• Observations re the merger control regime in China
  • January 4, 2011
  • Law Firm: King Wood - Beijing Office
  • At the brink of the New Year, it is timely to take stock of the antitrust merger control work we've undertaken for our clients and provide some observations re the merger control regime in China:

    • In 2010, MOFCOM has accepted more than 110 merger filings (see our article dated 20 December 2010 entitled "2010 Merger Control Stocktake - China".

    • In the same year, we have represented clients vis-à-vis a sizable proportion of these 110 merger filings.  During the second half of this year, MOFCOM cleared several merger filings (all of which are large-scale cross-jurisdictional transactions) within Phase 1 of the merger review period (i.e. 30 calendar days).

    • In general, MOFCOM takes between 2 to 6 weeks to decide whether to formally accept a merger filing (often referred to as the "pre-acceptance review period").  This year, we observed that MOFCOM has streamlined this pre-acceptance review period (and that our filings are being formally accepted more swiftly).  MOFCOM has successfully done this by issuing comprehensive supplementary questions within 5 to 10 days of receiving filings. 

    • MOFCOM has also organized and streamlined their divisions internally.  For instance, currently, the Administrative Management Service Centre receives the filings initially and conducts a preliminary review (in order to check that all necessary documents are in place), before passing the filing over to the Consultation Division of the Anti-Monopoly Bureau of MOFCOM for a more detailed, pre acceptance review process.  The Administrative Management Service Centre plays an important initial role to ensure that all required documents and annexes are in place. 

    • MOFCOM has also improved its communications systems.  Currently, MOFCOM uses its website (http://xzsw.mofcom.gov.cn) to update applicants about the status of each merger filing.  Applicants are given a password in order to log in to the page to view the status of their filings.

    • MOFCOM also sends text messages to applicants (often these text messages get sent to attorneys representing the applicants) in order to let them know that documents are ready for collection (e.g. supplementary questions, notices and decisions).

    • During the review period, the case handlers may voluntarily contact the applicants via phone in order to clarify or discuss specified or outstanding issues.  Applicants may respond to questions via fax, email or phone.

    All in all, we have seen many improvements and refinements re MOFCOM's merger control review process.  Of course, the length of time for review depends on a number of factors, namely whether all the required information is contained within the filing; the extent to which the filing poses antitrust or competition issues in the relevant market; whether parties are able to furnish MOFCOM with clear and succinct information; and MOFCOM's general workload during the time of filing.

    In addition, we have observed that one of the most time-consuming processes within the merger control review period is MOFCOM's opinion seeking process.  MOFCOM has recently instituted an opinion seeking process where they consult with relevant stakeholders (e.g. other government agencies; trade association; competitors; upstream/downstream entities and sometimes even end-customers) on each merger filing.  This takes time and it is not uncommon for filings to spill into Phase 2 of review (i.e. a further 90 calendar days) because of this process.  However, this year, we have also seen improvements in relation to this many cases that we have undertaken tend to clear within the initial period (i.e. first 20-30 days) of Phase 2 of review.