China to improve anti-trust laws

CHINA - The Ministry of Commerce is drafting improvements to the nation's antitrust laws, part of the government's drive to build a level playing field for all companies.

"We have finished the draft of 'Imposing Restrictive Conditions on the Concentration of Undertakings'. It is undergoing internal approvals and is expected to be released in the first half of this year," Shang Ming, director-general of the anti-monopoly bureau of the ministry, told a news conference on Thursday.

The rules will spell out in detail the restrictions that may be imposed by anti-monopoly authorities in reviews of mergers and acquisitions.

The regulations will replace interim provisions issued in July 2010, known as Implementing Assets or Business Divestment Related to the Concentration of Undertakings.

China is a relative newcomer in terms of anti-monopoly reviews, but its reviews increased rapidly after Aug 1, 2008, when the Anti-Monopoly Law took effect.

As of Dec 31, the ministry had received 866 filings related to industrial concentration, officially accepted 797 and settled 740 cases, according to the ministry.

Breaking down the settled cases, 717 were approved without conditions, 22 were conditionally approved, and one was rejected, the ministry said.

In 2013 alone, the ministry received 224 filings involving industrial concentration, up 8 per cent, and accepted 212 of them, up 12.8 per cent.

Of those cases, 207 were resolved, up 26 per cent, with four conditionally approved.

In April 2013, the ministry approved the acquisition of Xstrata Plc by Glencore International Plc, the largest merger in mining history, but with restrictions, saying that the transaction would limit competition in copper, lead and zinc concentrates.

China is the largest target market for Glencore's mining products and an important target market for Xstrata's mining products.

The National Development and Reform Commission has confirmed that it is conducting an antitrust investigation into US mobile chipmaker Qualcomm Inc for allegedly abusing its dominance in the wireless telecommunication copyright and chip markets.

"As for restrictive condi-tions, China took various measures, and they were determined by the specifics of each case and the difference in terms of competition issues.

"We are summarizing the experience from these cases and will set down effective measures in the draft rule," Shang said.

To make reviews more efficient and reduce filing bur-dens, the ministry on Feb 11 released the final version of its Interim Provisions on the Standards that Apply to Simplified Cases of Concentrations of Undertakings.

The document is seen as a genuine fast-track procedure for simple cases.

Zhang Yizhe, a partner in the antitrust and competition practice at Jones Day law firm, said that the ministry has established itself as an "important stop" in the global merger clearance process for international transactions.

"The biggest challenge during the ministry's investigation of transactions that may raise competition concerns is that the parties aren't given much detail regarding the ministry's concerns, the underlying evidence and its theory of competitive harm," Zhang said.

Last year, China pledged to accelerate the construction of a modern market system and let the market play a decisive role in allocating resources.

These reforms are intended to end local protectionism, strengthen anti-monopoly efforts and combat unfair competition.

Yao Jian, spokesman for the ministry, said that the ministry and other government departments are working to clear regional "blockades" and industrial monopolies.

That effort includes improving tax provisions for operations that cover more than one region, removing discriminatory product and service prices within a region, and dismantling barriers to the flow of products and services between regions.

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