The fifth anniversary of Chinese anti-monopoly Law

August 1, 2013 marks the fifth anniversary of the implementation of China’s Anti-monopoly Law. And MOFCOM has diligently performed its functions over the past five years, and has made positive progress in the enforcement of Anti-monopoly Law.

The supporting legislation system for the review of concentration of undertakings has been basically formed in China. Since the implementation of the Anti-monopoly Law, MOFCOM has constantly promoted and improved the supporting laws and regulations, and has issued a series of administrative rules and regulations, the guidelines for the Antimonopoly Committee, department regulations and regulatory documents in accordance with the requirement of the enforcement of the Anti-monopoly Law, and relevant provisions of the Anti-monopoly Law has been specified to facilitate the implementation of the law and increase transparency of the enforcement. MOFCM has formulated a series of laws and regulations in such areas as definition of relevant market, petition, review and remedy measures in accordance with the requirement of law enforcement, and a system of rules and regulations including administrative regulations of the State Council, the guidelines of the Anti-monopoly Committee, department rules of MOFCOM and the guidance for the Anti-Monopoly Bureau of MOFCOM has been established.

A scientific and effective mechanism for anti-monopoly law enforcement has been gradually established. MOFCOM has set up the Anti-Monopoly Bureau, with relevant departments in charge of such areas as accepting petitions, review, remedy measures, international cooperation and supporting laws and regulations. And MOFCOM has kept positive interaction with economists, legal professionals, industrial and technical experts and professional industrial associations and relevant administrative departments, so as to utilize all social resources to enhance law enforcement.

The law has been enforced strictly to maintain legal authority. MOFCOM has strictly enforced the law, and has stepped up publicity efforts to enhance the law-abiding awareness of companies. In 2011, MOFCOM formulated the Interim Measures for Investigating and Punishing of Concentration of Undertakings Failing to File Notification, according to which MOFCOM has given warnings or imposed a fine on eight cases.

Remarkable achievements are made on review of concentration of undertakings. Since the Anti-monopoly Law was implemented in 2008, MOFCOM had received 754 filings for concentration review by the first half of 2013, of which 690 reviews were initiated, and 643 reviews were concluded. Among the concluded cases, 624 were unconditional approvals, 18 were conditional approvals, and only one case was disapproved.

Among the concluded cases, 624 were unconditional approvals, accounting for 97% of the total, and those conditional approvals and disapproved accounted for 3%. Thus, only in a few cases that could be confirmed to cause substantial impairment to competition, would MOFCOM take necessary intervention to the concentration of undertakings.

The check-up on concentration of undertakings in China preserves the order of Chinese market competition. The case that is prohibited by the State Council anti-monopoly law enforcement authorities takes a low percentage among all the cases MOFCOM announced, only one (Coca-cola’s acquisition of Huiyuan) among 19 cases, accounting for 0.05%. It has been proved by practice that the disapproved action maintained the competition of China’s fruit juice and beverage market and protected Chinese consumers’ legitimate rights, reducing the potential risks of China juice industry’s monopoly by transnational corporations.

Compared with the prohibited case, Ministry of Commerce tend to solve the competitive issues by way of additional restrictive conditions, 18 of 19 cases is in such case, accounting for 99.5%. The restrictive conditions are divided into three kinds: The structural restrictive condition. There are 9 cases in total, accounting for 50% and mainly the horizontal merger.The behavioral restrictive conditions. There are 7 cases in total, accounting for 39% and mainly the vertical or complex merger. And the comprehensive restrictive conditions. There are only 2 cases, accounting for 11%, with both horizontal integration and vertical relevance. The restrictive conditions on transaction in resources industry like Uralkali’s M&A of Silvinit, Glencore International’s M&A of Xstrata, and Marubeni Corp’s M&A of Gavilon have protected the products that are highly dependant on imports such as potash fertilizer, copper, lead, zinc and soybean from the monopolies’ control. This action has ensured the rights of fair trade with relevant manufacturing and processing enterprises and preserves a market with fair competition. The additional restrictive conditions on Google’s acquisition of Moto have weakened Google’s control of smart operational platform and make sure that Chinese smart terminal equipment manufacturers can continue to enjoy the free open source software products developed by Google and the patents owned by Moto. The restrictive conditions on transactions of Pfizer’s acquisition of Wyeth, Panasonic’s acquisition of Sanyo’s core technique have fastened the R&D of relevant products in China and strengthened China’s international competitiveness.

The case-handling efficiency and openness of law enforcement are improving. In the beginning of year 2012, Ministry of Commerce began to carry on the case-classification review. To regulate the review, Ministry of Commerce is now working on Regulations of Code Requirements for Simple Case, making the code requirements clear and ensuring simple procedures in application and check work applicable to cases obviously without eliminant and restrictive competition. We will try to issue the regulation this year.

Meanwhile, in October, 2012, Ministry of Commerce has released all the unconditional approval cases to public since The Anti-monopoly Law of the People’s Republic of China entered into force in 2008, with a total of 458 cases. From 2013, the uncondtional approval cases will be released to public quarterly.

By now, Ministry of Commerce has set up cooperative mechanism with the United States, Europe, BRICS, and the neighboring countries and regions and made good exchanges with foreign counterparts on law policy and case check. While improving the ability of law enforcement, we also carry on exchanges on some key cases at technical level so as to get an objective, justice, reasonable and effective result.

Source: Ministry of Commerce Website; http://english.mofcom.gov.cn/article/newsrelease/significantnews/201308/20130800231761.shtml

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