Mr. Alford’s remarks were largely about agency cooperation in international antitrust enforcement. He discussed the Multilateral Framework on Procedures in Competition Law Investigation and Enforcement (“MFP”). The MFP strengthened and promoted due process in global competition law enforcement, and helped improve cooperation among competition agencies around the world.
Mr. Alford concluded his remarks by warning that state-owned enterprises (i.e. companies owned in whole or in part by the Chinese government) were not immune to investigation and prosecution for competition law violations:
Turning to the role of state-owned-enterprises, over the past few decades, SOEs have increasingly played a more prominent role in international commerce. In fact, some of the largest companies in the world are SOEs, including numerous Chinese companies. To the extent those companies engage in anticompetitive commercial behavior that harms the United States market, the Antitrust Division will challenge such behavior and subject foreign SOEs “to the U.S. antitrust laws to the same extent as the activities of privately owned firms.” As Assistant Attorney General Makan Delrahim said last year, in the United States state-owned enterprises that are engaged in commercial activity are not immune from the antitrust laws and “where competitors come together to engage in collusive or anticompetitive behavior, we will bring all our enforcement tools to bear.”
Last month the Antitrust Division filed a statement of interest interpreting the scope of the commercial activity exception to foreign sovereign immunity. As we noted in that filing, “actions of a foreign company to join and act in furtherance of an antitrust conspiracy can cause a direct effect in the United States even if that company made no direct sales in the United States.” Any other interpretation “could immunize many conspirators from liability for their anticompetitive actions, even when the conspiracy substantially harms consumers in the United States.”
In addition, the mere fact that a foreign government owns shares in a company does not render that company an SOE that benefits from foreign sovereign immunity. For a company to enjoy such immunity, it must be majority-owned by a foreign government or engage in a public activity on behalf of the foreign government such that it is an organ of the state. “While commercial enterprises can qualify as organs of a foreign state in certain circumstances, they do not constitute organs when they are acting to maximize profits rather than pursue public objectives on behalf of the foreign state.”
Investigation of any state-owned enterprise would face unusual obstacles, but its good to fire a warning shot and let it be known that prosecution is not off the table.
Mr. Alford’s full remarks can be found here.
Thanks for reading.