Australia: Competition Law Developments in East Asia June 2011

More than $824 million in fines have been imposed so far this year in East Asia, with the Korean competition authority being the most aggressive enforcer by far. The amount of penalties imposed in the first six months of the year is a significant increase over the $492 million imposed in the first half of 2010. Sanctions for antitrust violations are also imposed more frequently. 34 decisions imposing fines were adopted during the period, compared to 24 in the same period last year.

The increase in fine amounts is not the only noteworthy development. Considering the types of infringements sanctioned, cartels and concerted practices now make up the vast majority of cases, with twice as many decisions sanctioning cartels than decisions sanctioning bid-rigging practices. Vertical restrictions rarely attract the imposition of fines, although there were several resale price maintenance cases in Taiwan and Korea where penalties were imposed during the period. These trends are illustrated in the graph below.

The fines data otherwise confirms established trends: Japan and Korea are among the authorities that consistently impose the highest amounts of fines, both in Asia and on a global basis. Authorities in China are gradually stepping up their enforcement against behavioural conduct under the Antimonopoly Law, while continuing to deal with price and market allocation cartels under the Price Law and the Unfair Trade Practices Law. Competition authorities that can rely both on antitrust and unfair trade practices regulation will also often choose the latter when dealing with unilateral conduct, as shown by the lack of sanctions imposed for abuse of market power under antitrust legislation (but sanctions are imposed and action is taken under other legislation, as seen recently in the retail and online gaming sectors in Japan).

Finally, in terms of industrial sectors, the construction (11 decisions), energy (four decisions) and food (seven decisions) industries continue to be the most affected by antitrust fines, as was the case in previous periods.

The statistics used are based on public announcements made by competition authorities in East Asia during the first half of 2011. The amount for China is an estimate as no detailed figures were published. US dollar equivalent amounts were calculated using annualised exchange rates established on 25 June 2011.

Hong Kong LegCo Committee launches public consultation

The Hong Kong Competition Bill was formally introduced by the Government in the Hong Kong Legislative Council (LegCo) in July 2010. A Bills Committee was established in September to consider the proposal, and has now met 18 times. The Committee review process is expected to conclude in the summer of 2012.

In response to the general unease among Committee members with a broadly worded principles-based legislation, the Government has been requested to provide examples of implementing guidelines to show how a Competition Ordinance would be enforced in practice.

On 30 June, the Bills Committee released these guidelines for public consultation. Interested parties have until 11 July to submit a written submission.

Vietnam Competition Authority releases 2010 Annual Report

On 9 June, the Vietnam Competition Authority (VCA) published its 2010 Annual Report which describes its enforcement activity during 2009 and 2010. During that period, the VCA received 23 complaints in relation to restrictive practices and 8 applications for merger clearance. It also dealt with an abuse of dominance case against Vietnam Brewery, which was accused of allegedly having imposed unfair terms and conditions on its retailers. In this particular case, the VCA recommended that the Vietnam Competition Council issue a cease and desist order to bring an end to the investigation owing to the lack of evidence supporting the case for dominance. The case was dismissed in 2010.

Although the number of cases reviewed has been increasing since the Competition Law was introduced in 2004, the VCA acknowledges that there are still weaknesses in the implementation of the law. The VCA pointed out, in particular, the limited human resources to carry out antitrust investigations and the overlap between the various laws and regulations governing anticompetitive practices.

The annual report also identifies the VCA's priorities for 2011. These include proposing amendments for the Competition Law, conducting market investigations in those sectors that have high levels of concentration and improving legal certainty in the implementation of the law.

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