More anti-monopoly guidelines published

The Ministry of Commerce (Mofcom) has published four draft documents clarifying the handling of concentrations and suspected concentrations.

The documents listed below appeared on Mofcom’s website on January 19 and 20, and had previously been circulated to a small group of stakeholders for comment.

Tentative Measures for the Investigation and Handling of Concentrations of Business Operators that have not been Reported in accordance with the Law (Draft);
Tentative Measures for the Collection of Evidence for Suspected Monopolies of Concentrations of Business Operators that have not reached the Reporting Threshold (Draft);
Tentative Measures for the Reporting of Concentrations of Business Operators (Draft for Comments); and
Tentative Measures on Reviews for Concentrations of Business Operators (Draft for Comments)

Specialists reviewing the draft Measures say they should help settle various contentious issues. One involves the factors that Mofcom will take into account when deciding whether one business has acquired control over another.

For the first time, an exact share ratio has been specified. If an acquiring party exceeds this ratio, they can be said to have acquired control. The new documents also seem to confirm that joint ventures will qualify as concentrations (although the position with so-called greenfield ventures is unsure), and explain how to calculate business turnover. This will help companies to apply the long-debated threshold tests contained in the 2008 Anti-monopoly Law, including one which sets a threshold of Rmb10 billion for the aggregate global turnover of all parties involved

For Francois Renard, competition specialist with Allen & Overy, the draft covering “Suspected Monopolies of Concentrations of Business Operators that have not reached the Reporting Threshold” is intriguing.

“Mofcom seems to give a lot of weight to the review of concentration below thresholds,” he says.

This could be interpreted in two ways: as an indication that Mofcom intends to review many below-threshold operations, or simply as a response to previous concerns over the Ministry’s scrutiny of such deals.

Since the promulgation of the Anti-monopoly Law in 2008, many lawyers have commented that supporting guidelines would benefit from external input. It seems the Ministry has been listening, as it has opened the new draft Measures for public comment until February 16.

Although the latest drafts have been generally welcomed, they leave some existing uncertainties unresolved and raise further uncertainties themselves. One lawyer has reported some “very bizarre drafting” in some of the Measures. There is certain to be considerable debate in the weeks ahead.