Freshfields' Alex Potter charts the rapid spread of aggressive competition enforcement around the world

In recent times, much attention has focused on the significant increase in financial services regulation and anti-bribery law. At the same time, a more steady – some would say relentless – growth story has been the continuing trend towards far more sophisticated competition law enforcement around the world.

While agencies in countries with more developed competition regimes are turning to new economic techniques and ever more onerous information demands are becoming the norm, agencies with newer regimes are fast becoming aggressive enforcers. The blank spaces on the map of global competition law enforcement are rapidly being coloured in as countries such as China and India apply their laws in complex cases.

Regime change

China brought into force a comprehensive anti-monopoly law (AML) in August 2008. Since then, China's merger control authority, the Ministry of Commerce, has not hesitated to use its newfound powers. It has prohibited one acquisition and imposed remedies on a further seven.

Moreover, use of the AML has not been restricted to merger reviews. It was reported that the first use of the legislation by a private litigant in the Chinese courts was launched on 1 August 2008, the same day the AML came into force. Since then, there have been a series of further court actions.

The Chinese agencies entrusted with non-merger enforcement have now begun to step up activity. In May 2011, the National Development and Reform Commission (NDRC) imposed a fine on Unilever for price signalling in relation to food products. Although brought under the provisions of China's Price Law, the NDRC made a point of noting that price signalling could also constitute an infringement of the AML.

India's Competition Act was enacted in 2002, but the provisions relating to anti-competitive agreements and abuse of dominance only entered into force in May 2009. Since then, the Competition Commission of India (CCI) is thought to have initiated inquiries into more than 80 cases of potentially anti-competitive behaviour. The merger control provisions took longer to arrive, finally being activated on 1 June 2011.

Thus far, the CCI has imposed fines on the National Stock Exchange and India's largest real estate developer for abuse of dominance (in the latter case, the fine amounted to €96m (£84m)), as well as imposing a penalty on Kingfisher Airlines for failure to provide information. Other investigations reported to be underway include a complaint against the Multiplex Association of India, a review of the procedures followed when the Indian Premier League awarded cricket franchises to bidders and a complaint against Indian Railways and the Steel Authority of India. The striking nature of the CCI's workload so far is the complexity of the cases that are being subject to review. The CCI does not seem to envisage a slow build up of activity starting with easy wins.

While China and India have prompted headlines, the emergence of new enforcement regimes is now clearly evident across the globe, spanning both mature and developing economies. Japan enacted revised merger control rules in January 2010, leading to a much greater likelihood that international transactions would trigger a filing obligation there. Kosova and Kurdistan both adopted new merger control regimes in 2011, while Kenya amended its regime and introduced a new independent competition authority in the same year.

Hong Kong continues to debate a new cross-sectoral competition law, which would outlaw cartels and abuses of significant market power. Brazil is considering replacing its post-merger filing regime with a pre-merger filing obligation that requires companies to await clearance before proceeding with a merger. In 2011, Mexico instituted a criminal offence for hardcore cartel activity, joining countries such as the US, Canada and the UK in enacting criminal law to punish competition infringements. Gaps in the map of competition law enforcement around the world are now increasingly hard to find.

The only way is UPP

As new competition law regimes flex their muscles, the trend in those countries with a longer tradition of competition law enforcement is inexorably towards the use of more complex techniques for market analysis, with the consequent increase in the informational burden on the parties subject to investigation.

Last year saw the introduction of new merger assessment guidelines in the UK and new horizontal merger guidelines in the US. Both of these documents declared a greater reliance on a range of economic techniques with which to assess the potential impact of a transaction. Less emphasis was to be placed on market definition and market shares, and more time was to be spent analysing – and requiring data for – diversion ratios, critical loss analysis and a range of economic tools designed to assess post-transaction pressure on pricing behaviour (known by acronyms such as IPR, UPP and GUPPI).

There is truth to the statements of the agencies in these two countries that these revised guidelines, in some respects, did no more than recognise current enforcement practice. However, the likely trend is for an increasing array of analytical techniques to be deployed in more straightforward cases where previously a cursory assessment would have sufficed.

In the context of a truly global push towards robust antitrust enforcement, it has become critical that companies with cross-border operations take an international view of the impact of competition law on their businesses.

Alex Potter (pictured) is a partner in Freshfields Bruckhaus Deringer's competition group.

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