China Intends to Simplify Anti-Monopoly Review Procedures in 2013

Shang Ming, the director of the Anti-Monopoly Bureau at China’s Ministry of Commerce (MOFCOM), has announced that the implementation of new rules designed to speed up the merger review process will be a priority in 2013. MOFCOM has been working on reforming the merger control process since 2011 and has circulated a number of drafts of the new procedures for comment.

Under the current rules, MOFCOM’s formal Phase I review lasts up to 30 days. Phase II reviews last for 90 days and can be extended for a further 60 days. However, although the vast majority of cases are ultimately approved without conditions, most companies have to wait much longer than the official 30-day Phase I review period to obtain clearance, even for very straightforward cases with no impact on competition in China. Under the new system, mergers would be classified into one of three different categories with different timelines for review, depending on their complexity. According to drafts of the new rules circulated last year, mergers will be classified as simple, normal or major on the basis of market share and Herfindahl-Hirschman Index thresholds. See earlier newsletter coverage here.

The reforms are intended to enable MOFCOM to review simpler concentrations within a shorter timeframe. They should help MOFCOM to better allocate its resources and facilitate transaction planning for companies. However, the new rules do not introduce a fast track or simplified notification procedures of the type found in other jurisdictions. Notifying parties would still have to complete the full notification form and provide extensive data, and, based on drafts of the new rules that have been circulated, the review periods will not be any shorter than those set out in the Anti-Monopoly Law even for simple cases.