Antitrust allies

n Enhancing each agency's capabilities with appropriate activities related to competition policy and law-making such as training programmes, workshops, study missions and internships;

n Exchanging experiences on competition law enforcement, when appropriate;

n Seeking information or advice from one another regarding matters of competition law enforcement and policy;

n Providing comments on proposed changes to competition laws, regulations, rules and guidelines;

n Exchanging views with respect to multilateral competition laws and policy and;

n Exchanging experiences in raising companies', other government agencies' and the public's awareness of competition policy and law.

In addition, the agencies agree that, when enforcement bodies from both countries are investigating related matters, it may be in their common interest to cooperate in appropriate cases consistent with those agencies' enforcement interests, legal constraints and available resources.

The enforcement authorities' perspective

The aim of any cooperation agreement between antitrust enforcement authorities is more effective and consistent enforcement of competition law. Economic activity is increasingly international and as more and more jurisdictions establish their own national antitrust laws and enforcement agencies, some form of cooperation between these enforcement agencies is necessary in order to ensure effective and consistent enforcement of antitrust laws across the globe. Effective and consistent enforcement results in greater benefits for consumers and greater legal certainty for businesses.

In fact, the US and Chinese authorities have been cooperating for many years in the field of antitrust and consumer protection. The US Federal Trade Commission and China's SAIC signed a memorandum of understanding on consumer protection matters in 2007 and the US antitrust agencies were regularly given the opportunity to comment on the China's draft PRC Anti-monopoly Law (中华人民共和国反垄断法) as it was developed. To a large extent therefore, in particular as far as policy, training and exchanges are concerned, the MOU simply codifies existing practices of cooperation between the authorities.

With respect to this MOU, the initial focus of cooperation seems likely to remain on China's continued development of a clear legal framework and effective enforcement mechanisms to promote market competition.

In addition, it is clear that the US authorities are keen to encourage greater transparency from their Chinese counterparts. Although Mofcom has become more open, issuing decisions which explain to some extent the action it has taken and the reasoning behind it, the other enforcement bodies, the NDRC and the SAIC, very rarely publish any information regarding their actions.

Implications of the MOU for global business

The signing of the MOU makes cooperation in overlapping transactions and investigations possible particularly in the field of international mergers and, in the longer term, cartels. This could result in coordinated dawn raids by US and Chinese enforcement authorities and other coordinated enforcement activities. However, it is noteworthy that unlike many other cooperation agreements in this field, for example the EU – US Agreement Regarding the Application of Competition Rules, the MOU does not actually commit the parties to cooperate in enforcement.

Under the provisions of the MOU, both sides will have to agree that cooperation in any related matters under investigation is in their common interest before any coordinated activity occurs. This is perhaps an acknowledgement of the fact that in many cases cooperation may be difficult, not least because of the continuing suspicion by non-Chinese companies that the Chinese authorities consider issues outside the scope of antitrust law when assessing transactions. In addition, in the field of cartels, many other developments are needed before joint enforcement activities can occur as there is currently little evidence that China or its legal system has an effective cartel enforcement regime.

Consequently, coordinated enforcement activities, such as seen between other national authorities following the signing of cooperation agreements, appear to be some way off. A key test of the significance of the MOU for businesses will therefore be how cooperation between the various enforcement authorities develops.

In the meantime however, as discussed above, the MOU is a major step towards improving communication between the enforcement agencies and should help to encourage greater transparency from the Chinese enforcement authorities who often publish limited or no information regarding their investigations and enforcement decisions. This in turn should result in greater transparency in the decision-making process and increased business certainty. It should also gradually help to reduce the risk of multinational businesses being subjected to fundamentally inconsistent legal standards in different jurisdictions.

Note that, even if the US authorities do cooperate with their Chinese counterparts on an investigation they will not share any confidential information relating to an investigation without the consent of the parties.

Final thoughts

In the three years since its Anti-monopoly Law came into force on August 1 2008, China's antitrust laws have become an important consideration for any global business. In particular its merger control regime has become a significant issue for many large international transactions. Since August 2008, China has published a significant number of measures, rules and other guidance and the regime has generally operated with greater and greater transparency. At the same time, the enforcement authorities' analysis has generally become more and more sophisticated. However, international businesses continue to have concerns regarding the transparency of the regime and the perception that the Chinese enforcement authorities may use the Anti-monopoly Law to protect domestic competitors.

The signing of this MOU does represent a further step towards the integration of China in the global network of antitrust enforcement and, as such, it should facilitate the continued increase in the transparency of the regime. It is noteworthy that the enforcement agencies with responsibility for the world's three largest markets, the US, the EU and China, are all now linked by a network of cooperation agreements. However, China's integration into the global network is still very much an evolving process. China is not, for example, a member of the International Competition Network, the principal body of enforcement agencies world-wide with over 100 member organisations and whose primary work is focused on developing convergence of antitrust principles and cooperation. As mentioned above, the key area of interest for business will be how cooperation develops between the enforcement authorities in overlapping investigations. It seems likely that it will be a while before more concrete benefits to business will materialise.

Veronica Lockyer, Orrick Herrington & Sutcliffe, Shanghai