Timing is everything
The world will remember 2008 as China’s year. The Olympics highlighted the country’s accession to the world stage. As the final changes were being put to an opening ceremony future host cities would envy, the first PRC Anti-monopoly Law also came into effect.
Practitioners hoped the Law would clarify what constitutes a monopoly. Investors wondered how their mergers and acquisitions would hold up before anti-monopoly reviews. Exactly four years later, China Law and Practice takes a closer look at the Anti-monopoly Law and reviews.
Click here to download China Law & Practice's English translation of the PRC Anti-monopoly Law ( 中华 人民 共和国反 垄 断法 ).
The review process
Any transaction can trigger a review. Even foreign-to-foreign party transactions, which may affect competition in the Chinese market, are subject to a review. There can be up to three phases to a review, but the demanding pre-acceptance stage is almost a fourth phase in itself, here is why.
At the end of 2011, the Ministry of Commerce (MOFCOM) had reviewed more than 380 cases. This year, they have already published four conditional approvals. Included in these was Google’s high-profile acquisition of Motorola Mobility. MOFCOM took took eight months to review it, while EU and US regulators approved the transaction unconditionally. Learning by example: Four conditional reviews.
Times are changing though, as a proposed draft to streamline reviews has been circulated within the Ministry. Despite no official announcement, the fast track review process also seeks to simplify reviews. MOFCOM released a new filling form as well this year. While this provides some clarity, it also requires submitting extensive sensitive information. Coming soon: fast-track reviews.
The EU has been offering fast-track reviews for over a decade and if certain conditions are met, approval can be granted in 25 days. The US system allows for decisions during the 30-day waiting period or less, depending on the circumstances. But how does China’s review process compare to well-established regimes in the EU and US?
Provisions add clarity
In June this year, the Supreme People’s Court issued Provisions for the trial of civil dispute cases arising from monopolistic acts. The Provisions came less than a month after the first People’s Higher Court began hearing a landmark dispute between software companies Qihoo and Tencent.
Click here to downlaod China Law & Practice's English translation of the Provisions on Several Issues Concerning the Application of the Law in Trials of Civil Dispute Cases Arising from Monopolistic Acts ( 关于审理因垄断行为引发的民事纠纷案件应用法律若干问题的规定 )
The Provisions were welcomed as the Court finally provided guidance for anti-monopoly cases. They lowered the burden of proof and set out a procedural framework. Zhaofeng Zhou analysed the Provisions and how they change disputes.
However, the Court failed to touch on horizontal monopoly disputes and what constitutes market dominance. The country is also still waiting to see a plaintiff win a high profile anti-monopoly case, raising questions over how and under what circumstances damages will be awarded. Fang Qi spoke to China Law & Practice on these issues.
With only four years of history, the Anti-monopoly Law has already changed how companies do business in China. It is clear MOFCOM and the Supreme Court both have work to do when it comes to streamlining reviews and providing guidance on how to interpret the Law, but for now this guide gives you everything you need to know.