U.S. and EU cartel risks to Chinese companies

| BY

Katherine Jo

Chinese companies engaging in cartel activities can be subject to the extraterritorial reach of U.S. and EU antitrust laws. This means long and costly investigations, heavy fines and even criminal prosecution. Understanding the risks, compliance and devising an effective strategy are key

China's cartel enforcement authorities are now working closer than ever with their counterparts around the world. They signed Memorandums of Understanding with the U.S. and the EU in July 2011 and September 2012, respectively, and the effects of cooperation are now showing. In several recent probes, the National Development and Reform Commission (NDRC) exchanged visits and information with the other authorities and even coordinated surprise inspections at the premises of suspected cartelists. The heightened enforcement efforts are due to the significant harm cartels can inflict upon society and are intended to deter such activities. At the same time, recent case law in Europe shows that, also absent an investigation in China itself, Chinese companies are at greater risk of increased fines in other jurisdictions.

As it is increasingly clear that U.S. and EU competition authorities can investigate – and punish – Chinese companies for cartel behavior, it is crucial for Chinese companies to ensure compliance with the rules in overseas jurisdictions.

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