China, Monopolies & M&A

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We have covered M&A (including Chinese outbound investment) and monopolies in China before, but new news is now on offer, with the announcement of Diageo’s bid for Chinese spirits maker Shuijingfang, as well as coverage of the Anti-Monopoly Law (AML) and the role of state-owned enterprises (SOEs). See the links from our tweets below for more coverage:

• RT @chinahearsay: Latest China Hearsay post re: Anti-monopoly Law and State sector. http://tinyurl.com/ydpazo8 6:41 AM Mar 7th

Stan Abrams, in his post (see link above) notes:

    “China’s State sector, and its industrial policy in general, presents a competition law problem. How do you square the existence of dominant SOEs, many of which have very large market shares, with fair competition?

    The AML provides some basic guidance on this issue. Article 7 acknowledges that although SOEs may engage in monopolistic conduct, they will be protected by the State. In other words, they will receive special protection. At the same time, however, the State recognizes the danger posed by these special privileges and has a duty to regulate SOEs and their pricing behavior.

    Articles 8, and 32-37 address specific actions of government actors in restricting competition, laying out certain situations and actions that are prohibited.

    …China will accelerate the reform of monopoly industries to facilitate fair competition among private and state-owned businesses, Premier Wen Jiabao said in a government work report delivered at the parliament’s annual session Friday.

    There are calls for government to loosen the grip and invite private sector to join the competition in monopoly industries.

    We’ll have to wait and see what all this means once individual policy documents are released…”

And, just in case that has made you thirsty for more AML detail, Mayer Brown have stepped up to the plate in a timely fashion with the following:

• RT @ChinaLawAlerts: Mayer Brown: China’s Anti-Monopoly Law Merger Control Regime – 10 Key Questions Answered (Part II) http://bit.ly/4bsdr 1:13 PM Mar 6th (Part 1 is here)

As for foreign M&A, the link with the AML was highlighted by Mayer Brown – and by the failed Coke-Huiyuan deal, where the protection of domestic industry may have played a part alongside pure completion concerns. Now that another drinks company deal is on the cards, the comparisons are coming out:

• Need regulatory approval RT @niubi: Diageo in £610m bid for Chinese spirits maker – Telegraph http://bit.ly/aUYIY5 7:56 AM Mar 2nd

• M&A RT @chinahearsay: Diageo on Shuijingfang bid: “It’s not like Coke-Huiyuan!” http://tinyurl.com/yejhwph Keep an eye on this one. 9:13 AM Mar 6th)

As Stan Abrams at China Hearsay says “Keep an eye on this one”.

One Response to “China, Monopolies & M&A”

  1. Archive » Briefly…Top Ten Tweets (From Taxes, Monopolies & Loans, To Bribes, Recalls & Yuppies)| China Business Blog Says:

    […] Monopolies & M&A RT @chinahearsay: Latest China Hearsay post re: Anti-monopoly Law and State sector. http://tinyurl.com/ydpazo8 6:41 AM Mar 7th (Also note: M&A RT @chinahearsay: Diageo on Shuijingfang bid: “It’s not like Coke-Huiyuan!” http://tinyurl.com/yejhwph Keep an eye on this one. 9:13 AM Mar 6th). See more on this in our post here. […]

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