In the news: CITIC and KKR bid for Sinopec Sales, Microsoft comes under investigation and Apple loses Siri case

CITIC, KKR and TPG bid for Sinopec's retail stake

A consortium comprising private equity firms CITIC Capital, Boyu Capital, Canada Pension Plan, TPG and KKR have bid for the 30% stake in Sinopec's retail unit. A Barclays report in February predicted the unit could fetch more than US$20 billion, and, as of April 30, the retail division (Sinopec Sales) had assets worth US$55 billion (Rmb341.7 billion). The stake includes over 30,000 petrol stations and 23,000 convenience stores. The move is part of the government's effort to introduce private capital – and efficiency – into its sprawling SOE sector.

Source:
FinanceAsia

The investment is already well into its first round and has gathered a lot of interest. The private equity firms will face competition from strategic investors and sovereign wealth funds. The move follows CITIC Group's injection of its US$36 billion worth of assets to its Hong Kong-listed arm CITIC Pacific and its subsequent sale of 16% of its capital to 27 institutional investors. Other state-owned entities are in line for test reform, such as the State Development & Investment Corp and COFCO. An increasing number of domestic and foreign funds are participating in the SOE restructuring, which may launch a new era of private equity in China.

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Microsoft targeted in antitrust probe

The State Administration for Industry and Commerce announced on July 27 that Microsoft was being investigated for possible antitrust violations. Chinese IT analysts have suggested that an antitrust investigation would have involved Microsoft's operating system, which controls 95% of the market. But this was not the focus of the regulators and Microsoft's share in the OS space has been challenged by domestic competitors, who see their share rising as part of a government drive. Microsoft's key competitor in China, however, is the stolen and pirated versions of its own software.

Sources:
Financial Times
China IPR

Very little information has been released to the public. However, the signs show that China is interested in protecting IP and competition. But some argue these motives are in favour of local interests. The move follows a separate probe into Qualcomm, which is being investigated by the National Development and Reform Commission (another antitrust regulator) on the basis that the US mobile chip company had abused its power of market dominance to set its licensing fees.

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Apple faces Siri case setback

The Beijing No 1 Intermediate People's Court ruled against Apple early this month in an IP dispute that started two years ago. The case in question goes back to 2012 when Shanghai Zhizhen Network Technology claimed Apple infringed on its little-I-robot chat technology patent with the Siri voice recognition software, which was introduced to China in early 2012 with the iPhone4S. Zhizhen took Apple to Shanghai No 1 Intermediate People's Court that summer but Apple got the Patent Review Board to invalidate Zhizhen's patent. A year later, the board lifted the invalidation and Apple sued both Zhizhen and the board, taking them to the Beijing No 1 Intermediate People's Court for a brand new lawsuit. This is the case Apple just lost, and it will probably appeal.

Source:
China Economic Review

The intermediate courts usually decide in favour of review board decisions, but the high courts often overturn these rulings. Apple may win this administrative suit as its appeal takes the case up the next level. But even if Apple wins, enforcement may be difficult. This would lead to the case going back to the Shanghai No 1 Intermediate People's Court, where the decision would depend on the strength of Zhizhen's patent.

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