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.

1. The situation of the acceptance of the concentration filings.

By the end of June 2010, the Antimonopoly Bureau has received more than 140 filings. Except 4 filings that were withdrawn by the applicants, more than 90% of the cases have been closed.

In summary, we can see several features in these filings.

(1). Most of the filings were closed in the preliminary review phase, namely the first 30 days review period. Nearly 80 filings were closed within such period, which accounts for 60% of all the filings. 50 filings needed to undergo further reviewed, which accounts for 30% of all the filings. Only 3% of all the filings were closed in the extended period of 60 days.

(2). Most of the filings, more than 95%, were approved without any conditions. 5 filings were approved with conditions (the Novartis filing was approved with conditions in August, which makes the number of this category to 6) and 1 was prohibited.

(3) Most filings concerned horizontal concentration, in which two or more competitors are the parties. The number of such horizontal concentration forms 62% of all the filings. There are also vertical concentration and conglomerate concentration.

(4). In all the filings, over 80% of the concentrations were undertaken in the manufactory industry. The large part of the filings involved public listed companies.

2. The impression of discrimination against foreign companies.

One criticism to the filing process is that there appears to be discrimination against foreign companies, because from the evidence per se, the 5 cases that were cleared but with conditions imposed and 1 prohibited case all involved foreign companies. However, that does not necessarily mean that AML and Chinese antimonopoly enforcement institution has discrimination towards foreign companies.

Several reasons may explain the said figures.

(1). Generally speaking, foreign companies have abundant capitals, which make them easy to reach the threshold for concentration filings.

(2). Although the financial crisis exerts some negative impact on the M&A market, it remains active as always and the most active players in this market are foreign companies. That is why they are easily exposed to the competition issue. What is more, in order not to interfere too much with the M&A market, the enforcement institutions are more incline to impose some conditions to relieve the negative effect on competition, but approve the transaction. To some extend, the approval with conditions is one way to smooth out, rather than hinder the transaction.

3. Exemptions to the agricultural industry.

In the recent years, lots of mergers and acquisitions through stock finance take place in the agriculture industry. The concentrations occurring in the industry cause people to want to know whether the industry is also subject to AML.

Article 56 of the AML stipulates: this law does not govern the concerted actions of agricultural producers and rural economic organizations in economic activities such as production, processing, sales, transportation and storage of agricultural product.

However, this article cannot be interpreted as the exemption of the entire agricultural industry from antimonopoly review and regulation. Concentration in the agriculture industry shall file to the Ministry of Commerce in accordance with the antimonopoly laws and regulations.

4. No exemptions to state-owned companies.

There are no exemptions for state-owned companies, they are also subject to the AML and regulations.

The current situation in China is that there are some state-owned companies who already have monopoly status in some areas. The purpose of AML is to supervise more aggressively on these companies, but such purpose will be achieved through the regulation of the activities of the companies, such as entering into monopoly agreement or abuse of dominance. Concentration review is not the only way to regulate state-owned companies who are already in position of dominance.

5. The requirements of the materials

It is true that for some cases, the period between the applicant submits the materials and the official filing of the case is quite long. However, the time limit was not at the discretion of the enforcement institutions, but pursuant to the AML and regulations.

According to Article 23 of AML, the applicant shall submit: declaration paper, explanations on the effect of the concentration on the relevant market competition, the agreement of concentration, the financial reports and accounting reports of the proceeding accounting year, and other required documents and materials. The filing will not be reviewed before all the necessary materials required in Article 23 are submitted and the contents are in compliance with the laws and regulations. There is no limitation on the time for such submission of materials. If the applicant cannot submit the required materials, or the submission is not in compliance with the laws and regulations, the applicant will be asked to provide further information and the review will not start before all the necessary information are submitted.