On 12 August 2010, the PRC Ministry of Commerce
(MOFCOM) hosted a "stocktake" briefing
to mark the second anniversary of the Anti-Monopoly Law
(AML).1 Director-General of the
Anti-Monopoly Bureau Shang Ming chaired the briefing. MOFCOM's
transcript of this briefing is located here. The following were the
salient points raised during the briefing.
From 2008 to June 2010, MOFCOM accepted 140 merger review
applications for review. Out of these 140 merger review
applications, MOFCOM has completed review of approximately 90% of
95% of these merger reviewed were approved unconditionally. In
the European Union (EU) and in the United States
(US), on average only 93% of mergers are approved
Thus far, only 5 mergers have been approved with conditions and
only 1 merger was rejected (Coca-Cola's proposed acquisition of
The merger control review process in China is divided into 3
stages. The first stage of review lasts no more than 30 days; the
second stage of review spans for a further 30 to 90 days; and the
third stage of review spans for a maximum of 60 days after the
second stage. The entire merger control review process is not to
exceed a total of 180 days.
Out of all the mergers reviewed, more than half of the mergers
were cleared within the first stage; the remainder of the mergers
were cleared within the second and third stages.
Shang Ming noted that the proportion of mergers entering the
second stage of review was somewhat higher than that in the US or
the EU. Shang Ming commented that at times, merger reviews enter
the second stage of review not due to antitrust issues but due to
process issues (e.g. MOFCOM undertaking public consultations
62% of the merger applications received by MOFCOM are
horizontal mergers; 14% of the merger applications received by
MOFCOM are vertical mergers; and the remainder of the merger
applications received by MOFCOM are conglomerate
A majority of the cases reviewed by MOFCOM involved business
operators in the manufacturing industry. In addition,
three-quarters of mergers accepted for review by MOFCOM involved
public listed business operators.
Shang Ming noted that some commentators believe that Chinese
State Owned Enterprises (SOEs) obtain
"special treatment" from MOFCOM pursuant to merger
clearances. Shang Ming emphasised that this was not the case. All
business operators, including SOEs, privately-owned companies and
foreign companies are treated equally by MOFCOM.
MOFCOM has received more merger clearance applications which
involve foreign companies (as opposed to merger clearance
applications which involve domestic companies only). Shang Ming
said that this could be because the "financial strength"
of these multinational foreign companies trigger the turnover
notification thresholds more easily. In addition, Shang Ming also
noted that since the global financial crisis, foreign multinational
companies have been quite active acquirers.
It is timely for MOFCOM to conduct a stock-take of the merger
control process in China, since its inception in 2008. It is
interesting that a significant number of merger applications
received by MOFCOM spill into the second stage of review. Shang
Ming's explanation that some of these "second stage
review" merger applications do not necessary involve complex
antitrust issues, but rather "process" issues, is also
In light of the above, companies that are interested in mergers
or acquisitions that meet the turnover thresholds pursuant to the
AML should ensure that they factor in the notification and review
periods into their planning processes.
1. The AML was enacted on 1 August 2008.
2. The term "conglomerate mergers" refers to
mergers involving businesses that operate in different product
markets (i.e. they are neither "vertical" nor
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Hon'ble High Court of Bombay has held that where a Scheme of Amalgamation is executed between two companies registered in two different states [...], then the said two orders are two independent instruments.
Lawyers are pretty good at figuring it out quietly and amicably among themselves, without recourse to a public courtroom.
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