When China's new Anti-Monopoly Law (AML) took effect in August 2008, it posed substantial uncertainties for non-China businesses: Would the enforcement agencies, whose missions had focused on managing a planned economy, be competent and even-handed guardians of a market economy? Would MOFCOM, China's vast and powerful finance-and-commerce ministry, use its merger-review role to protect Chinese firms from deals that strengthened foreign competitors? Would the State Administration for Industry and Commerce (SAIC) penalize non-Chinese firms that sought to market their products and technology efficiently? How would the National Development and Reform Commission (NDRC), China's price-regulation agency, adapt to punishing cartel behavior instead of engaging in it? How would China's court system enforce the law? And would the enduring role of state ownership in China lead Chinese enforcement agencies to use antitrust investigations to gather corporate intelligence?
The answers have been hard to come by. Nearly two years after the AML launched, the big picture is still fuzzy. The few solid data points so far suggest that our worst fears won't pan out. The Chinese courts, for example, have shown impressive sophistication in evaluating and rejecting private antitrust suits. And it now looks as if non-price distributor restrictions like exclusive territories will not be condemned outright as "monopoly agreements" (comparable to per se Sherman Act section 1 violations). MOFCOM has cleared an overwhelming majority of the mergers it has reviewed, and in general, the relief it has required as a condition of clearance has been rational. For example, the veterinary vaccine divestiture it ordered in clearing the Pfizer-Wyeth merger (after a three-and-a-half month review) appears to be reasonably connected to competition concerns the deal posed. And the conduct restraints imposed upon General Motors as a condition of its acquisition of the parts-maker Delphi, while solicitous of GM's Chinese rival auto manufacturers, are a defensible precaution against the possibility that GM was acquiring a uniquely important supplier in China.