I. Introduction -
In April 2013, two keenly awaited MOFCOM merger decisions illustrated China’s continued focus on utilising far-reaching behavioural conditions, especially in commodity transactions, which aim to strategically protect supply into China.
These recent conditional approvals, namely Marubeni/Gavilon, and Glencore/Xstrata, involved significant behavioural conditions being imposed, notwithstanding the fact that neither of the transactions in question resulted in very high market shares in China. They did, however, involve potentially sensitive sectors which require high levels of supply of primary resources into China, highlighting the importance of national interest and strategic industrial policy goals in MOFCOM's merger review process. While some previous merger decisions have been criticised for lack of reasoning, it is clear that MOFCOM is now moving towards a more transparent approach in its merger control review process, in terms of guidance, providing a more comprehensive analysis in merger decisions, and publishing a full text of the conditions it has accepted.
This alert considers the implications of MOFCOM’s emerging policy imposing far-reaching behavioural conditions, which can be expensive to implement and monitor. In addition to examining these recent cases in more detail, it assesses other similar recent conditional approvals, analysing the potential effects for future international M&A transactions involving Chinese merger review from a practical perspective.
Please see full alert below for more information.
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