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This chapter examines the myth behind the paucity of appeals against antitrust agencies in China. The primary reason holding businesses back from defying Chinese antitrust authorities is not necessarily the perceived low probability of success in a Chinese court but rather the high transaction costs associated with such an appeal. Chinese antitrust authorities possess wide discretion over enforcement and can proactively apply it to entire firms to settle the cases. Firms operating in China, whether foreign or domestic, are likely to continue to interact with these agencies and their host ministries in the future. Businesses therefore avoid taking an aggressive and adversarial approach for fear of future retribution. In addition, Chinese government agencies are adept at using media strategies during enforcement. In several high-profile cases, the antitrust bureau at the National Development and Reform Commission (NDRC) deftly mobilized public sentiments through the state media, strategically shaming to prevent defiance of their orders, and relentlessly suppressing experts from voicing opinions that might threaten the legitimacy of its measures. In so doing, the NDRC was able to overcome its capacity and bureaucratic constraints, thereby quickly cementing its reputation as an astute and forceful regulator.

This chapter demonstrates the close interdependence between the regulatory moves of the United States and those of China. Against the backdrop of the bitter Sino-US tech war, it applies game theory analysis of cooperation and conflict to examine the role of antitrust in China’s tit-for-tat strategy against the aggressive US sanctions. The US executive branch has wide discretion in prosecuting foreign businesses and individuals and has strategically used such legal discretion as an instrument of trade and foreign policy against China. China has retaliated in kind by invoking a number of regulatory measures. In particular, the Chinese antitrust authority has flexed its muscles by holding up large mergers between foreign multinationals, amending its antitrust law to allow for high monetary fines and potential criminal liabilities, and threatening to impose heavy sanctions on firms that boycott or refuse to supply key components to Chinese technology companies. As a result, the line between national security and antitrust policy, once belonging to separate spheres, has become increasingly blurred amid growing Sino-US tensions. However, similar to other countries that have applied countermeasures against US sanctions law, China faces significant economic constraints in weaponizing its antitrust law against US businesses.