How to tackle merger remedies under MOFCOM's new rules

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clpstaff &clp articles

While the Ministry of Commerce has expanded on its implementation of restrictive conditions by clarifying procedures and introducing the crown jewel and upfront buyer mechanisms, how it determines its preference for remedies requires further explanation

On December 4 2014, the Ministry of Commerce of China (MOFCOM) released the Provisions for the Imposition of Restrictive Conditions on Concentrations of Business Operators (Trial Implementation) (2014 Provisions), which took effect on January 5 2015. As a departmental regulation, the Provisions has superseded the Tentative Provisions for the Implementation of Asset or Business Divestitures of Concentrations of Business Operators (2010 Provisions) previously issued by MOFCOM on July 5 2010.

Compared with the limited content covered in the 2010 Provisions, the 2014 Provisions have been considerably expanded to cover more aspects including restrictive conditions' category, determination, implementation, supervision, modification, rescission and legal liabilities.

Updated and expanded


In terms of the category of restrictive conditions, the 2014 Provisions cover both structural remedies and behavioural remedies set forth in the Measures for the Review for Concentrations of Business Operators released on November 24 2009, rather than being limited to the structural remedy of divestiture of assets or business only. However, for the implementation and supervision of restrictive conditions, the 2014 Provisions' relevant details are still mainly on divestiture, leaving the behavioural remedies yet to be developed.

In terms of the determination of restrictive conditions, the 2014 Provisions set forth procedural details.

Generally, the procedure for conditions includes the following steps:

(1) MOFCOM raises the potential anti-competitive effects of the concentration;

(2) the filing party proposes restrictive conditions to be imposed;

(3) MOFCOM and the filing party conduct negotiations;

(4) MOFCOM evaluates the proposal;

(5) MOFCOM solicits third parties' comments (optional); and

(6) MOFCOM announces the review decision.

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