September 27, 2021

Volume XI, Number 270

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September 24, 2021

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May 2021 Competition Currents: China and Japan

China

SAMR issues series of fines for failure to pre-file notice of market concentration

The State Administration for Market Regulation’s (SAMR) recent enforcement actions have focused on two aspects of antitrust law. The first is the PRC Anti-monopoly Law’s (AML) requirement that business operators must first submit a filing to SAMR prior to implementing a concentration that exceeds relevant market thresholds. On April 28, 2021, SAMR issued administrative fines against several companies for failing to submit the necessary filings prior to engaging in a notifiable business concentration. This is in addition to SAMR penalizing dozens of companies the previous month for the same infraction. The maximum penalty currently allowed for unreported business concentrations is 500,000 RMB (approx. 77,000 USD). SAMR’s actions indicate a renewed emphasis on pre-concentration filing compliance.

SAMR restrains exclusive dealing arrangements by companies with a dominant market share

The second focus of the SAMR’s recent enforcement is the AML’s Article 17, which prohibits entities with dominant market positions from pursuing exclusive dealing arrangements with business partners without justifiable business reasons. SAMR’s enforcement activities include not only imposing administrative fines but also requiring companies to implement structural remedies to prevent future antitrust violations, as well as enhance internal compliance mechanisms and submit self-inspection reports to the SAMR for a specific time.

While China’s recent antitrust enforcement has mostly focused on domestic entities, the actions contain lessons for foreign and multinational companies doing business in China and may illuminate China’s enforcement priorities in other industries. Companies with substantial Chinese market presence should carefully review practices implicating exclusive dealing arrangements as well as carefully consider whether a SAMR filing is needed prior to engaging in a business concentration.\

Japan

The JFTC conducts on-site investigations of four electric power companies on suspicion of cartel

On April 13, 2021, the Japan Fair Trade Commission (JFTC) conducted on-site investigations against four electric companies, including three major Japanese electric companies. This is the first time the JFTC has investigated cartel charges against major power companies.

In 1995, in response to criticism that electricity prices were too high in Japan, the government started liberalizing electricity sales, and fully liberalized in 2016. As a result, major electric companies are now in danger of losing customer share and seeing prices plummet. It has been reported that the four electric companies are suspected to have agreed to limit new sales to each other and have restricted the acquisition of customers beyond their own area.

Algorithms/AI and competition policy in Japan

With the development of digitalization and e-commerce, some firms use algorithms to collect information about competitors’ prices and to automatically set their prices. On March 31, 2021, the JFTC released the report “Algorithms/AI and Competition Policy” (“Report”), which discusses issues and challenges regarding algorithms and AI competition policy in Japan. The main purpose is to enable JTFC to adequately address algorithm/AI-related competitive risks.

The use of algorithms may promote price competition, but there is a concern that they may lead to concerted price settings. For example, some firms have provided various services using ranking. A firm may interfere with transactions between its competitors and their customers by manipulating the order of the ranking it provides to have its own products placed higher in the ranking. The ranking position can be important for competition, and possible ways for JFTC to verify the operation of the algorithm were discussed in the Report. According to the Report, strict action should be taken against businesses that restrict competition by arbitrarily operating algorithms, and the JFTC may well address the issue in the future.

©2021 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XI, Number 127
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About this Author

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Andrew G. Berg Chairs the Global Antitrust Litigation & Competition Regulation Practice and advises clients on litigation, mergers and acquisitions, and other antitrust and competition-related matters before the Federal Trade Commission (FTC), the Antitrust Division of the Department of Justice (DOJ), state attorneys general, and in private litigation. Andrew's practice includes a full range of antitrust transactional and mergers and acquisitions experience, including Hart-Scott-Rodino filings at the FTC and DOJ, and related merger analysis issues. He also counsels...

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Gregory Casas, Greenberg Traurig Law Firm, Austin, Houston, Energy and Business Litigation Law
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Gregory J. Casas is the Administrative Shareholder for the Austin office and focuses his practice on antitrust, complex business litigation, and energy and natural resources law. Greg's antitrust and complex business litigation practices are international in scope. His antitrust practice includes litigating price-fixing, bid-rigging, and market allocation claims, and providing counseling for DOJ/FTC investigations, joint venture formation, mergers and acquisitions, pricing plans, and other contractual relationships. Greg's complex business litigation experience includes...

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Calvin Ding Corporate and Compliance Lawyer Greenberg Traurig China
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As a U.S. attorney who has worked in China for over decade, Calvin Ding has deep experience in international anti-corruption advisory and investigations, cross-border litigation and e-discovery, as well as compliance with Chinese anti-trust, anti-bribery, and privacy laws.

In the anti-corruption space, Calvin frequently advises companies on comprehensive compliance programs, risk assessments, pre-transaction compliance diligence, government policies, and internal investigations. Having spent several years working on the day-to-day implementation of an FCPA compliance program in...

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Miguel Flores Bernés Antitrust & Competition Attorney Greenberg Traurig Mexico City, Mexico
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Miguel Flores Bernés focuses his practice on antitrust and competition issues affecting clients in various industries, including government merger review, investigations of alleged anticompetitive conduct, litigation and counseling. He regularly represents clients before the two Mexican competition authorities: Comisión Federal de Competencia Económica and Instituto Federal de las Telecomunicaciones, and designed and implemented antitrust/competition compliance programs for clients in Mexico.

Prior to joining the firm, Miguel was a partner dedicated to antitrust and competition...

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Víctor Manuel Frías Garcés Commercial Law Attorney Greenberg Traurig Mexico City, Mexico
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The practice of Victor Manuel Frías is focused on commercial law, including competition, mergers and acquisitions and arbitration.

On the competition side, Mr. Frías has represented clients in numerous cartel investigations before the Competition Commission in different industries for over 20 years. He frequently represents clients in pre-merger filings. Mr. Frías has been ranked by different publications as one of Mexico’s premier competition attorneys. He often appears before Mexico’s Federal Specialized Courts in Competition and Telecommunications matters.

On the M&A...

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