China: MOFCOM's Recent Decision On Anheuser-Busch InBev's Acquisition Of SABMiller – A Comparison Of The US And The EU Decision

Last Updated: 3 January 2017
Article by Janet Hui and Lacy Zheng

On July 29, the PRC Ministry of Commerce ("MOFCOM") approved the Anheuser-Busch InBev (ABI)'s acquisition of SABMiller ("Transaction") conditional on SABMiller's divestiture of its 49% stake in China Resources Snow Breweries Co., Ltd ("CR Snow") to China Resources Beer (Holdings) Company Limited ("CR Beer"). This is the second time that MOFCOM has adopted the "fix-it-first" solution in its decision.

SABMiller entered the Chinese market in the year of 1994 by forming the joint venture CR Snow with CR Beer. Besides holding stake in CR Snow, SABMiller also sells a small amount of malt liquor. The MOFCOM's decision requires ABI to sell essentially the entire SABMiller beer business in China.1

To better understand MOFCOM's decision, it is essential to understand the terms of MOFCOM's 2008 decision on InBev's acquisition of Anheuser-Busch. Conditions included prohibiting ABI from (i) increasing its shareholdings in Zhujiang Brewer, and (ii) acquiring any shareholdings in CR Snow2. On August 25, 2015, the MOFCOM approved ABI's shareholding increase in Zhujiang Brewer from 25.62% to 29.99% finding that such shareholding increase would not change the controlling structure of Zhujiang Brewer. Nevertheless, with respect to this Transaction, the MOFCOM refused to allow ABI to acquire any shareholdings in CR Snow originally held by SABMiller.

Before MOFCOM's decision, the EU Commission and the US Department of Justice ("DOJ") had approved the Transaction with similar constructional conditions. ABI adopted the strategy of offering extensive divestiture solutions in various jurisdictions in order to facilitate the merger review process. On the agency side,

DOJ mentioned in its news release that it had cooperated with its counterparts in a number of jurisdictions, including the EU and China.3 The table below illustrates some similarities among the decisions issued by the three agencies:

China US4 EU5
Market position CR Snow (SABMiller holds 49%) and ABI are the first and third largest with a combined market share of 43%. ABI and MillerCoors(SABMiller holds 58%) are the first and second largest with a combined market share of 72%. ABI and SABMiller are the third and fourth largest.
In the popular beer market, the combined market shares exceed 70% in 7 provinces, and exceed 50% in another 4 provinces;

In the medium-high grade beer market, the combined market shares exceed 70% in 5 provinces, and exceed 50% in another 8 provinces.
In more than 15 Metropolitan Statistical Areas, the combined market shares exceed 70%. ABI holds strong market positions in Belgium and Luxembourg. SABMiller holds strong positions in Poland, Czech Republic, Slovakia, Hungary and Romania.
Divestiture Assets SABMiller's 49% shareholdings in CR Snow. SABMiller's entire U.S. business –including SABMiller's ownership interest in MillerCoors, the right to brew and sell SABMiller beers in the United States and the worldwide Miller beer brand rights. Essentially the entire SABMiller beer business in the EU, including: (Package 1) The whole of SABMiller's business in France, Italy, the Netherlands and the UK; and (Package 2) SABMiller's business in the Czech Republic, Hungary, Poland, Romania and Slovakia.
Restrictions on future acquisitions Based on the MOFCOM's previous decision on InBev's acquisition of Anheuser Busch in2008, ABI needs to seek MOFCOM's preapproval before any future acquisitions in Tsingdao Brewer, Zhujiang Brewer or CR Snow. The settlement precludes ABI from acquiring beer distributors or brewers, including non-HSR reportable craft brewer acquisitions, without DOJ's review. None

Additionally, the MOFCOM's decision reveals some differences between MOFCOM and its US and EU counterparts in certain considerations, such as the market definition, special concerns on possible harm to distributors, its fix-it-first solution and the connected merger review of CR Beer's acquisition of CR Snow.

I. Market definition

As in previous cases, the EU Commission has accepted that the supply of beer to the on-trade sector (i.e. pubs, clubs and restaurants) should be examined separately from the supply of beer to shops and other retail outlets (off-trade), and that the geographical scope of competition is mostly national. In some cases when necessary, the EU Commission has also examined whether the deal could raise competition concerns in relation to a narrower market for premium beer.6 In the DOJ's complaint against this Transaction, the DOJ examined the geographic market of each Metropolitan Statistical Area ("MSA"). Although the DOJ mentioned the possibility of further dividing the beer market to "sub-premium, premium and high-end" categories, it only examined the combined market shares of the parties in each MSA in the larger product market of beers including all price levels. In the MOFCOM's decision, the MOFCOM divided the beer market into the popular and the medium-high grade beer markets using the benchmark of RMB 5 per 500ml (approximately USD 0.75 per 500ml). The MOFCOM examined the combined market shares of the parties in each provincial market for the narrower product markets of popularization and medium-high grade respectively. This may lead to higher combined market shares in each provincial market. In addition, unlike its western counterparts, MOFCOM generally prefers precise market definitions rather than fuzzy or open-ended market definitions. That is why it provided a precisely defined market definition for this Transaction and calculated the parties' market shares based on the market definition.

II. Special concerns on harm to distributors

In its competition analysis, the MOFCOM considered four factors, including (a) the deal will further enhance ABI's market controlling power, (b) the deal between the two closely competing beer makers will lead to reduced competition, (c) the deal will increase barriers to entry, and (d) the deal will hurt downstream distributors. Unlike the DOJ and the EU Commission, which mainly focused on the likelihood of price increases in the already transparent beer market, the MOFCOM's decision analyzed the market structure (or market shares) and possible harm to downstream distributors. The MOFCOM found that most beer distributors are small in scale with limited coverage, and lack significant bargaining power. After the Transaction, due to reduced competition between ABI and CR Snow, the distributors' bargaining power will be further weakened. The distributors would have less access to ABI's incentive programs, and thereby their interests will be harmed.

III. Fix-it-first and the connected merger review of CR Beer's acquisition of 49% shareholdings in CR Snow

Fix-it-first is one of the structural remedies used in merger control review, where the parties can restructure the transaction or sign an agreement with the future buyer to divest assets before the implementation of the transaction. In the US, the DOJ uses the fix-it-first remedy more frequently compared to the Federal Trade Commission. If the proposed fix-it-first remedy eliminates the DOJ's antitrust concerns, there would be no need for DOJ to issue a consent decree or file a case. In the EU, if the EU Commission approves the "fix-it-first" proposal, the Commission will issue a decision conditional on theproposal.7 The MOFCOM's has adopted a "fix-it-first" remedy in its decision, and the MOFCOM followed a model similar to the EU by issuing a decision attached with conditions. CR Beer signed the purchasing agreement of 49% stake of CR Snow in the pre-acceptance review period before the MOFCOM officially acknowledged the completeness of the filing documents and accepted the case.

Unlike the EU, where the buyer doesn't need to file another merger notification for the "fix-it-first" transaction, CR Beer, which is the buyer of the 49% stake of CR Snow, filed a separate merger notification with the MOFCOM. The two notifications were reviewed in parallel by the MOFCOM. Approving the Transaction conditional on CR Beer's proposed acquisition of CR Snow shows that the MOFCOM does not have competition concerns on CR Beer's acquisition. Therefore, the merger notification made by CR Beer regarding its acquisition of CR Snow should be approved by the MOFCOM without conditions.

The first time when the MOFCOM approved a transaction subjecting to a fix-it-first remedy was on November 25, 2015in the NXP/ Freescal case. NXP proposed the relevant divestiture druing Phase I of the MOFCOM's review period, but had not sign the agreement with the buyer until the case entered into the extended Phase II. In its decision, MOFCOM requires that the closing of the divesting transaction should be the prerequisite of closing the NXP/Freescal transaction.8 The MOFCOM seems to have adopted the fix-it-first remedy frequently in its recent decisions. This shows that the MOFCOM became more and more confident in using various remedy tolls and that the MOFCOM considers the fit-it-first solution as a good way to ensure the effectiveness of the relevant structural remedies.


1 See MOFCOM's decision on ABI's acquisition of SABMiller, available at

2 See MOFCOM's decision on InBev's acquisition of Anheuser Busch in 2008, available at At that time, ABI's shareholdings in Zhujiang Brewer was 28.56%.

3 See DOJ's news release, available at

4 See DOJ's Complaint, available at

5 See EU Commission's press release at

6 See "Commission clears acquisition of Beck's by Interbrew",

7 See Jun Ye, "Comparison Analysis of fix-it-first and up-front buyer", available at

8 See MOFCOM's decision on NXP's acquisition of Freescal, available at

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions