Agreement Reached Between Australia and China to Cooperate on Cartel Investigations

Tuesday 17 November 2015 @ 9.35 a.m. | Legal Research | Trade & Commerce

It has been reported in a recent ACCC Media Release, that the Australian Competition and Consumer Commission (the ACCC) and the National Development and Reform Commission of the People's Republic of China (NDRC) have signed a Memorandum of Understanding (MOU).

Background to the MOU

Following complaints from some competitors and industry associations, most notably Mobile China Alliance, which represents China’s powerful mobile phone industry, and the Internet Society of China in early November 2013, NDRC carried out simultaneous dawn raids at Qualcomm’s offices in Beijing and Shanghai.

It was reported that NDRC had assigned up to 80 officials to the case, which marks a record in the regulator’s investigations and highlights the substantial resources NDRC can mobilize, especially when compared to the antitrust-division of the Chinese Ministry of Commerce (MOFCOM), which is in charge of merger control and only employs around 30 officials. In addition, NDRC teamed up with some external advisors in order to comb through the substantial volume of data collected. Throughout the investigation, NDRC cooperated closely with the Ministry of Industry and Information Technology (MIIT), China’s powerful telecom and internet regulator. It is understood that several meetings took place involving NDRC, MIIT and Qualcomm.

About the NDRC and Antitrust

It was reported that in the calendar year to October 2015 China has imposed over 6.6 billion yuan (US$1 billion) in antitrust fines involving 10 cases. The NDRC is currently working on antitrust guidelines for the automobile industry and reportedly plans to step up law enforcement in the future.

In February 2015, the NDRC imposed a record fine of 6.09 billion yuan on mobile chip maker Qualcomm for charging discriminatory fees in the Chinese market when licensing mobile chip technology.

This resolution comes as a result of the fact that the NDRC issued an Administrative Sanction Decision finding Qualcomm guilty of breaking China’s 2007 Anti-monopoly Law (AML) and levying a fine on them. In 2014 the NDRC fined Chrysler, Audi and 12 Japanese companies following antitrust investigations.

The NDRC also has antitrust cooperation agreements with Korean, Japanese, American and European counterparts.

Reaction from the ACCC

Commenting in a recent ACCC Media Release, the Chairman of the ACCC, Rod Sims said:

“This agreement paves the way for increased engagement between the ACCC and NDRC on international cartel investigations affecting Australian and Chinese markets. The agreement allows the agencies to take coordinated action in response to anti-competitive conduct, including through the exchange of information and evidence. This will allow the ACCC and NDRC to make the best use of available resources and, where possible, coordinate approaches.”

The NDRC Bureau of Price Supervision and Antimonopoly is one of three bodies administering China’s AML. It is the agency responsible for price supervision and related enforcement action. The ACCC now has cooperation agreements in place with all three of China’s competition agencies.

Mr Sims further said:

“As cross-border trade increases, it makes sense that competition agencies work together to build and share sound practices and principles. For both countries, the MOU recognises the importance of cooperation in the field of competition enforcement, particularly in the fight against international cartels.”

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