First, base your enforcement actions on protecting competition. This standard focuses on allocative efficiency, price competition, quality, and innovation. It lets market-based economics, which are growing by leaps and bounds in China, drive the outcome.  This standard also is, in our view, the most objective. It allows competition authorities to focus less on extraneous values and more on economic realities and business incentives. Notions of fairness can be difficult to determine and too subjective to provide consistent, reliable guidance for businesses and consumers alike. Moreover, injecting notions of fairness into competition law enforcement inevitably turns it into regulation that protects competitors rather than competition itself.

Second, avoid competing values that incorporate political and social concerns, which can impose tradeoffs that have the potential to harm Chinese consumers. All enforcement agencies face challenges in dealing with entrenched interests, and the risks of promoting national champions is ever present. In the Chinese context, that means avoiding the temptation to give SOEs privileged status. I was interested to see the announcement last week about SAMR’s penalty against PetroChina units for resale price maintenance. To increase the standard of living of over a billion Chinese consumers, prioritizing their welfare and treating SOEs the same as companies without government interests is central. Of course, we intend to do the same. The Antitrust Division does not distinguish between competitors based on their nationality or ownership structure. Any foreign SOE that engages in commercial activity that harms the United States market is not immune to U.S. antitrust laws. 

Third, commit resources to economic analysis to enhance the possibility of success. It is important that SAMR has the resources it needs to assess practices in the dynamic economy it regulates. Having motivated, educated, and energetic staff is important for a competition agency to fulfill its mandate, and having a skilled group of economists to provide support and insight into competitive effects is critical. The Antitrust Division has had in-house economists since 1936, and our Economic Analysis Group today has over 50 Ph.D. economists. Agencies committed to rigorous economic analysis need to hire and retain qualified economists, and empower them to review cases and make independent recommendations to decision-makers. In addition, lawyers and staff benefit from training in fundamental microeconomic theory. 

Fourth, enforce competition laws consistent with intellectual property rights. That means competition law and policy should not constrain the legitimate exercise of intellectual property rights, or stifle innovation by undermining incentives for investment. It is critical to create a culture of innovation and economic freedom, where the default position is that anything that is not prohibited is permitted. This leads entrepreneurs, investors, and innovators to migrate toward your economy and identify it as a cradle of creation.  

Fifth, join the network of international competition agencies. Competition authorities from around the world meet regularly to share experiences and gain insights regarding the latest trends in competition enforcement. These regular meetings dramatically shape the reputation and relationships the competition authorities have with each other, and inform the substance and process of competition enforcement. One of the most important items on the agenda for the coming decade is for SAMR to slowly integrate into international organizations such as the International Competition Network (“ICN”).

Sixth, respect fundamental procedural fairness. Process can be as important as substance when it comes to competition enforcement. In particular, we strongly encourage SAMR to avoid discriminatory enforcement of the Chinese competition laws. As I have discussed previously, the prohibition against discrimination is central to the rule of law. The ICN Guiding Principles state that “[c]ompetition agencies should conduct enforcement matters in a consistent, impartial manner, free of political interference.” Failure to do so leads to biased antitrust enforcement and broader adverse economic effects. (emphasis added)