Procedural Rights in Competition Law in the EU and China

Procedural rights are an essential tool for guaranteeing that the rule of law is respected in competition cases. This applies both in merger cases, where the competition authority needs to clear the merger before it takes effect (ex ante cases), and in infringement cases, where the competition authority sanctions an infringement that already took place (ex post cases). In both cases, stakes for the undertakings are high. The clearance (or non-clearance) of a merger determines the future profit-making ability of an undertaking. In infringement cases, sanctions tend to be severe, which may be reflected in share value and may have an impact on the image of the undertaking. Differences in procedural rights may hamper international cooperation between competition authorities. Moreover, weak or non-existing procedural rights may have an impact on the readiness of international undertakings to enter the market in question.

It has been over 10 years since the European Union modernised its competition law regime and introduced a more decentralised system that granted the national competition authorities (NCA) and the national courts the power to apply Articles 81 and 82 of the Treaty establishing the European Community (now Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU)) alongside national competition rules. In particular, NCAs and the national courts were empowered by the implementing procedural regulation (Regulation 1/2003) to determine whether agreements restrictive of competition met the conditions for exemption in Article 101(3).

China’s introduction of its Anti-Monopoly Law (“AML”) on 30 August 2007, marks a legal milestone in the country’s unprecedentedly adventurous journey towards marketization. However, the AML only launched a transformation that centers on fulfilling a declaration of fair competition within preexisting legal and institutional constraints. Since the day that the statute entered into force, largely due to enforcement actions and sporadic high-profile court cases, details of the AML have gradually been filled in. During the process, China’s competition regime has received a major makeover and is still continually evolving, with wide-ranging implications on the country’s legal as well as economic development. This paper traces the origin and progression of China’s competition law, in order to identify the factors that have shaped it, and analyze its various components, with a particular focus on how administrative enforcement has dominated the development of the AML.

The present contribution has two inter-related purposes: first, to analyse the context and legal framework of procedural rights in EU competition law, in particular, the administrative notification of mergers, and second, to critically review any perceived flaws in the substantive, institutional design or exercise of these procedural rights in practice, thereby offering proposals for institutional reform.

The Anti-Monopoly Law (AML) has been in force for over 7 years. The 5-year anniversary in August 2013 has been described as a turning point in the history of Chinese antitrust enforcement, with the focus of public attention arguably shifting from merger control to the enforcement against anti-competitive agreements and abuse of dominance. Many observers find the reason for this development to be that China’s merger control policy and enforcement practice have reached a stage of maturity.

In the European Union (EU), the rights of parties to antitrust proceedings before the Commission are dispersed in a jungle of legal instruments. Some are enshrined in statutory instruments: the founding Treaties (Treaty on the European Union (hereafter TEU) and the Treaty on the Functioning of the European Union (hereafter TFEU), the Charter of Fundamental Rights of the EU (hereafter Charter), the European Convention on Human Rights (hereafter ECHR)) and EU secondary legislation (in particular Regulation 1/2003 and the Implementing Regulation 773/2004). Those instruments do not necessarily have equal legal value. Others can be found in the case law of the EU courts and of the European Court of Human Rights (hereafter ECtHR). They often stem from general principles of law or from the legal traditions and case law of the Member States. Finally, several important procedural rights originate from the EU Commission’s administrative practice. Those rights are usually described in soft law instruments, such as Communications, notices, best practices, manuals, etc.

The Anti-monopoly Law (AML) of China established a decentralised law enforcement scheme, in which anti-monopoly enforcement powers are divided and allocated between different agencies at the same government level. Business undertakings’ monopoly agreements and abuses of market dominant position are investigated and handled by two administrative agencies respectively, with (1) the Price Supervision and Inspection and Anti-monopoly Bureau under the National Development and Reform Committee (NDRC) responsible for monopoly pricing practices and (2) the Anti-monopoly and Anti-unfair-competition Enforcement Bureau under the State Administration for Industry and Commerce (SAIC) tackling anti-monopoly agreements and abuses of dominant market positions other than monopoly pricing practices.

Competition authorities have increasingly to deal with transnational cases in order to fulfil their task to enforce the competition rules in their countries against anti-competitive mergers and market behaviour. This paper outlines the reasons underlying international cooperation, describes and analyses the current framework for inter-authority collaboration and discusses the possible ways forward.

Based on the preceding research reports and some additional sources, this concluding chapter will horizontally compare the EU and Chinese rules on procedural rights in competition law. In line with the sequence of the previous chapters, we will deal, principally, with merger proceedings and, subsequently, with infringement procedures.

The book attempted to provide an overview of the similarities and differences between procedural rights of defendants in competition cases in the EU and China, to determine the most important negative effects of potential differences, and to formulate suggestions to overcome these.