China’s Anti-Monopoly Law Steps Out

We do not pretend to be lawyers so a statement that China’s anti-monopoly law is a hybrid of European and U.S. models is a broad generalization. We do know that there was concern among foreign businesses when it was being introduced in 2007 that it could be used against foreign multinationals to bolster domestic industries and their acquisition of IP rights and technology, though it should be said that overall the new law was seen as a significant step forward in Chinese commercial law.

James T. Areddy and Dinny McMahon, writing in the Wall Street Journal, take last week’s divestment of Pfizer’s Chinese swine-vaccine business to Harbin Pharmaceutical as an occasion to review the use of the  anti-monopoly law two years in. They find five other examples of where the Commerce Ministry has stepped into mergers involving multinationals, blocking one of them, Coca-Cola’s $2.4 billion bid last year for Huiyuan Juice.

That was the only one in which the acquisition target was a Chinese firm. Of the other five target companies three were American, one British and one Japanese. The acquirers break down is three American, two Japanese and one Belgian. The tone of the article is that there is a lean, albeit a small one, in the direction of protecting the national interest, though that is what anti-monopoly laws everywhere tend to get used to do. That is different, too, from using the law to promote a national interest. What is clear is that Chinese anti-monopoly review is taking its place alongside those in the U.S. and, in particular, the E.U. in any big-ticket cross-border M&A.

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