The Chinese Ministry of Commerce (MOFCOM) has blocked the
contemplated P3 Network, a container shipping alliance between MSC,
Maersk, and CMA CGM. The parties immediately abandoned their plan
for the proposed alliance. The decision comes after US and European
competition authorities had already approved the agreement, and
shows that MOFCOM determines its own course. Transactions that
require MOFCOM approval must therefore be managed carefully.
Since the introduction of the merger notification procedure in
China in 2008, MOFCOM has reviewed approximately 800 transactions.
It has imposed restrictive conditions in 23 cases and, before its
decision on the P3 Network, had rejected only one transaction (Coca
Cola's contemplated acquisition of the Chinese juice maker
Huiyuan, in 2009).
In its decision dated 17 June, MOFCOM states that it blocked the
creation of the P3 Network because the parties had not provided
sufficient evidence that the benefits of the P3 Network would
outweigh its harm to competition. The decision notes that the
proposed alliance would result in a combined market share of about
47% and would greatly increase market concentration in the sea
route between Asia and Europe. MOFCOM seems to treat the alliance
between the three parties as a full merger, whereas the parties
envisaged an operational rather than a commercial cooperation.
The MOFCOM decision was published on the very last day of a
lengthy review process. The parties announced the proposed P3
Network on 18 June 2013. The parties submitted their draft MOFCOM
notification on 18 September 2013. MOFCOM formally accepted the
submission on 19 December 2013, and subsequently took it to an
extended Phase II review. Meanwhile, the P3 Network was cleared
without any restrictions by the US Federal Maritime Commission on
24 March 2014 and by the European Commission on 3 June 2014.
The MOFCOM decision shows once more that transactions that
require MOFCOM approval must be managed carefully. Parties should
engage advisors to assess any issues as early as possible and
should prepare for a review process that involves significant time
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In the wake of economic liberalization and widespread economic reforms introduced in India since 1991 and in its attempt to march from a "Command and Control" regime to a regime based on free market principles, India replaced its archaic Monopolies and Restrictive Practices Act, 1969 with a modern competition law, in sync with modern and internationally established competition law principles, in the form of the new Competition Act, 2002 (the Act).
In the wake of liberalization and privatization that was triggered in India in early nineties, a realization gathered momentum that the existing Monopolistic and Restrictive Trade Practices Act, 1969 was not equipped adequately enough to tackle the competition aspect of the Indian economy.
All enterprises in the markets need to adopt fair practices while doing business. A fair competition promotes efficiency, encourages innovation, facilitates better governance and ensures availability of goods at an affordable price.
With progress comes new set of challenges; same is true in context of the challenges faced by Indian Competition watchdog.
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