On 2nd March of 2012, MOFCOM publicized another conditional clearance on concentration in the hard disk industry, which comes three months after MOFCOM imposed similar conditions on Seagate’s acquisition of Samsung’s hard drive business. At this time, the concentration parties are Western Digital’s and Viviti Technologies, and the relevant market is defined by MOFCOM as the worldwide market for hard disk drive.
Continue Reading Another Conditional Clearance on Hard Disk Industry Concentration
The Price Supervision, Inspection and Antitrust Bureau of NRDC has confirmed to the public on 2nd December 2011, that they have received applications from China Unicom and China Telecom for the suspension of probe on alleged abuse of dominant position by the parties in last month. In addition, China Telecom also submitted a proposal of rectifying and reforming to NRDC, with the expectation to be awarded a leniency treatment. The proposal of rectifying and reforming is comprised of mainly the following aspects:
First, China Telecom undertakes to expand the capacity which is connected to other backbone telecommunications operators such as China Unicom and China Tietong as soon as possible.
MOFCOM hosted a press conference on Feb 16th, 2012, in which it announced updates and news on Chinese business affairs for the previous month of January 2012.
MOFCOM hosted a press conference on Feb 16th, 2012, in which it announced updates and news on Chinese business affairs for the previous month of January 2012.
In the announcement, Google’s recent acquisition of Motorola Mobility Holdings Inc came to focus. Shen Dan Yong, a spokesperson from MOFCOM, confirmed that the Anti-Monopoly Bureau of MOFCOM was continuing its investigations of the American internet search giant’s recent take over of Motorola Mobility and is still yet to make a decision regarding its approval.
According to media reports, Google has already received ratification from the U.S. Department of Justice and European Commission DG Comp concerning its acquisition which is worth $12.5 billion, of which for Google, has been the biggest acquisition by far in the company’s history.
Statistical reports also show that the take over has also been the biggest acquisition of the last 10 years in the wireless devices industry.
While the investigation carries on and its outcome remains pending, Shen noted that any updates or decisions made by the Anti-Monopoly Bureau of MOFCOM would be promptly published to the public.
According to the information released by MOFCOM in its news conference at the end of 2011, statistics indicate that in the year of 2011, MOFCOM received 194 notifications for antitrust review on concentration in total, the amount of received cases increased by 43% compared to last year. Among them, the number of accepted cases by MOFCOM in the year of 2011 altogether are 179, which increased by 52%. Besides, there are 160 cases completed by MOFCOM, which increased by 40% compared to 2011.
In connection to the rapid growth on the number of notification on concentration to MOFCOM, the Director of Anti-Monopoly Bureau, Mr. Shang Ming explained three reasons thereof: first, the popularization of AML of China is gradually strengthened; second, more and more enterprises reach the threshold for antitrust notification in the wake of average scale of enterprises getting larger; third, most of international investors take prudent attitude, hence mainly choose the means of concentration to increase their market shares and competitive strength.
Among the 160 cases completed by MOFCOM, cases in manufacturing industries account for the most, 64%; cases in computer service, information transmission and software industries account for 8% in together; and cases in electricity, gas and water industries account for 6%. As far as the outcome of the case concerned, MOFCOM make the decision of unconditional clearance on 151 cases (account for 94%). Besides, there are four conditional clearance and 5 withdraw of cases after acceptance by MOFCOM, which account for 3%.
On 12th December 2011, MOFCOM publicly disclosed its decision to clear Samsung and Seagate hard disk deal by imposing several conditions. According to the Asset Purchase Agreement, Seagate Technology intends to acquire control of Samsung Electronics’ hard disk business by purchasing all relevant assets. The acquiring party, Seagate Technology, is a multinational enterprise, engaging in the manufacture and sales of hard disk and other digital storage products. The target assets are all plants, equipments and other assets specifically for R&D, manufacture and sales of Samsung Electronics’ hard disk.
From MOFCOM’s point of view, the market for manufacture and sales of hard disk constitutes a separate and distinct market by taking considerations on both demand and supply side. Moreover, the geographic scope of competition for hard disk is worldwide. Consequently, relevant market in this case is determined as worldwide market for manufacture and sales of hard disk.
MOFCOM examined a variety of facets in this transaction for the purpose of avoiding a restriction or elimination of workable competition on relevant market, including market situation, procurement structure, rate of capacity utilization, products innovation, buying power, potential influence on Chinese consumers and market entry.
Through thorough investigation, MOFCOM reached the conclusion that concerning transaction triggers potential competition concerns. For one thing, it reduces the number of players in the already highly concentrated market; hence increases market concentration in a further degree. As a result, it may eliminate or restrict competition on the market for manufacture or sales of hard disk. For another, the said transaction would increase the possibility of exclusion or restriction of competition on the market by collusion between competitors.
In light of above-mentioned competition concerns, MOFCOM and the concentration parties finally agreed several conditions to be imposed with the clearance of Samsung and Seagate hard disk drive deal, with the view to avoid potential detrimental effects on competition on the market for manufacture and sales of hard disk.
MOFCOM is getting more and more efficient upon dealing with its own work. Only 10 days after the Alpha V/Savio conditional clearance, MOFCOM imposed conditions on another proposed concentration between General Electric (China)., Ltd (hereinafter referred to as GE China) and China Shenhua Coal to Liquid and Chemical Co., Ltd (hereinafter referred to as CSCLC) on 10th, November, 2011. It is noticed that GE China/CSCLC is already the NO.2 conditional clearance on concentration only two months after the “Provisional Regulation on the Assessment on the Competitive Effects of Concentration of Undertakings” is officially released in the end of August (hereinafter referred to as “Provisional Regulation”). That to some extent gives people the impression that the Provisional Regulation does not only give administrative counterparts guidance, but also standardized and facilitated MOFCOM’s antitrust reviewing work on concentration in some degree.
On 31st October 2011, MOFCOM posted the No.73 Notice in its website, announcing to clear proposed concentration between Penelope Co., Ltd and (referred to as “Penelope” hereinafter) and Savio Macchine Tessili S.p.A. (referred to as “Savio” hereinafter) with certain conditions. Without doubt, the reasoning and analytical instruments utilized by MOFCOM would shed some light on of what attitude and approach hold by MOFCOM when facing anti-monopoly review of concentration.
According to MOFCOM’s notice, the proposed acquiring party (Penelope) is established as a tool specifically for the sake of this concentration transaction. Alpha Private Equity Fund V (referred to as “Alpha V” hereinafter) is Penelope’s wholly-owned controlling shareholder (the “parent”), which is a private equity fund and invests in non-ferrous metal recycling, production and sales of home textile and textile machinery. Meanwhile, being the largest shareholder, Alpha V holds 27.9% equity shares of Uster technologies Co., Ltd (referred to as “Uster” hereinafter)
Proposed acquired party in the said concentration (Savio) is a manufacturer of textile machinery, engaging in the production of electronic yarn clearers for winders, twisters and rotor-spinning frames. Beside, Phenanthrene Brothers Co., Ltd (referred to as “Phenanthrene Brothers” hereinafter).is a wholly owned subsidiary of Savio.
Continue Reading MOFCOM Announced the Another Conditional Clearance on Concentration
A spokeswoman from the Ministry of Commerce publicly declared in the recent, that the Ministry has officially accepted the notification on Nestlé’s acquisition of Hsu Fu Chi. If the Ministry turns on the green light for this filing it could be one of the biggest foreign takeovers of a Chinese undertaking historically.
A spokeswoman from the Ministry of Commerce publicly declared in the recent, that the Ministry has officially accepted the notification on Nestlé’s acquisition of Hsu Fu Chi. If the Ministry turns on the green light for this filing it could be one of the biggest foreign takeovers of a Chinese undertaking historically.
Founded in 1866 by Henri Nestlé in Vevey, Switzerland, Nestlé is the world’s leading Nutrition, Health and Wellness company. Nestlé’s product lineup covers from baby food, bottled water, cereals, chocolate & confectionery, coffee, culinary, chilled & frozen food, dairy, drinks to food service, healthcare nutrition, ice cream, petcare, sport nutrition, and further to weight management.
With already more than 3 years of practice experience concerning antitrust review to concentrations, the Ministry of Commerce of the People’s Republic of China in recent publicly announced its first set of guideline thereof on August 29, 2011, namely, “Provisional Regulation on the Assessment on the Competitive Effects of Concentration of Undertakings ( it would be abbreviated as “the Regulation” hereinafter).
It should be recognized that the Regulation reflects great significance in many facets without doubt. For one thing, the substantive process of reviewing and assessing concentrations by the Ministry of Commerce is tranparentized in a large degree. As a result, relevant competitors, consumers and other stakeholders of interest could obtain much more convenience for the purpose of supervising antitrust enforcement.
In the second place, the Ministry took this opportunity to standardize in the Regulation, which factors that they will take the most account into in principle, which interests they will consider principally when balancing the pro-competitive and anti-competitive effects of concentration concerned. In this connection, the Regulation would possess the function of conducting, standardizing as well as facilitating the work of antitrust control to concentrations of the Ministry.
Continue Reading The First Guideline for Reviewing Concentrations in China Has Been Freshly Baked
On 7th December 2011, Nestlé’s intended purchasing 60% shares of Hsu Fu Chi by Rmb1.51bn ($234m) was cleared by MOFCOM officially. By this news, all clouds of doubt and debates from a variety of societies in last months are dispelled. In particular, Nestlé/Hsu Fu Chi decision from MOFCOM cleans up the school of worries from foreign enterprises that antitrust enforcement of PRC is inclined to protect national brand, as they derived from Coca-Cola/ Huiyuan case. It is believed that MOFCOM’s clearance in Nestlé/Hsu Fu chi must have an encouraging effect on foreign enterprises’ incentive to march into Chinese market by the means of concentration.
Without many disputes, Nestlé’s market share in Chinese confectionary market would be much higher ex post this transaction. According to the market sources, Hsu Fu Chi’s greatest strength lies in bulk sales, while Nestlé is good at package sales. It is highly anticipated that combination of Nestlé and Hsu Fu Chi would give rise to a synergy effect, hence would influence Chinese confectionary market in a significant degree.
A spokesman from Nestlé publicly expressed there would not be major changes on the company’s development direction and employee after the concentration. Nevertheless, when asked if Hsu Fu Chi has the plan to develop high-end product after Nestlé joins in, he said, there existed various possibility.
