This new work by Professor Angela Huyue Zhang, director of the Centre for Chinese Law at the University of Hong Kong, is published at a very opportune moment given the recent increase in antitrust enforcement in China and the growing importance of the Chinese economy after the pandemic. The book focuses on Chinese antitrust exceptionalism, as its title indicates, and how this exceptionalism may introduce challenges for the global antitrust regulation system. In the words of the author, “China resembles that new kid on the playground: not only has it developed as a new antitrust regulator but also as a foreign target for antitrust regulation.”
This book consists of three parts. The first part investigates the current Chinese antitrust regulatory regime by looking into its institutions and agencies. The second part studies the EU and US antitrust regulations towards Chinese companies overseas. While the first two parts explore the Chinese exceptionalism in domestic antitrust policies, the last part examines the regulatory interdependence between the US and China.
The first part is divided into two chapters. In the first chapter, Prof. Zhang, by delineating a “bottom-up” approach, examines the motivations and the constraints of Chinese regulators’ antitrust enforcement. She points out that Chinese antitrust enforcement targets mostly monopolies, placing the central administrative enforcers at the wheel of the implementation of AML (Anti-monopoly Law of China). Chinese administrative antitrust agencies are seldom subject to judicial scrutiny. The tough antitrust sanctions that can be imposed by Chinese regulators give them incentives to advance the antitrust enforcement since these actions help build the agency’s reputation. Furthermore, the three former Chinese antitrust agencies were pre-existing departments in the central ministries. According to Prof. Zhang, “the bureaucratic mission, culture, and structure” of these departments have all impacted antitrust enforcement. While the three agencies have been integrated into a new agency, the new Anti-Monopoly Bureau within the SAMR (State Administration for Market Regulation), a big central ministry, remains constrained by the Chinese bureaucracy, including “the bureaucratic hierarchy, the power fragmentation, and the regional inertia.” Based on these observations in the first chapter, Prof. Zhang, in the second chapter, identifies the reasons behind the phenomenon that few firms have appealed to antitrust agencies’ decisions in China. In addition to the high costs of appeal, companies are fearful of being “taken hostage” by regulatory authorities in the future after challenging the antitrust enforcer. Moreover, the Chinese antitrust agency uses the state media to “shame firms” and directs the public opinion to justify the legitimacy of its measures. These various tools, though they help the agencies overcome their constraints of limited capacity and bureaucratic politics, imply the “imbalance of power between the government and businesses in China.”
The second part presents the exceptionalism as shown in the way Chinese firms have been treated in the EU and US. In chapter three, Prof. Zhang details “the paradoxical outcome” when the European Commission applies the existing merger control regime to scrutinize Chinese SOEs. As explained by Prof. Zhang, despite the fact that China remains a state-directed economy, the Chinese state has limited capacity to exert control over SOEs. The assessment of Chinese SOEs by the Commission focused on “de jure control” whereas the Commission used the criteria of “de facto control” when it relates to European SOEs, which appears to be applying “a double standard” to Chinese SOEs. A formalistic application of EU merger control rules to Chinese SOEs would result in both “overinclusive” and “underinclusive” problems. In this regard, she assesses the feasibility of regulatory tools such as foreign investment control as complementary to merger control. The next chapter deals with US scrutiny over Chinese export cartels. Prof. Zhang, by taking the example of the Vitamin C industry, reveals that “chronic overcapacity,” a result of “China’s highly decentralized economic structure,” serves as the major impetus for the organization of export cartels by the government. As a consequence, the Chinese companies could be subject to antidumping duties if they export at a low price due to the fierce competition among themselves, or otherwise be subject to antitrust sanctions if they coordinate to raise prices. In view of this, she analyzes the US judicial responses to the state-led export cartels where antitrust issues have interacted with trade policy. She further explores the challenges for US courts in export cartel cases and argues that “[t]he optimal regulatory response (. . .) hinges not only on antitrust law but also politics.”
The last part demonstrates another important feature of the Chinese antitrust enforcement, that is, the use of the AML as an instrument of trade and foreign policy. Beginning with explaining how the Trump administration has expanded its discretion to prosecute Chinese technology companies, Prof. Zhang indicates that China has invoked several regulatory weapons to “retaliate tit-for-tat,” of which the antitrust law could therefore serve as “a powerful economic weapon.” She, however, contends that the AML will only be applied to “fight a limited war” with the US as it will be difficult for China to overcome the “economic constraints” when it imposes countermeasures and China continues to be heavily dependent on US investment.
In her work, Professor Zhang, holding both insider and outsider perspectives, provides a balanced and neutral view of the Chinese antitrust exceptionalism. This book is a must-read for academics and legal practitioners who are interested in Chinese antitrust law. It is also highly recommended for researchers, policymakers and government officials in the fields of international relations, political science, and political economy.