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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Increased antitrust scrutiny for M&A in Asia
February has seen several developments relevant to Asian M&A activity.
The month started with the announcement by Japan’s competition authority (the JFTC) that it was opening an in-depth phase two investigation into the proposed merger between the Tokyo and Osaka stock exchanges. This is likely to further delay the high-profile transaction at a time where it is already facing some shareholder opposition. This is the latest in a series of lengthy in-depth reviews which the JFTC has conducted in recent months, including for the merger between Nippon Steel and Sumitomo Metal Industries.
Meanwhile, China’s Ministry of Commerce (MOFCOM) announced its tenth conditional approval in the Henkel/Tiande Chemical case. This is the second time MOFCOM imposes conditions to address vertical supply issues in the context of a joint venture transaction. This follows the adoption last month of new measures aimed at detecting mergers that were consummated without obtaining the required merger approvals - a clear indication that MOFCOM intends to enforce the Chinese merger control regime vigorously.
In the second half of the month, the Competition Commission of Singapore (CCS) released its proposals regarding revisions to its Guidelines on Merger Procedures. While many of the proposals are technical in nature, the authority is putting more emphasis on the risks associated with not notifying mergers. Merger control is voluntary in Singapore, but parties are encouraged to notify in circumstances where their transaction may lead to restrictions of competition.
These developments together with increased merger control scrutiny observed in the last two years in Indonesia and Korea, are a fresh reminder that merger control regulations are increasingly relevant to M&A activity in the region. Transaction parties are well-advised to adjust to the reality of a multipolar merger control world, as competition authorities across the region each have the potential to derail a multinational merger.
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CCS consults on proposed changes to merger review procedures
On 20 February, the CCS announced a public consultation on proposed changes to its Guidelines on Merger Procedures.
Five years after the entry into force of Singapore’s voluntary merger control regime, the CCS aims to further increase transparency by updating its guidelines on merger procedures. The main changes include (i) more detailed guidance on those transactions where merging parties are encouraged to notify as well as the risks associated with not notifying, (ii) a new process for obtaining a confidential opinion from the CCS on whether a transaction is likely to raise concerns, (iii) refined guidance on notification materials, (iv) clarification on the commitment procedure and (v) clarifications on the treatment of confidential information. The revised draft guidelines also emphasize the benefits of holding pre-notification discussions with the CCS and remind any merging parties that commercially sensitive information should not be exchanged prior to completion of a notifiable transaction.
Interested parties have until 20 March 2012 to submit their views and make suggestions to improve the relevant merger review procedures.
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