdictions and the fundamental principles of competitive markets. In some cases, such as MOFCOM-required supply guarantees, these decisions also appear to reflect a desire to benefit Chinese customers and consumers at the expense of foreign consumers and competitors. Worryingly, all signs are that this trend may continue, further distorting competitive markets and discouraging companies from pursuing procompetitive deals.

Avoiding this outcome requires international convergence about the purpose of the antitrust laws. Convergence does not necessarily mean converging around the standards of the U.S. or the EU or even having uniform rules around the world: we are not advocating for antitrust imperialism. Instead, this article is advocating for consensus about the core principles that should govern antitrust enforcement: antitrust laws are about competition, not industrial policy, should promote competitive markets, and must be grounded in sound economic analysis.

How can this convergence be achieveed? To answer that question, this article looks to the successful convergence between the U.S. agencies and the European Commission at the start of the century, in the wake of substantive divergence and allegations of protectionism in Boeing/McDonnell Douglas and GE/Honeywell. Part I of this article summarizes those decisions and the subsequent U.S./EU convergence. Part II discusses several recent MOFCOM decisions that have departed from international norms. Finally, Part III considers how the U.S./EU experience could aid convergence with MOFCOM.

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