On 4 December 2014, the Provisions of the Ministry of Commerce on Imposing Additional Restrictive Conditions on the Concentration of Business Operators (for Trial Implementation) (hereinafter the “Provisions of Restrictive Conditions”) was officially enacted by the Ministry of Commerce of the People’s Republic of China (MOFCOM), based on its 2013 draft version (hereinafter the “2013 Draft Provisions”). Restrictive conditions in merger reviews are also referred to as “merger remedies”. Pursuant to Articles 28 and 29 of the Anti-monopoly Law (hereinafter “AML”), where a concentration of business operators will or may eliminate or restrict competition, MOFCOM may decide to attach restrictive conditions to its clearance decision in order to reduce the adverse impacts on competition. MOFCOM has given conditional clearance in 24 cases since AML came into effect. Given that the imposition of restrictive conditions on proposed transactions may impact heavily on the parties and the nature of the transaction, even altering the relevant market and development of the relevant industry, the publication of the Provisions of Restrictive Conditions will be of great significance not only to the merger review process, but also to the business decisions of the relevant companies.
The Provisions of Restrictive Conditions came into effect on 5 January 2015. At the same time, MOFCOM’s Interim Regulations on Implementing the Divestiture of Assets or Businesses in Concentrations of Business Operators dated 5 July 2010 (hereinafter “the Regulations on Divestiture”), were repealed. The Provisions of Restrictive Conditions will become an important reference point for the enforcement of restrictive conditions. The Provisions of Restrictive Conditions contain 7 chapters addressing restrictive covenants, including when such covenants will be imposed, the mechanisms for supervising their implementation, the consequences of failing to comply, the procedure for amending them and when the obligations will come to an end .
Continue Reading Developments to the Merger Control Regime in China: MOFCOM’s Provisions on Imposing Additional Restrictive Conditions on Concentrations of Business Operators (for Trial Implementation)