• Chinese Commerce Ministry Conditionally Clears InBev Group's Acquisition of Anheuser-Busch
  • December 12, 2009 | Author: Nathan Garrett Bush
  • Law Firm: O'Melveny & Myers LLP - Beijing Office
  • On November 18, 2008, the Antimonopoly Bureau of the Chinese Ministry of Commerce (MOFCOM) for the first time published a determination in the review of a transaction pursuant to Chapter IV of the Antimonopoly Law of the PRC. Through Ministry of Commerce of the People’s Republic of China Notice [2008] No. 95, the Antimonopoly Bureau conditionally approved the acquisition of Anheuser-Busch Companies Inc. by InBev NV/SA.

    MOFCOM found that the “size of the acquisition is enormous, the market share of the combined new enterprise is very big, and the competitiveness of the combined new company will be increased significantly.” Accordingly, MOFCOM imposed conditions to “reduce possible adverse effects on future competition in the Chinese beer market.” Specifically, MOFCOM directed InBev to abstain after the transaction from (1) increasing Anheuser-Busch’s existing 27% stake in Tsingtao Brewery Co., Ltd.; (2) increasing InBev’s existing 28.56% stake in the Pearl River Brewery Co., Ltd.; or (3) seeking to acquire stakes in China Resources Snow Brewery (China) Co., Ltd. or Beijing Yanjing Brewery Co., Ltd. MOFCOM further directed InBev to further directed to “inform MOFCOM in a timely manner regarding the change of InBev’s controlling shareholders or the shareholders of InBev’s controlling shareholders.”

    This ruling is the first published decision enforcing the Antimonopoly Law. Significantly, decisions to block or approve mergers with conditions are the only administrative rulings which must be published pursuant to the Antimonopoly Law. Article 30 directs the enforcement authorities to “publicize in a timely manner” such decisions, but does not specify the required form or contents of such notices. In other enforcement actions, however, Article 44 simply suggests that the enforcement authorities may publish decisions. Notice [2008] No. 95 thus appears to represent MOFCOM’s first decision to block or approve transactions with conditions since the Antimonopoly Law first took effect on August 1, 2008.

    The notice also offers insight into the pace and scope of the Antimonopoly Bureau’s review of reported transactions. It indicates that InBev submitted the initial notification on September 10, 2008, followed by supplemental submissions (presumably in response to MOFCOM queries) on October 17, 2008 and October 23, 2008. Then, on October 27, MOFCOM “registered the notification and issued a notice of registration.”

    Under past practice, the issuance of a notice of registration or receipt typically commenced the 30 business day initial review period allowed by the Antimonopoly Law. Although MOFCOM's action took longer than 30 business following the initial submission, it acted well before the 30 business day deadline after the issuance of the registration receipt. The notice also reports that MOFCOM “solicited the views of relevant government departments, and listened to related beer trade associations, major beer producers, raw beer material producers, as well as sellers of beer products.”

    The publication of MOFCOM’s clearance, with conditions, of InBev’s acquisition of Anheuser-Busch is a major milestone in the implementation of the Antimonopoly Law.