Competition Law/ Anti-Monopoly Law

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Introduction

The Ministry of Commerce’s Anti-monopoly Bureau approved Novartis’s acquisition of Alcon on August 13 2010, subject to conditions.(1) The ministry accepted the filing in respect of the acquisition on April 20 2010 and decided on May 17 2010 that a further review period was needed. The ministry reviewed information on:

  • the overlap of the two companies’ products in the Chinese and global markets;
  • their respective market shares;
  • the characteristics, applications, prices and sales methods of their products;
  • the supervisory policies in the relevant market; and
  • the two companies’ relationships with competitors in the market.

Opinions were sought from other companies in the field. After negotiating with the filing parties, consensus was reached on how to reduce the acquisition’s undesirable effects on competition in the relevant markets.Continue Reading Conditional approval for Novartis’s acquisition of Alcon

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.

Continue Reading Clarification from Senior Official of the Antimonopoly Bureau of the Ministry of Commerce

On July 8th, 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.

Continue Reading Divestiture Regulation: A Giant Leap in Chinese Concentration Review Regime

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.

 Continue Reading SAIC Published New Draft Rules on Cartels, Abuse of Dominant Position and Administrative Monopoly

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.

Continue Reading China’s Leniency Program Taking a Hazy Shape

This is an article corresponding to the China Mobile case which was discussed at China Law Vision on April 21, 2009. On 23 October 2009 the Beijing Dongcheng District People’s Court announced the settlement of an Anti-Monopoly Law (AML) case brought by Zhou Ze, an activist lawyer in Beijing, against China Mobile, China’s largest mobile network operator.

Zhou alleged that China Mobile abused its dominant market position (DMP) and engaged in illegal price discrimination activities by charging additional monthly fees for services that he, as a subscriber, was not using. Zhou sought 1,200 yuan in compensation (an amount equal to his basic mobile fees for the last two years), and for China Mobile to stop charging its subscribers such fees. Consequentially,the state-owned giant agreed to pay Mr. Zhou 1,000 yuan ($146) to settle his claims over mandatory fees.

 Continue Reading The Ending of the ‘China Mobile’ Case

1. According to China Anti-Monopoly Law, we need the following information in order to evaluate whether a deal reaches the threshold of concentration filing in China:

a. The worldwide turnovers of the two parties.

To evaluate whether a certain concentration triggers anti-monopoly review, China’s authority looks at all turnover figures of all concentrating parties, regardless of spheres of business those turnovers are derived from. The only exception is that where the concentration involves asset acquisition, the turnover calculation for the seller refers to the turnover specific to the concentration. Continue Reading How to Calculate Turnovers under AML of China

The absence of specific rules on national security investigation on foreign investment in China has been labeled as one of the imperfections of the Anti-Monopoly Law of PRC (“AML”). Article 31 of AML only makes a passing reference to the necessity of conducting national security review when foreign capitals engage in acquisitions or other forms of concentrations that implicate China’s national security. Critics point to the general provision as inoperable in curtailing the massive inflow of foreign acquisitions into strategically important industries in China. To the author’s knowledge, no such investigation has been performed in China, since AML became effective on August 1, 2008.

It may be changed soon. Media reports say that a so called “National Security Investigation Mechanism” (国家安全审查机制) is probably going to be unveiled at the end of this year. At that time, an inter-agency committee charged with the investigation will be established. According to the reports, the committee shall have members from a galaxy of government bodies that represent broad and varied state interest, i.e., National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Science and Technology, Ministry of Commerce, Commission of Science, Technology and Industry of National Defense, Ministry of Agriculture, State-owned Assets Supervision and Administration Commission of the State Council, China Banking Regulatory Commission, State Administration for Industry & Commerce, State Administration of Taxation and several trade associations in key sectors of economy. It is reported that the draft bill on the national security policy was submitted to the State Council in March. The prelude to the unveiling came when Premier Wen Jiabao made the work report to the 3rd Session of the 11th National People’s Congress on March 5, when he is quoted to say that “in encouraging foreign capitals to participate in the restructuring and M&A of domestic enterprises, China shall accelerate the establishment of national security investigation regime. Continue Reading China’s National Security Check on Foreign Investment About To Be Unveiled

In early March, 2010，Diageo, the world’s leading spirits maker signed a deal whereby it acquires majority shares of SiChuan Quanxing Group, a holding company that owns Shui Jing Fang(水井坊), reputedly China’s oldest white wine. What is remarkable about the transaction is that it is the first case in which foreign capital takes over Chinese white wine. To further make the deal unique is how surreally the white whine came into being. In 1998, Quanxing Group discovered a relic site when its workers were in the process of renovating factories. Archeological excavation showed that the site was originally a wine making workshop that dates back to Yuan Dynasty, over 600 years ago. With state-of-art bio technology, several active microbes were obtained from the workshop and used to produce the white whine, branded Shui Jing Fang(水井坊). The relic site was also listed by Guinness World Records as the world’s oldest wine making workshop.

On a rough look, the Diageo/Shui Jing Fang deal is remarkably similar to the Coca-Cola bid for Hui Yuan . For example, both involve world famous brands buying Chinese famous local brands, in effort to tap into the ever increasing beverage market in China. Given the doomed Coca Cola/Hui Yuan transaction on antitrust account, one is tempted to ask whether history will not repeat itself this time. Meanwhile, media report says Diageo is preparing regulatory filing with MOFCOM, which is the authority charged with policing merger market to prevent anticompetitive consequences. There are also market speculations on the fate of the deal in the hand of MOFCOM.Continue Reading Can Foreign Capital “Drink” China’s Oldest White Wine?

On November 26, 2009, China’s Banking Regulatory Commission (CBRC) issued the Pilot Administrative Measures for Commercial Banks to Make Equity Investment in Insurance Companies (the “Measures”). The Measures cover several key aspects of commercial banks’ equity investment in insurance companies, i.e., market access, risk control and regulatory supervision. Its enactment marks the official recognition of cross-sector operations within the banking and insurance industries. By and large, the Measures establishes the regulatory framework for enhanced partnership between the banking and insurance industry. Interestingly though, it has streaks of competition law in its provisions, which has the effect of fostering healthier competition in the future financial market of integrated operation.Continue Reading A Look At the New Rule On Financial Integrated Operation: From the Perspective of Competition Law