Legal systems develop in response to the needs of economic growth.  It’s therefore little surprise that as China’s economy has mushroomed, so too has its corresponding body of laws and regulations.  Among its newest additions is an anti-monopoly law that went into effect last year.  While from a purely legal perspective, the adoption of such anti-monopoly principles represents a significant step in the harmonization of the rule of law between countries; its implementation has led to some business surprises.

Why?  Well, it was originally thought that the new law would be a factor in the burgeoning mergers and acquisitions area.  Yet, some lawyers are creatively applying the new law on behalf of consumers to file private actions against large Chinese companies. 

By way of comparison, in the U.S. private antitrust suits are usually filed by companies or similarly situated plaintiffs who file as a group in a class action suit.  They are not typically filed by individual consumers.  As a result the Chinese application of the anti-monopoly law could lead to some interesting liability exposure.  If these suits are sanctioned by China’s Supreme People’s Court it is entirely possible that such consumer actions could be brought against foreign companies operating in China too. 

You might say that that’s the way the fortune cookie crumbles, but, the creative use of anti-monopoly is but one example of how the assumptions we may have about our own legal system may not translate well when conducting business internationally.  With more businesses going global every day, understanding the legal playing field and developing confidence in your ability to successfully navigate it can make the difference between business success and failure.

If you would like to learn more about the common legal mistakes managers and executives make when dealing abroad and how to avoid them, please join me on December 3^rd at 8 pm Eastern (5 pm Pacific) when I’ll be hosting international legal expert Carol Emory on Ask the No Nonsense Lawyer.  Better yet, if you have a question that you’d like me to ask Carol on Thursday evening click here to submit it and you’ll receive the call-in information to this complimentary program. 

Copyright © 2009, Corporate M.O., LLC 

Tags: Ask the No Nonsense Lawyer, Carol Emory, China anti-monopoly law, legal harmonization

This entry was posted on Monday, November 30th, 2009 at 10:28 pm and is filed under Announcement, Business Blind Spots, Costs, International, Rule of Law. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.