Putting it mildly, Asia Pacific business historically has lacked enthusiasm for competition and antitrust regulation.
"Antitrust laws are simply not ingrained in the culture and are in fact contrary to the way business people have operated in this part of the world," says Marc Waha, a competition partner at Norton Rose. "If you look at the success of the Asian tigers in the '80s and '90s, you'll see that much of their success was built on joint ventures and cartels and the like."
But the environment changed rapidly as Asia Pacific economies sought economic aid and foreign investment in an increasingly globalized world.
"A good number of competition laws were enacted as a condition of entry to the WTO (World Trade Organization), as a condition of IMF bailouts or as part and parcel of bilateral trade agreements," Waha says.
In 2010 the pace picked up as Hong Kong and Malaysia scheduled the introduction of new competition laws for the first time; Indonesia implemented a new merger clearance regime; and several countries amended their laws significantly.
"All of the jurisdictions in East Asia except North Korea and Myanmar, but including Cambodia and Laos, have adopted antitrust regulations or committed to introducing them in the next few years," Waha says.
Even where extraterritorial assets are the subject of a merger, the fact that the merging parties' main customers are in Asia may be enough to trigger local merger control requirements. Japan, for example, recently reformed its laws to broaden their extraterritorial effect.
"When BHP Billiton and Rio Tinto proposed to pool their resources in Australia, the fact that Japan, China and Korea joined the European Union in objecting to the transaction was the trigger for the deal's demise," Waha says.
But the process has been a long time coming.
Japan and the Philippines were the first to adopt antitrust laws, part of their 1950s legacy from the American occupation under Gen. Douglas MacArthur. But the governments did little to enforce the laws in any meaningful way.
South Korea adopted competition legislation in 1993, followed by Thailand (1999), Indonesia (1999), Taiwan (2002), Vietnam (2004) and Malaysia (2010, taking effect in 2012). The enactment of China's Anti-Monopoly Law (AML) in 2008 was a significant step for a country edging ever closer to a truly modern economy. In many ways, the AML followed the lead of the American and European antitrust regimes by providing broad guidelines regarding abuse of dominance, cartels and merger review. It also gave private parties (as well as the government) a right of action against offenders.
As for the longstanding free-market economies, Singapore adopted a competition statute in 1994. Hong Kong, which unlike other international economies did not have a general competition law regime, finally came on board with the mid-2010 introduction of the Competition Bill, expected to take effect in 2012 or 2013.
Still, enactment is one thing and enforcement quite another.
"It wasn't until the end of the '90s that Japan discovered that competition laws could be a tool of economic regulation and started enforcing the country's laws very seriously," Waha says. "The Philippines still doesn't enforce its competition laws, even though they constitute part of the penal code, and it's only lately that Korean authorities have been serious about enforcement, using the legislation as a tool of economic deregulation at the expense of the conglomerates that still operate there."
In 2009, regulators in Asia imposed $1.5 billion in fines, with Japan and Korea imposing 95 percent of the total.
Yet there are signs that other Asia Pacific regulators are starting to bear down. So far this year, fines have totalled $260 million in Japan, $141 million in Korea and $120 million in Indonesia. China imposed its first fines, totalling $200,000. Singapore and Taiwan have also imposed fines in 2010, albeit less than $1 million in either country.
"While these sums may be small by American and European standards, they have drawn the attention of business in the Asia Pacific context," Waha says.
And even where the goodwill to enforce competition laws exists, tactical difficulties can get in the way.
"For example, there are very nice laws on the book in Vietnam," Waha says. "But the competition people we deal with earn less than $100 monthly and often defect to the private sector, where salaries are 20 or 30 times as much."Politics also plays a role. In places such as Malaysia and Vietnam, appointments to the regulating bodies are at the discretion of the Prime Minister.
"Enforcement is only effective if the regulator has a degree of independence, and that is lacking in many jurisdictions," Waha says.
Yet progress continues in many places.
"There's a good focus on educating the business community about competition law in Vietnam and other places, and that's making the countries a better place in which to invest," says Martin Commons, special counsel at Baker & McKenzie in China.
Still, giving advice to clients can be a difficult task for both internal and external counsel. That's largely because even in jurisdictions where enforcement is taken seriously, guidance can be scant.
"If you go on the Singapore regulator's website, you'll get a pretty good idea of how the authorities look at the law, and Vietnam is coming along," Commons says. "It's very different in China and Thailand, where it's hard to get information, details are long in coming, and sometimes the best you can do for a client is help them to make a risk assessment or hope there is no investigation."
The upshot is that legal advice on the subject must focus on the specific.
"There's a commonly accepted view that it's very difficult to draw conclusions or give advice with reference to the region as a whole," Waha says.