This month’s editors: Maxime Vanhollebeke, Julienne Chang, Zhao Jingjing and Lydia Fung.
Below is an excerpt from our monthly Competition Report. More detailed commentary on these issues and other recent competition law developments in the Asian region is to be found in this month’s edition of our report available on a free subscription basis (see further below).
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MOFCOM signals new era of enforcement
Earlier in January, China’s Ministry of Commerce (MOFCOM) released its merger control enforcement statistics for 2011, showing a 50 per cent increase in notifications. Out of 203 filings, MOFCOM’s Antimonopoly Bureau initiated merger review procedures in 185 cases, 168 of which were completed by year end. All but nine transactions were cleared unconditionally. In four transactions MOFCOM's approval was subject to the condition that parties implement remedies, and in five cases parties chose to withdraw their notification. By way of comparison, during the same period, the European Commission reviewed 309 merger cases and approved all transactions unconditionally save one that was prohibited, six that were cleared subject to conditions and ten that were withdrawn.
Three and a half years after the entry into force of the Chinese merger control regime, these statistics show that MOFCOM’s Antimonopoly Bureau has found its place as one of the leading competition merger control authorities.
Notwithstanding these impressive enforcement statistics, compliance with the compulsory merger notification regime remains an issue in China. MOFCOM acknowledged in December that a number of reportable concentrations have been implemented without undergoing a merger review as required by the Antimonopoly Law. The announcement by MOFCOM in January that it had adopted Interim Measures on the Investigation of Concentrations not Notified shows that it aims to address this issue by providing MOFCOM with additional tools to ensure full compliance with the Chinese merger control regime.
An interesting feature of the Measures is that they contemplate a decentralised enforcement model. Where necessary, MOFCOM may entrust provincial commerce authorities with investigating suspect transactions within their territory. This could - at least in theory - make it easier for MOFCOM to identify transactions that have not been notified. Given the substantial role played by provincial authorities in the Chinese economy, involving them in the enforcement of the merger control rules may also have an educational objective, leading officials in the provinces to advocate compliance with the merger rules when dealing with the provincial State-owned enterprises they control.
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MyCC to investigate share swap agreement between AirAsia and Malaysia Airlines
On 4 January, the Malaysian press reported that the Malaysia Competition Commission (MyCC) is to investigate a share swap deal between AirAsia and Malaysia Airlines, which was signed in August 2011. Under the arrangement, both parties agreed to cooperate in various areas including ground handling, training and engineering services. The share swap and collaboration agreement forged between the two airlines may raise concerns of reduced competition between parties and increased airfares. MyCC has reportedly requested the parties to submit detailed information on the arrangement by the end of January.
MyCC has yet to confirm that it is formally looking into this matter, which would be one of the first investigations to be carried out under the Malaysian Competition Act, which came into force on 1 January 2012.
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