Geographic Market Definition in China – Inching Towards Convergence?

This article is part of a Chronicle. See more from this Chronicle

David Stallibrass, Jing Wen, Feb 11, 2014

Antitrust activity in China stepped up a gear in 2013. While there was no increase in the number of merger decisions from previous years, there was a marked increase in the detail provided by the Ministry of Commerce in the decisions they did make. Similarly, two landmark and lengthy court judgments in the Rainbow v. Johnson & Johnson and Qihoo v. Tencent cases provided new insight into antitrust analysis conducted by the courts. The decisions published in 2013 by the National Development and Reform Council and the State Administration for Industry and Commerce were less detailed, and are not analyzed in this paper.

Nonetheless, perhaps for the first time it is possible to attempt a comparative analysis of a single detailed element of antitrust decisions in China: the treatment of geographic market definition by MOFCOM and the Chinese courts in the year 2013.

Geographic market definition is often the less popular sibling of product market definition-it is given less attention in most discussions of competition economics, and shorter shrift in most administrative and judicial decisions, including in China. However, a country’s policy in relation to geographic market definition is clearly of high importance both in the legal assessment of individual cases and in understanding extraterritorial reach and enforcement sophistication.

Part 2 of this paper summarizes China’s formal guidance on geographic market definition and briefly sets it in an international context. Part 3 summarizes the approach to geographic market definition taken in all four merger decisions published in 2013 along with a select number of 2013 court cases. Part 4 provides an assessment, including a discussion of how China’s approach to geographic market definition can be seen to have evolved in the years preceding 2013, and a brief discussion of four unpublished mergers that were cleared by MOFCOM during 2013. Part 5 concludes with some tentative projections for the future.