Cartel Enforcement Ramps up in China

Over the past year, cartel enforcement in China has intensified as enforcement agencies have built up capacity, confidence and experience. The result has been a series of high-profile actions against domestic and foreign companies in a broad range of industries. Companies doing business in China cannot afford to overlook this jurisdiction in their global antitrust compliance programs.

Since 2012, Chinese courts have also recognized a cause of action for private cartel enforcement. Investigations proceed very quickly and lack many procedural safeguards provided in more mature jurisdictions. For example, there is no formal right to external counsel or mechanism for limiting the scope of the investigation.

While trade associations always present antitrust risks, enforcement experience shows that they may be of particular concern for multinationals in China. One reason is their unique historical role in the Chinese economy. Many trade associations in China are former government agencies, evolved into their current status as the result of administrative reforms conducted in the past decades. Given their previous role in the industry, trade associations have in practice tended to initiate and manage concerted action among their members. Moreover, most trade associations do not yet have antitrust compliance programs.

Vigorous cartel enforcement is likely to become the norm as Chinese enforcement agencies accumulate experience and build up enforcement capacity. Companies are advised to assess carefully their own risks in light of the unique features of cartel enforcement in China, and to monitor developments closely.