International Law Update: China Pledges To Equally Enforce Anti-Monopoly Law

How is international law going to be affected once China begins to enforce this new law?

China represents significant opportunities for U.S. corporations, with exports alone totaling $161 billion in 2013. However, the country’s legal unpredictability increases the risks of conducting business in terms of international law.

To improve trade relations, officials from China and the United States recently concluded the 25th session of the U.S.-China Joint Commission on Commerce and Trade (JCCT). The JCCT meets annually to review the progress made by 16 working groups that meet throughout the year to address diverse trade issues, from intellectual property rights to the environment.

“This year we sought to ‘reimagine’ the JCCT to engage businesses from both countries in a dialogue about how to strengthen the trade and investment relationship between the world’s two largest economies, and we made significant progress,” said U.S. Secretary of Commerce Penny Pritzker.

Among the most noteworthy agreements, China has pledged to modify its enforcement of its Anti-Monopoly Law (AML) to treat domestic and foreign companies equally. The law is intended to deter monopoly agreements, prevent abuse of dominant market position, and police other transactions that may restrict competition. However, multi-national corporations operating in China have raised serious concerns about insufficient predictability, fairness and transparency in China’s investigative processes since the law’s enactment in 2008.

In a report published last year..

the U.S. Chamber of Commerce alleged that China’s enforcement of the anti-competition law in favor of local companies “arguably violates commitments that China undertook when it acceded to the World Trade Organization.” Last year alone, Audi, BMW, Daimler, Microsoft, and Qualcomm were all investigated for violating the AML.

At the JCCT..

the Chinese delegation agreed that a foreign company in an Anti-Monopoly Law investigation would be permitted to have counsel present and to consult with the company during proceedings. China also made several additional commitments, such as agreeing to provide increased transparency for investigated companies.

For U.S. businesses..

the agreed upon changes should lead to greater predictability and increased economic opportunities when operating in China. We will be closely tracking the status of the JCCT commitments and will provide updates in the coming months.