MOFCOM Update Draft Rules on Simplified Merger Review Procedure

On March 17, 2014, the Chinese Ministry of Commerce (MOFCOM) sought comments from antitrust lawyers on draft rules for its long-awaited simplified merger review procedure in a meeting behind close doors.

Attendees reported that MOFCOM showed a much simplified notification form, which could significantly reduce the burden of proof companies have to provide to MOFCOM for “simple” merger reviews.

A total of six sections, or sections 8 – 13 on the current notification form, were omitted in the simplified version. These sections dealt with the supply and demand structure in markets affected by the merger, market entry, horizontal or vertical agreements, possible efficiencies the mergers may create, trade associations in the relevant sector, and information on whether the merger involves bankrupt or distressed companies. According to the draft rules, once a case is accepted for simple review, it will be notified to the public for 10 days should it fall into the simple case notification threshold.

The lawyers who attended the meeting hailed the development as important and positive; in particular, they noted the significant alleviation of the burden of conducting complicated economic analysis by the merging parties. However, they were reserved on the short-term relevance of the form, since MOFCOM did not issue any procedures on who should file, and how to file a merger for simple review. As we have noted in our previous article (linked below), MOFCOM is currently separating simple from normal cases at its internal discretion, and so far MOFCOM have not issued any notifications for simple review.

As a result, lawyers advise that those seeking to file merger review with MOFCOM continue to use the existing rules, lest the MOFCOM reject a simple merger filing and force companies to re-submit using old filing procedures, increasing both the cost and delay of MOFCOM approval.

Link to our previous article on the development of MOFCOM’s Simple Review Procedure:
(https://www.antitrustlawyerblog.com/mofcom-publishes-long-awaited-interim-rule-on-applicable-standards-for-simple-merger-review-cases/)

Mark Ye
202-589-1834
mye@dbmlawgroup.com