Wednesday, May 23, 2012
Posted by D. Daniel Sokol
Margaret Wang (Freshfields) has written on China's Current Approach to Vertical Arrangements Under the Anti-Monopoly Law.
ABSTRACT: Traditionally in competition law, vertical arrangements (where parties to the transaction or agreement in question are active up and downstream of each other) are normally subject to a lower level of scrutiny compared with horizontal arrangements. Some jurisdictions have even taken the policy decision not to subject vertical arrangements to the reach of competition law. For instance, the United Kingdom until recently had in place an exemption for vertical agreements. This approach is also proposed under the hotly anticipated Hong Kong Competition Bill. The position in China is, however, different. Under the Chinese Anti-monopoly Law (“AML”), the legislation expressly seeks to regulate agreements involving undertakings operating at different levels of the value chain, and this is reinforced in regulatory guidance. The merger control provisions make no distinction as to horizontal, vertical or conglomerate mergers, and in practice, the Ministry of Commerce (“MOFCOM”) has indeed imposed remedies in two cases involving vertical mergers.
This article summarizes the extent to which vertical arrangements have been scrutinized by antitrust regulators, and instances where they have been challenged in the private sphere.