Competition Law/ Anti-Monopoly Law

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Recently, General Office of the State Council issued the Notice of Launching the Security Review System for Acquisitions of Domestic Enterprises by Foreign Investors (“the Notice”). The Notice will come into effect on March 5, 2011.

Recently, General Office of the State Council issued the Notice of Launching the Security Review System for Acquisitions of Domestic Enterprises by Foreign Investors (“the Notice”). The Notice will come into effect on March 5, 2011.

Security review system for acquisition of domestic enterprises by foreign investors (hereinafter referred to as "Security review") is neither created by China, nor meaning to deter foreign investment. A lot of developed countries have set up M&A Security review for many years to protect their own national security related interests. China already started Security review a few years ago, but it hasn’t yet released the formal regulations until now. The Security review system covers two sectors:

i) foreign investors’ acquisition of military industrial enterprises or military industry related supporting enterprises, enterprises located near key and sensitive military facilities, and other entities relating to national defense;

ii)foreign investors’ acquisition of key domestic enterprises in areas such as agriculture, energy and resources, infrastructure, transport, technology, assembly manufacturing, etc., whereby the foreign investors might acquire the actual controlling right thereof.

Continue Reading New Notice Strengthens National Security Review

On November 29 2010 the National Development and Reform Commission (NDRC) promulgated one substantive regulation and one procedural regulation regarding pricerelated monopolies (for further details please see "NDRC issues new anti-monopoly pricing regulations"). To accompany these regulations, the State Administration for Industry and Commerce (SAIC) issued the Regulation on Prohibiting Monopoly Agreements, the Regulation on Prohibiting Abuse of Market Dominance and the Regulation on Prohibiting Abuse of Executive Authority to Exclude and Limit Competition on December 1 2010.

Continue Reading SAIC regulations signal greater anti-monopoly enforcement

 The end of 2010 leaves China’s anti-monopoly regulators with several matters to consider, resolve or improve. The anti-monopoly framework is still not well established and consumer rights issues have been badly neglected. End consumers remain at risk of manipulation by collusion between large enterprises, especially on price. Recently, an instant noodle company stopped providing its products because a supermarket chain objected to a price increase and a mobile telecommunications company, facing claims of unreasonable tariffs, refused to reveal the basis of its pricing structure.

The National Development and Reform Commission (NDRC) is in charge of price related monopoly agreements (ie, cartels), abuse of dominance and administrative monopoly issues. In comparison with the other two regulatory bodies – the Ministry of Commerce and the State Administration of Industry and Commerce (SAIC) – it remains severely understaffed. Moreover, price regulation is invariably a sensitive issue in China and often attracts criticism. The SAIC issued regulations on non-pricing-related monopoly agreements, abuse of dominance and administrative monopoly in May 2010 (for further details please see "New draft rules on monopoly agreements and abuse of dominant position"), but the NDRC has been slow to follow suit. As the world economy has started to emerge from the financial crisis, many Chinese and foreign economists have criticised distorted market prices and price mismatching in China, making the NDRC even more wary of taking action on anti-monopoly pricing issues.Continue Reading NDRC issues new anti-monopoly pricing regulations

Baixiang Food Group and other instant noodle manufacturers have brought a complaint against their competitor Kangshifu, claiming that it unfairly dominates the instant noodle market in China. Kangshifu has also been accused of engaging in price dumping through its subsidiary brand Fumanduo. Kangshifu contests both assertions.

Continue Reading No quick answers in instant noodle dispute

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