Refining China's cartel leniency policy

Nate Bush and Lining Shan
[email protected] and [email protected] 

On February 2 2016, the National Development and Reform Commission (NDRC) released for public comment the draft Guidelines on the Application of the Leniency Program for Horizontal Monopolistic Agreement Cases (横向垄断协议案件宽大制度适用指南) (Guidelines). The final measures are intended to be issued by the Anti-monopoly Commission of the State Council, and apply to cartel investigations by the NDRC, the State Administration of Industry and Commerce (SAIC) and their local counterparts. The Guidelines adopt many common features of foreign cartel leniency programs, and reflect an increasingly sophisticated approach to managing the incentives for voluntary disclosure of cartels.

Disrupting cartels through leniency

For many competition regulators worldwide, leniency is the weapon of choice for combatting cartels. Schemes among competitors to fix prices, restrict supply, allocate customers and markets or rig bids are almost always harmful to consumers, therefore illegal or illegal per se in most jurisdictions. They are also generally secretive, making them difficult for customers or regulators to detect (or prove).