What Compliance Counsels Need to Know About the Recently Published Implementing Rules and the Coke Decision Under China’s Anti-Monopoly Law

May 2009
Bloomberg Law Reports
Christopher F. Corr, Patrick W. Ma

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China's Anti-Monopoly Law (AML), which went into effect on 1 August 2008, establishes China as one of the world's most important merger review authorities, along with the U.S. and EC. The Anti-Monopoly Bureau (AMB) of China's Ministry of Commerce (MOFCOM) recently shed light on how it will implement the AML merger review provisions in a series of publicly issued guidelines, and in its 18 March decision rejecting a proposed investment in China by The Coca Cola Company (Coke).

In January and February, MOFCOM published eight sets of guidelines and regulations on merger review. Two "Guidance Opinions" took effect immediately upon publication, whilst the others remain in draft form and subject to public comments. Key aspects include:

1. the approach to defining the relevant market that will be used by MOFCOM in merger review and, most likely, by the other enforcement agencies, namely: the State Administration of Industry and Commerce (SAIC) and the National Development and Reform Commission (NDRC) in non-merger cases; and 
2. the circumstances in which a transaction must be notified to MOFCOM, such as guidance on turnover computation in determining whether the notification thresholds are met and confirmation that joint ventures are covered by the notification regime.

In a decision announced on 18 March rejecting Coke's bid for Huiyuan Juice Group Ltd. (Huiyuan), a local beverage manufacturer, MOFCOM provided additional, albeit troubling, insight into how it will enforce its merger review authority as to foreign investment.

In this article, we provide a summary of the AMB's recent merger review guidance and decision, and the larger implications.