MOFCOM Opens Public Consultation on Detailed Merger Remedies Proposals

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I. Introduction -

Since the inception of China’s Anti-monopoly Law in 2008, the Ministry of Commerce (“MOFCOM”), the government authority responsible for merger review, has taken an active role in analyzing and applying “restrictive conditions” proposed by merger parties (usually referred to as “remedies” or “commitments” in other jurisdictions) in order to get a proposed merger cleared. On March 27, 2013, MOFCOM took another stride forward in providing more detailed guidance for merger parties by issuing the Provisions on the Additional Restrictive Conditions for the Concentrations of Undertakings – Draft for Comments (“Draft Provisions”)[1]. These Draft Provisions have been released in the form of a public consultation, with a deadline to submit comments to MOFCOM by April 26, 2013.

The Draft Provisions aim to provide increased transparency by setting out uniform standards for the proposal, implementation and supervision of restrictive conditions. In particular, they outline the conditions that MOFCOM will consider, the process of implementation, the amendment and removal of conditions, the supervision of conditions, and penalties for breach. The Draft Provisions replace the 2010 Interim Provisions of the Ministry of Commerce on Implementing Assets or Business Divestment Related to Concentration of Undertakings (“Interim Provisions”) which had dealt in detail only with structural conditions, like divestitures. MOFCOM’s more detailed guidance now covers behavioral conditions, which were previously excluded in the Interim Provisions. This represents a welcome improvement given MOFCOM’s continued use of behavioral conditions as opposed to structural ones in its recent merger decisions.

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