Alert: The Supreme Court clarified the principles of international comity this week in a ruling pertaining to the long-running vitamin C antitrust class action litigation. International comity is the recognition a nation shows to the legislative, executive or judicial acts of another nation. Principles of comity state that US courts should defer to the laws of other nations when actions are taken pursuant to those laws. In this week’s ruling, Justice Ginsberg wrote that federal courts should accord respectful consideration to foreign government submissions when analyzing comity issues, but are not bound by them. This ruling vacates the Second Circuit’s decision in the case overturning the jury verdict for the class, and is a win for the class of US purchasers of vitamin C. (more…)
The Chinese government announced on March 13, 2018, that it will consolidate the duties of three competition agencies into a new government agency to handle all antitrust matters. While it is too early to tell how this reorganization will impact China’s review of transactions and conduct cases, we believe that this change could lead to greater consistency and potentially more experienced attorneys reviewing competition matters.
On April 14, 2014, China’s Ministry of Commerce (MOFCOM) filed an amicus brief asking the Second Circuit to overturn a ruling by the Eastern District of New York against Chinese vitamin manufacturers. See Brief for Amicus Curiae Ministry of Commerce of the People’s Republic of China in Support of Defendants-Appellants, In re Vitamin C Antitrust Litigation, No. 13-4781 (2d Cir. filed Apr. 14, 2014). The lower court rejected the defendants’ argument that the challenged conduct was required by Chinese law and refused to dismiss the case. The case was later tried by a jury and ultimately resulted in a $157 million judgment against the defendants.
As MOFCOM recounted in its brief, the Chinese agency has been involved in the litigation since 2006, when it filed its first amicus brief in support of defendants’ motion to dismiss. MOFCOM explained that beginning in 1997, it required the defendants to participate in a Vitamin C Subcommittee in order to obtain export licenses, which “could be revised or revoked if a licensee failed to comply with mandatory export price and quantity constraints.” Brief at 5. The lower court characterized MOFCOM’s involvement in the case as “a post-hoc attempt to shield defendants’ conduct from antitrust scrutiny.” Id. at 2. In its April 14 filing, MOFCOM fired back, calling the court’s statement “profoundly disrespectful, and wholly unfounded.” Id.
MOFCOM’s central legal argument is that under United States v. Pink, 315 U.S. 203, 220 (1942), American courts must accept a foreign government’s official interpretation of its own law as conclusive. The district court, however, “ignored these fundamental precepts” and “instead invented its own mode of analysis that yielded a strikingly incorrect conclusion of Chinese law.” Brief at 14. The case has raised thorny international relations issues, and the appeal will no doubt be closely watched by the Chinese government. In MOFCOM’s words, “[t]he district court’s approach and result have deeply troubled the Chinese government, which has sent a diplomatic note concerning this case to the U.S. State Department.” Id. at 13. A reversal by the Second Circuit would “reaffirm that principles of international comity require district courts to treat official statements of a foreign government with a high degree of deference and respect, and with due caution about the court’s ability to determine accurately the law of an unfamiliar legal system.” Id.
Beginning on October 28, 2013, all merger control cases before China’s Ministry of Commerce (MOFCOM) will have to be filed, and only be filed, in electronic form. In the past, it was required by MOFCOM to provide both hard and soft copies (i.e., paper or scanned copies) of all materials submitted. The new filing system uses software developed by MOFCOM itself (System) that incorporates a digitalized merger notification form updated by MOFCOM in June 2012 (please see “China Streamlines Antitrust Notification Process” https://www.mwechinalaw.com/news/2012/chinalawalert061c.htm).
The System appears to work well. Generally, the System allows a filing party to submit all data and information required by MOFCOM in electronic form (i.e., either by typing into or choosing an option in the software). A data package, incorporating all data and documentation submitted in support of the filing, will be generated by the software automatically.
The launch of this new System is unlikely to change the procedure of merger filing to any great extent. However, it does allow MOFCOM to collect and compile data in a much more efficient and timely manner. This new System also allows MOFCOM to much more easily compare information provided by others in the same or a similar industry, and to compare information submitted by the same party in different cases. The new System will therefore require a higher level of vigilance by notifying parties to ensure they provide accurate and consistent information. Also, counsel practicing in this area can expect to see an improvement in efficiency, and likely more sophisticated assessment by MOFCOM of mergers, acquisitions and joint ventures, as this new tool should help with data analysis.
China’s Ministry of Commerce recently issued two new draft regulations. The first provides a wider range of potential remedies to obtain the clearance of a concentration (e.g., a merger, acquisition, joint venture, etc.); the other defines the standards for “simple” merger cases that are eligible for a “fast-track” clearance procedure.
China’s Ministry of Commerce recently announced that it opened four investigations during 2012 into suspected non-compliance with China’s merger control notification procedures. The outcomes of the investigations are still uncertain, but the actions clearly show increased efforts to ensure compliance through enforcement of the law. Although the number of investigations was fairly low in 2012, the four cases are part of a new, larger trend of enforcement that began with a 2011 announcement to prioritize these investigations and was reinforced by new interim measures aimed at specifying compliance obligations and enforcement procedures. Multinational companies with operations in China are encouraged to increase compliance efforts in this area in order to avoid becoming targets of this new enforcement priority.
The Ministry of Commerce of China (MOFCOM) recently promulgated a new amended merger notification form along with instructions for completing the form. In doing so, MOFCOM aims to further regulate the procedures regarding antitrust review of large mergers, acquisitions and joint ventures; to promote transparency in the notification procedure; and to improve the efficiency of antitrust review.
McDermott Will & Emery has released the latest China Law Alert: Focus on Competition, which provides insight on current issues surrounding cross-border antitrust and transactional issues.
China’s New Merger Control Regime Makes Major Progress in Its First Three Years
It is now just more than three years since China’s Anti-Monopoly Law (AML) was introduced. Compared with the well-established practices of US antitrust and EU competition authorities, AML enforcement is still in its infancy. However, China’s AML regulators, especially the authority in charge of merger control, the Ministry of Commerce (MOFCOM), has moved quickly to make its mark on international business. Now, most large, cross-border mergers, acquisitions and joint ventures must also successfully pass the rigors of review by MOFCOM as well as the European Commission and the US Department of Justice (DOJ) and/or Federal Trade Commission (FTC). Read the full article here.
NDRC and SAIC’s Actions in 2011 and Prospects in 2012
China’s National Development and Reform Commission (NDRC) and State Administration for Industry and Commerce (SAIC) are the two authorities in charge of investigation and supervision of “monopoly” agreements and abuses of dominant market position. NDRC focuses on price-related cases while SAIC takes care of non-price related violations of the law. Compared to MOFCOM, which is responsible for merger control, NDRC and SAIC have been relatively quite since China’s AML came into force on 1 August 2008. Read the full article here.
Civil Litigation under China’s Anti-Monopoly Law
Since the introduction of the China AML in August 2008, Chinese courts have experimented with various methods of civil dispute adjudication based on breach of the AML. In general, China’s courts have very limited judicial experience with such cases. A number of civil cases have been brought before the courts, but very few, if any, have resulted in a successful judgment for breach of the AML. Read the full article here.
Might the Ministry of Industry and Information Technology (MIIT) Become A New Enforcement Authority for China’s Competition Laws?
In addition to MOFCOM, SAIC and NDRC, the three major enforcement authorities for the anti-unfair competition and anti-monopoly laws, it seems the MIIT might also become a regulator of competition in the telecommunications sector. In addition to a Draft Regulation on Internet Information Services, published for consultation in January 2012, MIIT released an “Opinion on Regulating the Business Activities of Basic Telecommunications Carriers on Campuses” (the Opinion) on 30 June 2011. Read the full article here.
China’s Ministry of Commerce (MOFCOM), following six months of public comment on and consideration of Draft Regulations, has now formally promulgated new Regulations on the Investigation & Treatment of Failure to Report a Concentration of Undertakings. The new regulations will take effect as of February 1, 2012, and arm MOFCOM with clear powers to investigate and collect evidence on concentrations.
Before granting its approval of Alpha V’s acquisition of Savio, China’s Ministry of Commerce (MOFCOM) required the private equity fund to divest its 27.9 per cent stake in Savio’s rival Uster. With this decision, MOFCOM has signalled its willingness to closely scrutinize the influence of minority shareholders when conducting merger reviews under China’s Anti-Monopoly Law.
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