Recently, ENN Energy Holdings Limited and China Petroleum & Chemical Corporation jointly announced the acquisition of all outstanding shares in China Gas Holdings Limited. This acquisition triggers a requirement to notify and obtain clearance from China’s Ministry of Commerce (MOFCOM). Therefore, MOFCOM’s approval will be one of the preconditions for ENN Energy and Sinopec to close the transaction.
On 27 December 2011, in its annual end-of-year press conference, the Anti-Monopoly Bureau of China’s Ministry of Commerce gave an overview of the country’s Anti-Monopoly Law enforcement efforts in 2011, as well as stated its clear intention to investigate and sanction parties who fail to submit proper notification of a concentration and have it cleared by the Ministry.
China’s Ministry of Commerce (MOFCOM), following six months of public comment on and consideration of Draft Regulations, has now formally promulgated new Regulations on the Investigation & Treatment of Failure to Report a Concentration of Undertakings. The new regulations will take effect as of February 1, 2012, and arm MOFCOM with clear powers to investigate and collect evidence on concentrations.
Recently,China’s National Development and Reform Commission (NDRC) imposed large fines on two pharmaceutical distributors. This move indicates the enforcement agency, which supervises price-related monopolistic practices, is beginning to take a more active role in enforcing the country’s Anti-Monopoly Law.
Before granting its approval of Alpha V’s acquisition of Savio, China’s Ministry of Commerce (MOFCOM) required the private equity fund to divest its 27.9 per cent stake in Savio’s rival Uster. With this decision, MOFCOM has signalled its willingness to closely scrutinize the influence of minority shareholders when conducting merger reviews under China’s Anti-Monopoly Law.
In giving approval to GE China’s joint venture with Shenhua Coal, China’s Ministry of Commerce (MOFCOM) has answered positively the recurring question of whether the formation of a joint venture falls within China’s merger control rules. It is now clear that the formation of a joint venture can require clearance from MOFCOM under China’s Anti-Monopoly Law.
China’s antitrust authorities are investigating—and taking significant action for the first time against—state-owned enterprises, using the powers granted them under the 2008 Anti-Monopoly Law.
On 3 February 2011, the State Council promulgated the “Notice of the General Office of the State Council on Launching the Security Review Mechanism for Mergers and Acquisition of Domestic Enterprise by Foreign Investors,” which established the national security review system for merger and acquisition (M&A) transactions by foreign investors in China. On 25 August 2011, after a trial implementation period of about six months of an interim regulation on the security review system, the Ministry of Commerce finalised and issued the “Regulation on Implementing of the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors,” which came into effect 1 September 2011. The national security review system as established and specified under the notice and the regulation may have a broad impact on prospective M&A transactions by foreign investors in China.
To evaluate the competitive impact of an anti-monopoly review on the mergers and acquisitions market (or concentration) and to guide business operators when notifying a concentration, the Ministry of Commerce of China introduced new measures for evaluating competitive influence. The new rules have been in effect since 5 September 2011.
On June 24, 2011, Assistant Attorney General Christine Varney announced that the U.S. antitrust enforcement agencies will be signing a cooperation agreement with their Chinese counterparts. As a consequence, companies can now expect to see the Chinese authorities participating in coordinated “dawn raids” and related cooperative enforcement initiatives with the U.S. and EU antitrust enforcers in international cartel cases.
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