China Law Vision : China Insurance & Anti-Trust Lawyer : Dr. Zhan Hao : Grandall Legal Group : Anti-Monopoly & Competition Law : China Law Vision Blog

On August 12th 2010, the Ministry of Commerce held a press conference regarding the development of the antimonopoly practice in China.  The Chief of the Antimonopoly Bureau, Mr. Shang Ming, answered questions raised by the journalists.  For the first time in 2 years since the China Anti-Monopoly Law (“AML”) came into effect that some of the most controversial questions were clarified directly by the official from the enforcement institution.

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On July 9, China Insurance Regulatory Commission (“CIRC”) issued a notice concerning assumed interest rate on traditional life insurance to solicit public opinion. Some analysts said CIRC proposes to loosen its control over the assumed interest rate through this notice and expected that the profits margins of traditional life products will shrink following the implementation of this proposal, while insurers will have more flexibility in the design of this kind of policies.

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On July 8^th, MOFCOM (Ministry of Commerce of People’s Republic of China) released The Provisional Rules on Implementing Divestiture of Assets or Businesses(“Provisional Rules”). This legislative move can be seen as China’s aggressive while at the same time, practical effort in the perfection of Chinese concentration review regime within the framework of Chinese Anti-monopoly Law (“AML”).

So far, China has only slightly less than two years of antitrust enforcement. Yet some antitrust professionals have already been amazed by how China has quickly become the world’s third most important merger control jurisdictions, and its influence is still ascending. MOFCOM, SAIC and NDRC, China’s three AML enforcement authorities, have issued nearly 20 regulations, guidelines, notices and provisions to implement AML in the areas of concentration, cartels, abusing dominance and administrative monopoly.

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On May 27, State Administration of Industry and Commerce (“SAIC”) published new draft regulations on monopoly agreements, abuse of dominant position and administrative monopoly for public comments. These sets of unveiled draft rules are resulted from pubic opinions and comments which SAIC has collected since June 2010, this is when SAIC first published the draft regulations. Within China’s antitrust law enforcement system, SAIC has the mandate to condemn non-price-related monopoly agreements, non-price-related abuse of dominant position and administrative monopoly. Furthermore, it has mandate to fashion implementing rules for the Anti-Monopoly Law of PRC (“AML”) too.

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Leniency program is an effective tool in exposing cartels. This has been confirmed by over 20 antitrust jurisdictions having leniency program around the world. China joined the club on August 1, 2008, when the Anti-Monopoly Law of PRC (“AML”) came into effect. For the first time, AML expressly recognized leniency program in its intention to condemn monopoly agreements. However, AML only makes a passing reference to the policy in which “undertakings who voluntarily report to antitrust enforcement authorities on monopoly agreements and advance key evidence MAY be reduced or exempted from penalties”. Thus, it takes China’s trust busters to fashion rules to implement leniency policy.

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On 4^th May 2010, a new regulation was in the spotlight, which was seen as the most important regulation published this year. After three rounds of public discussions, the official Measures on Equity of Insurance Company (hereinafter referred to as the “New Measures”) was promulgated and will take effect on 10^th June 2010. It will replace the Interim regulation on investing in insurance company (Baojianfa [2000] No. 49) published on 1^st April 2000 and the Notice of Regulating Domestic Insurance Company on Attracting Foreign Investment (Baojianfa [2001] No. 126) published on 19^th June 2001. This article aims at picking up some representative questions and presenting answers based on our understanding.

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The first Chambers Asia Award: China held at the China World Hotel, Beijing on 6^th May 2010. Grandall Legal Group was nominated for three awards – “Capital Markets Law Firm of the Year”, “Competition/Antitrust Law Firm of the Year” and “Insurance Law Firm of the Year”, and was finally honored with “Insurance Law Firm of the Year”.

The UK-based Chambers and Partners publishes a series of guides to the legal profession and is recognized as one of the most prestigious organizations in the analysis of the international legal market. In assessing the reputations and expertise of business lawyers across China, Chambers conducts extensive interviews with clients. The Chambers Asia Award: China honored the work of law firms in China. All 16 awards recognized a law firm's pre-eminence in key practice areas. They also reflect notable achievements over the past 12 months including outstanding work, impressive strategic growth and excellence in client service. This is the first time that Chambers and Partners gave awards for Chinese market, so it drew great attention of all Chinese lawyers.

“A key player within this field, this firm works with major Chinese insurance companies. It has specialist expertise within all areas of insurance, and retains an impeccable reputation for its high-quality work.”

                                               – Chambers and Partners Asia Award: China

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Subordinate debt is an agreed unsecured debt between raiser and creditor(s) who has lower priority than other creditors, yet has higher priority over the raiser’s equity capitals.

Subordinate debt fund can be counted as Tier-II capitals in measuring an insurance company’s solvency status. Thus raising subordinate debt fund has become an important means of replenishing capitals by insurance companies. It is governed by CIRC’s Interim Measures on Management of Subordinate Term Debt of Insurance Company.

Subordinate debt has inherent risk. Creditors of insurance company’s subordinate debt can seek protection by virtue of the following methods:

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As Chinese financial integration progress intensifies, increasing number of Chinese insurance companies are not content with limiting themselves to insurance business only. Rather, they have started to diversify their range of operations. By the end of 31 March 2010, China already has seven insurance group companies as well as one insurance holding company, with their combined total assets, net assets and premiums constituting 75% plus of the whole industry.

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