On June 17, 2014, China’s Ministry of Commerce (MOFCOM) issued a decision blocking the formation of a strategic alliance between three of the world’s largest ocean container shipping companies, A.P. Møller - Maersk A/S, MSC Mediterranean Shipping Company S.A., and CMA CGM S.A. (the “P3 Alliance”). The proposed P3 Alliance would have allowed the three companies to consolidate their shipping fleets on Asia to Europe, Trans-Pacific and Trans-Atlantic routes. Authorities in the US and the EU did not oppose the transaction. MOFCOM, however, decided that the P3 Alliance would have reduced competition in the ocean container shipping business between Asia and Europe. According to MOFCOM’s decision, the P3 Alliance would have (i) significantly increased concentration in container shipping between Asia and Europe, thereby enabling the parties to exercise market power, (ii) increased entry barriers and (iii) adversely affected competitors. This is only the second time since China’s Anti-Monopoly Law went into effect in 2008 that MOFCOM has issued a decision blocking a proposed transaction in its entirety.
MOFCOM’s decision appears to highlight a significant difference in the competition laws of the US, EU and China. Unlike the competition laws of the US and the EU, China’s Anti-Monopoly Law requires MOFCOM not only to assess the potential competitive effects of a proposed transaction but also the transaction’s potential impact on China’s “national economic development.” This assessment adds additional complexity to the analysis.
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