On 5 July 2010, the Ministry of Commerce (MOFCOM) enacted
regulations which set out the rules and procedures to do with
divesting assets. These regulations are entitled "Interim
Regulations on Implementing the Divestiture of Assets or Businesses
in Concentration of Business Operators" (divestiture
regulations). A copy of the divestiture regulations are
The following are some salient features of these recently
enacted divestiture regulations:
the objective of the regulations are to ensure that any
divestiture or assets or business pursuant to the merger control
regime is conducted smoothly (Article1);
business operators who are required to divest assets pursuant
to the merger control regime (known as "divestiture
obligors") would have to divest their assets within a time
limit stipulated within a merger control decision by MOFCOM
(including finding a purchaser and enter into the relevant sales
agreements) (Article 3);
divestiture obligors may appoint a "supervision
trustee" and a "divestiture trustee" to assist in
the divestiture process. The former will supervise the divestiture
process and the latter would assist with locating a purchaser as
well as assist with the actual sale process (Article 4);
supervision trustees and divestiture trustees must
be equipped with the resources and capabilities necessary for
conducting trust businesses; and
not possess substantial interests in any of the business
operators participating in the merger under scrutiny.
In addition, supervision trustees and divestiture trustees may
be the same natural person or legal entity (Article 5); and
purchasers of divested business must satisfy the following
they must not possess substantial interests in any of the
business operators participating in the merger under scrutiny;
they must be equipped with the necessary resources and
capabilities and must be willing to maintain and develop the
business to be divested; and
the purchase of the business to be divested must not result in
eliminating or restricting competition (Article 8).
It is timely that MOFCOM has enacted these divestiture
regulations. These regulations provide some sort of structure from
which business operators can expect to divest their assets pursuant
to a merger control decision issued by MOFCOM. In our view, these
regulations are consistent with the divestiture regulations in the
more experienced antitrust jurisdictions such as the European
In practice, it is important to work closely with MOFCOM when a
business has been told to divest pursuant to a merger control
decision. Regular consultations with MOFCOM will ensure that the
divestiture process goes smoothly. In our experience, it takes
approximately 6 months for a business to find a suitable purchaser
for the divested business and to reach the relevant agreements for
the sale. It is also noteworthy that MOFCOM has stipulated that
divested businesses should be transferred to the purchaser within 3
months after the execution of the sales and other agreements,
although this time limit may be extended with MOFCOM's
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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