Merger Control in China - Past Practice and Future Developments
Miika Junttila, Senior Legal Counsel, Nokia Siemans Network, Finland
This paper will provide the reader an insight into the Chinese merger control regime outlining the legal framework, applicable laws and competent authorities after the introduction of China’s first comprehensive competition law regime in August 2008. In addition to explaining the requirements triggering a merger control filing in China and certain problems associated with the current criteria, the paper will discuss the preparation of the filing, review process and certain timing and procedural aspects that should be taken into account when considering a transaction involving a Chinese entity. Furthermore, feasibility of consulting local and regional authorities and certain other third parties pre- and post-filing will be discussed on a general level and in light of recent case law.
As there is little published case law available and the published cases are related solely to transactions which were either prohibited or approved subject to conditions, it is difficult to establish the criteria on which the transactions are generally reviewed in China. Few examples of case law in which the criteria and grounds appear to differ from the western methodologies have been elaborated in this paper with an aim to identify potentially problematic deals and industry sectors that may be subject to closer scrutiny. Recently implemented rules and regulations as well as proposed guidelines related to merger control filings will also be discussed. Finally, this paper will elaborate the implementation and potential implications of new security review system and how this and the current merger control regime may impact foreign companies doing business or considering investing in China. In addition to getting basic understanding of the merger control process and the duration thereof in China, this paper should help the reader to identify and, ideally, to negotiate contractual and other safeguards already in the deal-making phase. These are necessary to address some of the complexities and uncertainties that are inherent in the Chinese merger control process and which may significantly impact the timing of the transaction that is subject to merger control in China.
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