Regional Developments: Asia

Legislation and Guidelines

MOFCOM Issues Regulations Regarding Failure to Notify Transaction. On January 5, 2012, China’s Ministry of Commerce (MOFCOM) issued new regulations regarding the investigation of and sanctions for companies that fail to notify transactions as required by the Anti-monopoly Law (AML). The regulations, which took effect February 1, 2012, provide that companies that fail to notify a transaction in accordance with the AML may be fined up to RMB 500,000 (approximately $80,000) and ordered to take measures deemed necessary to restore pre-concentration conditions. Such measures may include the disposal of shares or assets acquired. Companies under investigation will be ordered to suspend the relevant transaction pending the outcome of MOFCOM’s investigation. The extent to which MOFCOM may seek to enforce suspension beyond China is unclear. However, these new regulations demonstrate MOFCOM’s determination to see that the AML is properly complied with and enforced.

Korea Introduces Antitrust Guidelines for Patent Licensing. On January 17, 2012, Korea’s Fair Trade Commission (KFTC) published new antitrust guidelines on patent licensing that aim to protect the bargaining power of small and medium-sized companies that license the right to use patents owned by large businesses. The guidelines outline 10 potentially abusive practices and explain how they can restrict competition and how to reduce their anticompetitive effects. Practices covered include charging discriminatory prices, dividing the market by restricting the geographical areas in which licenses are granted, restricting the price or sales of products made using a licensed patent, and prohibiting the buyer of a patent license from buying competing licenses. Although the guidelines are not legally binding, they suggest the KFTC may increase its activity in the field of patent licenses.

Korea Introduces Antitrust Guidelines for Standards-Setting Activities. On Feb. 1, 2012, the KFTC published new guidelines that address competition concerns arising in standards setting. The guidelines suggest how to conduct standards setting in a transparent, inclusive, and fair manner. They ask standards-setting organizations to allow as many interested parties as possible to take part in the process and to keep clear and non-discriminatory restrictions to a minimum. The Commission also instructs companies to avoid exchanging data on prices, production volumes, and condition of sales. To avoid patent ambush, the holders of relevant patents must disclose their patents and accept fair, reasonable, and non-discriminatory (FRAND) commitments for the use of the patents, including disclosing proposed licensing terms. The new guidelines illustrate KFTC’s efforts to promote competition in the technology industry and to clarify gray areas in potentially anticompetitive uses of intellectual property rights. The guidelines are not legally binding, and KFTC still will have to prove any breach of competition law.

Investigations

China Telecom and Unicom Pledge to Reduce Broadband Rate and Apply for Suspension of Anti-monopoly Investigation. On Dec. 2, 2011, China Telecom and China Unicom announced that they had applied to the National Development and Reform Commission (NDRC) for suspension of an ongoing anti-monopoly investigation. The NDRC’s investigation focused on two areas: (1) whether the two companies had not fully integrated their networks, therefore resulting in increased costs and lower network speeds, and (2) whether they use discriminatory pricing practices against other service providers and customers. Both companies admitted to price discrimination against different broadband access operators. China Unicom pledged to enhance broadband access speeds over the next five years and to further lower broadband access charges to the public. China Telecom pledged that within five years, the unit broadband price for public users would decrease by 35%, and measures would be carried out immediately. It has been disclosed that the Price Supervision Bureau of the NDRC was not satisfied with the proposed measures on the grounds that they were too broad and not verifiable. Although the NDRC has acknowledged receipt of the application, no official decision has been issued regarding acceptance or rejection of the application.

Authorities

Shanxi Price Bureau to Select Key Industries for Anti-Price Monopoly Investigation. On Jan. 10, 2012, the Price Bureau of Shanxi Province (“Price Bureau”) held a provincial price supervision and AML working conference. The Deputy Director of the Price Bureau announced that the Price Bureau will focus on AML enforcement and investigating and sanctioning major price fraud cases, and will initiate anti-profiteering and anti-dumping law enforcement. In 2012, the Price Bureau will select some key industries for anti-price monopoly investigations, focusing on pricing in the banking, electricity and coal, medicine, education, tourism, and other sectors. The Price Bureau also announced that it will keep a close watch on collusive price increases between enterprises or organized by industry associations, and will severely punish hoarding of products beyond reasonably required storage levels. The Price Bureau will keep close track of and investigate frequent or significant price manipulations by companies with high market shares and promptly stop the bidding up of prices beyond a reasonable cost growth rate.