China is set to amend its merger control regime. What will change?


It has been reported by the Competition and Antitrust team at the law firm of Denton in China that the Ministry of Commerce of the People's Republic of China (MOFCOM) is contemplating a change to the merger rules. The firm which has been provided with a "near-final draft of the new law" reported some changes which are expected to be enacted late this year or early next year.

They report the following changes:

- Providing a more comprehensive "Measures for Review of Concentration of Undertakings" rules compared to the existing ones (seven chapters and 70 articles, covering (i) the definition of concentration of undertakings, (ii) turnover calculation, (iii) procedures for making filings, (iv) procedures for reviewing filings and negotiating remedies and (v) investigation of concentrations of undertakings that do not meet the filing threshold.

- Extending the criteria for acquisition of control to include obtaining the right to determine the senior management of the target such as manager, vice manager, financial officer, board secretary and other staff prescribed in the articles of association.

- Providing rules to report \ treat interdependent transactions.

- Modifying rules pertaining to geographic allocation of turnover which will be based on the location of the purchaser is within the territory of China at the time it purchases the products or services.

- Differentiating between the meaning of "control" in calculating turnover calculation and in defining concentration of undertakings.

- Providing express time limit for preliminary review of filing (within five business days).

- Providing procedures for investigating below-threshold concentrations of undertakings. The Denton team notes that "While the procedure itself is not novel, it may signal that MOFCOM is ready to start investigating below-threshold concentrations. The background of this new move is similar to the "WhatsApp gap." In China, several high-profile transactions involving Internet companies, in which the concentrations occurred between the top two players in their relevant markets, led to consumer complaints. This may be motivating MOFCOM to intervene."

#Asia #China #Mergercontrol #MOFCOM

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