Article
Source: Law360
Article
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02.20.13
A major development in antitrust law over the last 25 years has been the adoption and increased enforcement of antitrust laws by jurisdictions around the world, and particularly the prosecution of international price-fixing cartels. While cartel enforcement was once pursued almost solely by U.S. regulators and in U.S. courts, today any large-scale cartel activity typically attracts the attention of regulators from several countries. For example, a cartel in the vitamins market led to enforcement actions by authorities in the U.S., Canada, the EU, Korea, Australia, Brazil and Mexico. Investigations in markets ranging from marine hose to air cargo have involved different combinations of the same cast of characters, as well as others such as Japan and New Zealand.
Some antitrust regulators describe this as a symbiotic process, marked by increased cooperation and harmonization among law enforcement agencies in different countries. At the same time, however, such overlapping enforcement may lead to disagreements over the limits of each regulator or court system’s jurisdiction, and risks punishing defendants multiple times for the same conduct. Recent developments suggest that such tension may increase as new players enter the field, while U.S. enforcement widens rather than contracts to allow room for others.
China’s Entry Into Cartel Enforcement and Criticism of U.S., EU Regulators
One of the more significant recent entrants into the antitrust enforcement field has been China, which in 2008 passed its first comprehensive antitrust statute, the Anti-Monopoly Law. In January 2013, China’s National Development and Reform Commission announced its first ever enforcement action against non-Chinese firms for price-fixing conduct. The NDRC imposed fines and restitution payments totaling $56 million against Korean companies Samsung and LG Display, and Taiwanese firms AU Optronics, Chunghwa Picture Tubes, Chimei InnoLux and HannStar.
The sanctions were based on price-fixing of LCD panels that allegedly occurred as a result of regular meetings between these companies in Taiwan from 2001 to 2006. This same conduct was previously investigated by the U.S. Department of Justice, the European Commission and the Korean Fair Trade Commission, resulting in more than $2 billion in total fines. The NDRC noted that since the liquid crystal display cartel activity predated the implementation of the Anti-Monopoly Law in 2008, the enforcement action was based on China’s older and more limited Price Law, and that the fines would likely have been higher under the new law.
This announcement has been widely viewed as an important first step, signaling that Chinese authorities intend to become active players in international cartel enforcement. In an article in China Daily, a semi-official English-language publication in China, a researcher at China’s Ministry of Commerce emphasized China’s intent to assert the extraterritorial reach of Chinese law and noted that “overseas companies that want to expand their operations on the mainland should understand that their actions, even if taken outside China, fall within the purview of Chinese economic laws if they have a large enough impact on the Chinese market.”
At the same time, the article criticizes the penalties imposed by the U.S. and EU authorities, stating that these “astronomical” fines are “usually based on the global sales of the enterprises involved, which [is] tantamount to plundering other countries’ wealth.” The author states that “[s]uch unfair practices are undesirable for China and fated to meet with growing opposition.” It remains to be seen whether the article represents the views of the relevant Chinese authorities more broadly, and if so, in what form China might express its opposition to the practices of U.S. and other regulators.
Download: Expanding Reach of Sherman Act Draws Criticism