Introduction

In 2012, the Asia-Pacific region stands out as the notable performer of the global economic environment. Its rapid development, abundant resources and untapped potential mean that the region will emerge as the economic powerhouse of the 21st century.

With such rapid regional growth, robust antitrust (competition) laws and attention to law enforcement will play a crucial role in determining the quality of economic development in the Asia-Pacific region and the spread of the benefits from that growth.

Agency development

The year 2011 was one of significant developments in the antitrust landscape of the Asia-Pacific region. Some countries established new agencies, some made improvements to their antitrust laws, and agencies further refined their enforcement strategies.

Malaysia’s newly established antitrust agency, the Malaysia Competition Commission (MyCC), has used 2011 to prepare for the implementation of Malaysia’s Competition Act, which came into effect on 1 January 2012. The Competition Act broadens the scope of Malaysia’s existing antitrust laws and regulations - that previously covered only the communications and multimedia as well as energy sectors - to include all sectors of Malaysia’s economy.

Similarly, in Hong Kong, a cross-sector competition bill was introduced to the Legislative Council. This bill seeks to increase the scope of Hong Kong’s antitrust law from telecommunications and broadcasting to include all sectors of the economy. If passed, the proposed law will be enforced by a new Hong Kong agency, to be called the Competition Commission.

The Philippines established an Office for Competition under the country’s Department of Justice and filed its first cartel case. In New Zealand, the government introduced a bill to the parliament that would bring in criminal sanctions for cartel behaviour.

The Taiwan Fair Trade Commission introduced new leniency rules for enforcement under the agency’s leniency policy, and increased the available cartel fines by more than fortyfold. These changes, to be implemented in 2012, aim to deter cartel conduct and encourage self-reporting of existing cartel conduct in Taiwan.

The Australian government passed new legislation prohibiting price signalling (which will initially apply to the banking sector). The amendment will take effect in mid-2012.

The Australian Competition and Consumer Commission (ACCC), the Competition Commission of India (CCI) and the Korea Fair Trade Commission (KFTC) all saw new chairpersons appointed to their respective agencies in 2011.

The KFTC celebrated its 30th year in operation, and revised its leniency programme. The CCI introduced its merger control regime, giving effect to the merger control provisions in its Competition Act, and providing more comprehensive oversight of concentration in its markets. The Canadian Competition Bureau (CCB) also released revised merger enforcement guidelines.

Reviewing enforcement

Over the last year, the antitrust agencies of the Asia-Pacific region have pursued anti-competitive conduct with significant results. Listed below are a few of the significant cases of antitrust enforcement in the Asia-Pacific region finalised during 2011.

The KFTC successfully prosecuted a cartel of four oil refiners that had been engaging in market allocation conduct for almost 10 years. The firms, from Korea, Japan and Malaysia, were fined over US$400 million.

In a second case, the KFTC issued fines of over US$47 million to four producers of glass for cathode ray tubes, used in television and computer screens, for price-fixing conduct. The fines followed an investigation commenced in 2007 in cooperation with the United States Department of Justice and the European Commission. Also in Korea, court decisions in the Gmarket and Melon cases, regarding internet retailing and online music retailing respectively, shed further light on the current body of law on both exclusionary and exploitative abuses.

In China, 2011 saw the National Development and Reform Commission (NDRC) commence an antitrust investigation into two state-owned telecommunications companies. The NDRC also issued the largest fine for antitrust infringements since China’s Anti- Monopoly Law came into force in 2008. The fine, of approximately US$1.1 million, was issued against two private pharmaceutical companies for colluding to raise the price of a medicine used to treat high blood pressure.

In Australia, the courts ordered a Singaporean company and an Indonesian company to pay penalties totalling US$4.5 million for fixing the price of paper supplied to Australian customers. These orders brought the imposed total penalties on corporations involved in this case to approximately US$8 million.

For Australia, 2011 was also a year of important litigation decisions, with the ACCC appealing the initial decision in the contested Metcash merger matter, in the grocery sector, in order to clarify some of the principles relating to merger analysis under the Competition and Consumer Act.

The ACCC also succeeded in securing further penalties in the continuing investigations into the air cargo price-fixing case; the total penalties so far exceed US$50 million. Of the fifteen proceedings launched in Australia, seven remain unresolved. In the Asia-Pacific region, the CCB, the KFTC, the New Zealand Commerce Commission (NZCC), and the ACCC have each brought cases against multiple airlines and secured fines for price fixing in their respective jurisdictions. In 2011, the NZCC secured US$11 million in penalties, including a fine of over US$5 million against a single airline company. The CCB secured further settlements in their own air cargo cartel investigations.

The CCB secured the first convictions for cartel conduct under the amended conspiracy provisions in Canada’s Competition Act, along with US$12.3 million in fines. The CCB also lodged its first merger challenge since 2005, after reviewing a merger that had not been reported to the CCB. It has applied to a Canadian court to dissolve the merger.

Reviewing enforcement

Over the last year, the antitrust agencies of the Asia-Pacific region have pursued anti-competitive conduct with significant results. Listed below are a few of the significant cases of antitrust enforcement in the Asia-Pacific region finalised during 2011.

The KFTC successfully prosecuted a cartel of four oil refiners that had been engaging in market allocation conduct for almost 10 years. The firms, from Korea, Japan and Malaysia, were fined over US$400 million.

In a second case, the KFTC issued fines of over US$47 million to four producers of glass for cathode ray tubes, used in television and computer screens, for price-fixing conduct. The fines followed an investigation commenced in 2007 in cooperation with the United States Department of Justice and the European Commission. Also in Korea, court decisions in the Gmarket and Melon cases, regarding internet retailing and online music retailing respectively, shed further light on the current body of law on both exclusionary and exploitative abuses.

In China, 2011 saw the National Development and Reform Commission (NDRC) commence an antitrust investigation into two state-owned telecommunications companies. The NDRC also issued the largest fine for antitrust infringements since China’s Anti- Monopoly Law came into force in 2008. The fine, of approximately US$1.1 million, was issued against two private pharmaceutical companies for colluding to raise the price of a medicine used to treat high blood pressure.

In Australia, the courts ordered a Singaporean company and an Indonesian company to pay penalties totalling US$4.5 million for fixing the price of paper supplied to Australian customers. These orders brought the imposed total penalties on corporations involved in this case to approximately US$8 million.

For Australia, 2011 was also a year of important litigation decisions, with the ACCC appealing the initial decision in the contested Metcash merger matter, in the grocery sector, in order to clarify some of the principles relating to merger analysis under the Competition and Consumer Act.

The ACCC also succeeded in securing further penalties in the continuing investigations into the air cargo price-fixing case; the total penalties so far exceed US$50 million. Of the fifteen proceedings launched in Australia, seven remain unresolved. In the Asia-Pacific region, the CCB, the KFTC, the New Zealand Commerce Commission (NZCC), and the ACCC have each brought cases against multiple airlines and secured fines for price fixing in their respective jurisdictions. In 2011, the NZCC secured US$11 million in penalties, including a fine of over US$5 million against a single airline company. The CCB secured further settlements in their own air cargo cartel investigations.

The CCB secured the first convictions for cartel conduct under the amended conspiracy provisions in Canada’s Competition Act, along with US$12.3 million in fines. The CCB also lodged its first merger challenge since 2005, after reviewing a merger that had not been reported to the CCB. It has applied to a Canadian court to dissolve the merger.

Cooperation between agencies in the region

With the increasing sophistication of international trade, regional cooperation between antitrust agencies remains crucial. The number of multi-jurisdictional antitrust cases highlights the need for antitrust policy that discourages anti-competitive conduct from domestic and international sources and requires cooperation with international antitrust enforcement agencies.

Regional activities in the last 12 months included:

  • in March 2011, the OECD-Korea Policy Centre held workshops in Korea, India and Vietnam to discuss antitrust policy and enforcement in relation to a range of topics, including: abuse of dominance; mergers; telecommunications; cartels; advocacy; and training judges in antitrust law;
  • at the 23rd APEC Ministerial Meeting in the United States in November 2011, APEC members pledged to maintain free and open markets. APEC’s Competition Policy and Law Group commenced work on a project to improve information sharing between APEC members. The project seeks to raise APEC economies’ awareness of the possibilities, rules and procedures for obtaining information that may be required for their antitrust enforcement actions, merger reviews and promotion of competition policies from other competition authorities in APEC economies. The project is due for completion in 2012;
  • in May 2011, the International Competition Network (ICN) announced its second-decade goals, including prioritising inter-agency cooperation and convergence of antitrust regimes; and
  • China’s three antitrust agencies and two counterpart antitrust agencies in the United States signed a memorandum of understanding intended to establish a framework of enhanced communication and cooperation between the signatories.

Antitrust agencies have continued to pursue informal cooperation arrangements that facilitate capacity building. In November 2011, the Japan Fair Trade Commission (JFTC) held its sixth training course for the Vietnam Competition Authority (VCA) on antitrust law and competition policy.

Agency-to-agency technical assistance programmes also facilitated the development of regional competition law enforcement officials, for example, during 2011 the ACCC hosted colleagues from the JFTC and the VCA, with a focus on mergers and cartel knowledge and technical expertise.

Looking ahead

In the immediate future, amendments to existing antitrust laws will come into effect, and new laws will be tested before the respective courts. There are multiple antitrust investigations and court cases underway throughout the region, and more will arise as the region’s antitrust agencies pursue anti-competitive conduct and seek redress for consumers and businesses.

In the years ahead, a priority for antitrust agencies in the region is to build sustainable relationships that allow significant operational cooperation. Further, the challenge will be to recognise the variation across the region, in the development of policy, legal frameworks and enforcement agencies, and share experience and expertise that will build a sound institutional base for antitrust enforcement in the region.

On a personal note, I look forward to catching up with my counterparts in the competition agencies throughout the region.

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