China Regulator: M&As Should Comply With Antitrust Laws
June 16 2009 - 7:59AM
Dow Jones News
If a country's antitrust regulators reject a merger and
acquisition plan but it still goes ahead, the deal would be in
conflict with that country's laws, China's antitrust chief said
Tuesday in response to concerns about the proposed joint venture
between Rio Tinto PLC (RTP) and BHP Billiton Ltd. (BHP).
Shang Ming, chief of the Anti-monopoly Bureau at the Ministry of
Commerce, said in a rare public speaking engagement at a local
university that the bureau hasn't yet taken a position on the
planned iron ore joint venture between the companies, after Rio
rejected a Chinese bid for massive investment.
His comments come after the Ministry of Commerce said Friday the
Anglo-Australian miners would be expected to undergo the Chinese
government's antitrust review if the nature of the two companies'
joint venture requires it.
BHP and Rio Tinto entered into the joint venture for their iron
ore supply operations last week after Rio Tinto terminated its
planned US$19.5 billion alliance with Aluminum Corp. of China, or
Chinalco.
"So far, we don't have related experience on this kind of case,"
Shang said. "Just because there is a merger, it doesn't mean we
will get involved."
He said an anti-monopoly review comes into play if a merger and
acquisition plan shows "industry concentration," and regulators can
either allow the merger to take place with conditions or reject
it.
"So if you disallow it, and it goes ahead, then you are in
contravention of a country's law," Shang said.
His comments echo those of other commerce ministry officials in
recent days, but it is the first time the bureau directly involved
in reviewing M&A cases in China has commented on the deal
between the Anglo-Australian miners.
Shang, who took up his current post last year after being chief
of the ministry's Department of Treaty and Law since 2003, said
there will be more regulations to support China's nearly
one-year-old anti-monopoly law in the near future.
These will include defining when a merger deal becomes
significant enough to trigger an antitrust review, he said. The
rules will govern when companies need to notify the Chinese
government of the possible antitrust implications of a deal and
also how to determine which markets would be affected, he
added.
Shang, a career bureaucrat in the government's foreign trade
sector since the early 1980s, also said the bureau hasn't received
an application from China Eastern Airlines Corp. (CEA) and Shanghai
Airlines Co. (600591.SH) about their proposed merger.
Over the weekend, China Eastern Chairman Liu Shaoyong said the
two airlines have set up a joint taskforce to work on the proposed
merger and will present a formal report to shareholders within 20
days.
China's anti-monopoly law took effect at the start of August and
the country's regulators, which include the Ministry of Commerce,
the State-owned Assets Supervision and Administration Commission,
and the National Development and Reform Commission, have issued
draft rules seeking public comment.
Many of the draft rules have yet to formally go into effect.
-Juan Chen and Chuin-Wei Yap contributed to this story, Dow
Jones Newswires; 8610 6588-5848; juan.chen@dowjones.com