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By  Jill Wong and Amanda Beattie King & Wood Mallesons’ Dispute Resolution Group, Hong Kong Office

The Securities and Futures Commission (“SFC”) has been steadily getting more creative in the use of its powers and we can expect them to continue to do so, given their recent success in obtaining compensation for investors for financial misstatements in a company’s prospectus. The SFC successfully obtained a court order under section 213 of the Securities and Futures Ordinance (“SFO”), that Hontex International Holdings Co. Ltd. (“Hontex”) pay back more than HK$1 billion raised in its 2009 initial public offering. This will give further impetus to the SFC’s push to improve the quality of disclosure in prospectuses and their controversial proposal – the consultation period for which has been extended to end of July – to make sponsors (who advise companies to a listing on the Hong Kong Stock Exchange) criminally liable for faulty prospectuses. And finally, a sting in the tail – what will this mean for financial institutions with self-reporting obligations and their new obligations, effective December 2012, to self-report suspected market misconduct by their clients?Continue Reading Combating Market Misconduct – Section 213 strikes again…and where or what else will it strike?

By Susan Ning, Liu Jia and Kate Peng

It is generally known that the antitrust enforcement powers are shared by three government authorities in China: the Ministry of Commerce (“MOFCOM”),  which is responsible for merger control,  the National Development and Reform Commission (“NDRC”), which is responsible for price-related monopoly conducts, and the State Administration for Industry and Commerce (“SAIC”), which is responsible for non-price related monopoly conducts.  Compared to the former two authorities, SAIC  keeps a relatively low profile on its antitrust enforcement actions. 

On July 11, Director General of the Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau of SAIC (“AMAUCEB”), Ms. Ren Airong (任爱荣) made a speech at a conference and introduced the fruits of antitrust enforcement by SAIC since the Anti-Monopoly Law (“AML”)  came into effect on August 1, 2008.  Continue Reading A General Picture of SAIC’s Antitrust Enforcement

By Susan Ning and Kate Peng

Since the enactment of the China’s Anti-Monopoly Law (“AML“), the State Administration of Industry and Commerce (“SAIC“) and the National Development and Reform Commission (“NDRC“) have investigated into a number of cases that raise competition concerns and have imposed penalties on some companies within their respective authorities.  Please see our previously published articles including “First Public Enforcement Decision by SAIC against concrete manufacturers“, “Earlier Rumor Confirmed: China Telecom and China Unicom under Antitrust Investigation“, “NDRC Fined Two Pharmaceutical Companies for Abusive Conducts“, “Price Related Breaches of the AML and the Price Law -How Many Public Cases Have There Been?“, etc.

According to Article 46 and 47 of the AML, if a business operator reaches and executes a monopoly agreement or abuses its dominant market position, the anti-monopoly enforcement agencies can impose the following penalties:Continue Reading FAQs about Administrative Review of Antitrust Enforcement Decision

By Susan Ning and Huang Jing

On June 6, 2012, the Ministry of Commerce (“MOFCOM“) promulgates the new merger filing form (the “New Form“).  Filings submitted after July 7, 2012 should use this New Form.  The New Form is more than just a formal change.  MOFCOM has condensed its three and a half years of experience since the first filing form of January 2009 into the new form.  It contains requests for additional information and guidelines on some substantive issues of merger filling.

 The definition of “operator to the concentration”

Before the promulgation of the New Form, the definition of an “operator to the concentration” is one of the major unsolved issues related to merger control review in China. 
Continue Reading MOFCOM New Merger Filing Form-Clarification on Major Filing Issues

By Susan Ning and Hazel Yin

On June 15, 2012, the Ministry of Commerce (“MOFCOM”) approved the acquisition of Goodrich Corporation (“Goodrich”) by United Technologies Corporation (“UTC”) subject to the divestment of the electronic systems business of Goodrich.  Both companies are headquartered in the United States and active in the production and sale of aviation equipment.  This marks the fourth conditional clearance issued by MOFCOM in the first half of 2012 and the only case where the core remedies are structural.

 Review Process.  MOFCOM received the notification on December 12, 2011 and officially accepted it on February 6, 2012.  A Phase 2 investigation was opened on March 2 and extended on May 31, which was set to expire on July 30. 
Continue Reading MOFCOM Approves UTC’s Acquisition of Goodrich with Divestiture Requirement

By Martyn Huckerby Jill Wong King & Wood Mallesons’ Foreign Direct Investment Group

On June 22, 2012, Hong Kong’s first cross-sector substantive competition law regime was published in the official gazette, bringing with it a new regulator ready to change business practices in the Asian region, and armed with extensive enforcement powers, including the ability to conduct dawn raids and levy significant fines for anti-competitive conduct once the changes come into force.

The Competition Ordinance will prohibit cartel conduct, abuses of market power and other forms of anti-competitive conduct, subject to the availability of a number of exemptions, including exemptions based on efficiencies, Block Exemptions and minimum turnover. Merger control will continue to be limited to the telecommunications sector.
Continue Reading Hong Kong’s new competition law: get ready for the antitrust revolution

By Liu Cheng  Martyn Huckerby and Yu Chenchen  King & Wood Mallesons’ M&A Group

Whether a resale price maintenance (“RPM”) provision is deemed to infringe the Anti-Monopoly Law (“AML”)[1] regardless of whether it has an impact on competition has been one of the most cloudy issues under the AML since the law came into effect in 2008. A recent decision by the Shanghai No.1 Intermediate People’s Court (“Shanghai Court”) has found that for RPM to infringe the AML it must have an adverse impact on competition. While it is still too early to say if this court decision will be followed by other Chinese courts, the decision provides valuable guidance for companies when considering how the AML will apply to their distribution agreements in China.Continue Reading Resale Price Maintenance – Not Per Se Illegal Under the AML

By Huang Tao  King & Wood Mallesons’ Dispute Resolution Group

The fast growth of China’s economy has gotten more and more foreign enterprises to invest in Mainland China. Foreign investors need to establish a local presence Chinese, for example, a representative office, a branch, a subsidiary, or a joint venture so that they can do business in China. As the business ties between China and the rest of the world strengthen, the number of China-related business disputes has been increasing.

Arbitration is one of the most favored international business transaction dispute resolution mechanisms because it is convenient, efficient, and the cross-border enforceability of arbitration awards tends to be higher than court judgments.
Continue Reading The Validity of Arbitration Agreements under Chinese Law

By King & Wood Mallesons’ Finance Group

In May 2010, the State Council issued the Opinions on Encouraging and Guiding the Healthy Development of Private Investment (Guo Fa [2010] No.13) to promote private investment activities . In order to solve the difficulties faced by private companies in terms of overseas financing and the lack of liquidity, and to simplify the foreign exchange control policies for outbound investment activities by private companies, SAFE released new rules on private outbound investments, the Circular of State Administration of Foreign Exchange on Foreign Exchange Administration in Relation to Encouraging and Guiding the Healthy Development of Private Investment (Hui Fa [2012] No.33) (the “Circular”) on 11 June 2012. The Circular simplifies the regulation processes for the remittance of foreign direct investment capital as well as offshore loans[1]  granted by domestic enterprises and relaxes the administration of  external security provided by individuals.

The Circular’s main content includes:Continue Reading Safe New Rules to Boost Private Outbound Investment

By Chen Changhui and Jiang Zhipei  King & Wood Mallesons’ Intellecutual Property Group

Chinese enterprises are progressively pursuing outbound investment strategy by expanding their businesses abroad. How to build the global branding of Chinese manufacturing is a key concern in China’s outbound investment strategies. If all Chinese-related exports, either “Made in China” or “Created in China”, continue to use the registered trademark of others without paying great attention to cultivating their own brands, Chinese exports are extremely likely to be kicked out by trademark owners in the international market.

Most Chinese enterprises don’t have immediate plan for outbound investment, or have sufficient financial strength to register enterprises, trademarks or domain names overseas in their early stage of development, and then find out their enterprise names, trademarks or domain names are already in existence or have been registered by others out of malicious cybersquatting.
Continue Reading Brand-Related Intellectual Property Disputes in Outbound Investment