For Overseas Mergers and Acquisitions, Companies Take Careful Attitude Towards the "Review Risk"
As Chinese companies frequently "go global" and become important buyers in the M & A market, the anti-monopoly review is also increasingly intensive. According to incomplete statistics, the investment merger and acquisition of more than 30 European and American companies were forced to "abort" for regulatory restrictions with 75 billion US dollars. While countries have tightened antitrust review, mergers and acquisitions may face more stringent scrutiny. Even more worrying is that many companies do not have enough knowledge about this.
As a senior anti-monopoly lawyer, Huang Wei, partner from Tianyuan law firm recently said in the Chinese business operators seminar held by China International Chamber of Commerce Competition Committee that if a transaction involving mergers and acquisitions, enterprises should pay attention to the risk of review. We need to make the declaration on time if the Concentration Standards For Operators have been achieved, otherwise it may bring economic losses, and delay the transaction process.
Do not repeat the mistakes of Huiyuan acquisition
The operator's centralized review usually occurs when the enterprise is acquired by merger or control rights from other operators by assets or equity purchase.
"Usually, the concentrated behavior among large enterprises, such as the purchase of Uber China by Didi, is likely to lead to economic monopoly, which damages to market competition. Therefore, it requires operators to declare in advance to avoid monopolistic behavior, which is a kind of protection for the market order. " Said Huang Wei.
The most representative case of domestic antitrust review is that in 2009, China's Ministry of Commerce forbids US Coca-Cola Company to acquire China Huiyuan Juice.
This is China's one of the operators concentrated cases since the implementation of Anti-Monopoly Law that only two cases did not pass. At that time, the Ministry of Commerce made a comprehensive review on the impact of fruit juice market competition caused by the relevant market share and market control and Huiyuan brand acquisition of the two sides.
"Although the prohibition of the operator concentrated cases occupies very low proportion in the operator concentrated declaration, the enterprise still can not be taken lightly.” Said Huang Wei.
Since 2014, the Ministry of Commerce has further increased the intensity of enforcement for the violation of operator concentrated rules and anti-monopoly investigation. If a M & A transaction should be declared but the operator failed to declared in accordance with the rules, the enterprise may be subjected to investigation.
Overseas acquisitions need to be more cautious that more risks may occur in the process of corporate participation in international acquisitions or establishment of overseas companies. In order to successfully reach the transaction, "companies may have to face operator concentrated antitrust review from a number of countries, and foreign reviews are usually very strict.”
In 2010, Geely Holding Group acquired Volvo for $ 1.8
billion. In the merger, Geely made antitrust declaration in China, the United
States, the European Union, Brazil and other countries and regions, lasting 4
months of the antitrust approval.
Sometimes, even if the transaction itself does not exclude and restrict competition, the company may also receive antitrust tickets if it does not declare according to anti-monopoly law of the country.
It is known that there are more than 100 countries and regions of the laws or regulations require enterprises to conduct concentration of anti-monopoly claims. As long as the mergers and acquisitions among enterprises have influence on the country's market, they need to make declaration.
In addition, in some international acquisitions, national antitrust agencies will also work together to jointly communicate with each other in a transaction. "As antitrust review agencies in different countries increasingly concerned about the anti - monopoly declarations related to Chinese enterprises, Chinese companies must begin to pay attention to the declaration of the operators concentration in order to avoid repeating the failure of Huiyuan acquisitions. Said Huang Wei.
First, enterprises should ensure that the transaction must be made after the concentrated approval obtained by the relevant state operators to avoid "rush" for punishment. Second, if necessary, hiring a professional antitrust lawyer to help determine whether the transaction can achieve the standard of the declaration of the operators concentration. if the declaration is needed, enterprises should submit the antitrust filing materials on time.
Source: China Trade News Network