Summarized below are a number of AML news items from the past 6 weeks or so. The most significant is today\u2019s announcement of the first administrative monopoly case concluded by the SAIC. But in the long term the merger cases described below will may indicate the attitude of the Chinese authorities to the acquisition of well-known Chinese retail brands. Ever since the failed acquisition of Huiyuan Juice by Coca Cola in 2009 there has been considerable discussion of this point.<\/p>\n
Today the State Administration for Industry and Commerce posted on its web site a description of its first case under Chapter 5 of the AML regarding the abuse of administrative power:<\/p>\n
Report (in Chinese): http:\/\/www.saic.gov.cn\/ywdt\/gsyw\/dfdt\/xxb\/201107\/t20110727_111694.html<\/a>.<\/p>\n It was undertaken by it Guangdong Provincial office in response to the decision of an unnamed city in Guangdong province to require the use of the GPS service of a private company, \u65b0\u65f6\u7a7a\u5bfc\u822a\u79d1\u6280\u6709\u9650\u516c\u53f8(New Horizon Navigation Technology Company web site: http:\/\/www.xskgps.com\/<\/a> )\u00a0 to monitor hazardous goods transportation. When competitors complained the Guangdong AIC investigated and concluded that the specific administrative order constituted an abuse under the AML. The provincial AIC sought the guidance of the SAIC (the national body) and then the provincial body made a recommendation to the Government of Guangdong Province to correct the abuse. On June 12 the Provincial Government ruled that the order violated Articles 8 and 32 of the AML as well as provisions of the Road Transportation Safety Law and cancelled the orders.<\/p>\n After it became known this month that Nestl\u00e9 Sa and China\u2019s second largest candy maker,\u00a0 \u4e1c\u839e\u5f90\u8bb0\u98df\u54c1\u6709\u9650\u516c\u53f8 http:\/\/www.hsufuchifoods.com\/\u00a0 (Hsu Fu Chi Foods Ltd.) based in Dongguan City, Guangdong Province were in talks regard an acquisition, a deal was formally announced on July 11, 2011.<\/p>\n WSJ (Subscription Required): http:\/\/online.wsj.com\/article\/SB10001424052702303678704576438601999980390.html<\/a><\/p>\n On July 15, 2011 the Ministry of Commerce AML unit announced that the notification materials had been submitted and that the review process has started.<\/p>\n News Report (in Chinese): http:\/\/economy.caing.com\/2011-07-15\/100279918.html<\/a> ; (in English): http:\/\/english.peopledaily.com.cn\/90001\/90778\/90860\/7442194.html<\/a><\/p>\n Although based in Dongguan, the company was founded in 1992 by a Taiwanese family (as the spelling of its name in English suggests) and is listed publicly in Singapore.<\/p>\n On July 15, 2011 the Ministry of Commerce received notification regarding the proposed purchase of the\u5185\u8499\u53e4\u5c0f\u80a5\u7f8a\u9910\u996e\u8fde\u9501\u6709\u9650\u516c\u53f8http:\/\/www.littlesheep.com\/index.aspx (Inner Mongolia Little Shee Catering China Co., Ltd.) the franchisor of a chain of hotpot restaurants, by Yum! Brands Inc.<\/p>\n News Report (In Chinese): http:\/\/economy.caing.com\/2011-06-15\/100269707.html<\/a><\/p>\n NYT : http:\/\/www.nytimes.com\/2011\/05\/14\/business\/global\/14yum.html?_r=1&hpw<\/a><\/p>\n Since 2009 Yum! Has owned a 20% equity position in Little Sheep. Little Sheep was founded in 1999 and has become one of China\u2019s most successful restaurant chains and franchise systems. It had started to expand overseas but found it more difficult than expected. Little Sheep is publically listed in Hong Kong.<\/p>\n On June 27, 2011 Daigeo PLC announced that its acquisition of baijiu maker\u56db\u5ddd\u6c34\u4e95\u574a\u80a1\u4efd\u6709\u9650\u516c\u53f8(Sichuan Shuijingfang Share Co. Ltd. \u2013 also known as \u201cSichuan Swellfun Co. Ltd.\u201d) had been approved by MOFCOM some 14 months after it was first announced.<\/p>\n WSJ (subscription required): http:\/\/online.wsj.com\/article\/SB10001424052702304314404576411671145640538.html<\/a><\/p>\n Company web site: http:\/\/www.swellfun.com\/<\/a> ; http:\/\/www.shuijingfang.com\/ <\/a><\/p>\n Diageo press release: http:\/\/www.diageo.com\/en-row\/newsmedia\/pages\/resource.aspx?resourceid=989<\/a><\/p>\n Baijiu is a white spirit distilled from sorghum, although other grains can be used. The best know brand in the West is probably \u201cMAOTAI\u201d as it was presented to Richard Nixon when he re-opened relations with China during his visit in 1972. Shuijingfang ranked fifth in the market with a 10% share. Still is considered by many to be a famous brand and the term \u201cShuijing\u201d dates back to the 14th Century and is now protected as an indication of geographical origin.<\/p>\n On July 27th in Beijing the DOJ, FTC and the three official Chinese enforcement authorities, the NDRC, MOFCOM and SAIC signed a memorandum of understanding on cooperation in a number of areas, including enforcement.<\/p>\n FTC: http:\/\/www.ftc.gov\/opa\/2011\/07\/chinamou.shtm<\/a><\/p>\n DOJ: http:\/\/www.justice.gov\/atr\/public\/speeches\/273347.pdf<\/a> ; http:\/\/www.justice.gov\/atr\/public\/press_releases\/2011\/273306.htm<\/a><\/p>\n NDRC (in Chinese): http:\/\/jjs.ndrc.gov.cn\/gzdt\/t20110727_425313.htm<\/a><\/p>\n WSJ (subscription required): http:\/\/blogs.wsj.com\/chinarealtime\/2011\/07\/29<\/a><\/p>\n \/u-s-and-china-pursue-merger-of-m-and-a-regulatory-mindset\/?mod=WSJBlog&mod=chinablog<\/p>\n The Ministry of Industry and Information Technology (\u5de5\u4e1a\u548c\u4fe1\u606f\u5316\u90e8) also known as \u201cMIIT\u201d (\u5de5\u4fe1\u90e8) issued a guidance on June 30, 2011 regarding competition between telecom providers on college and university campuses. Exclusive agreements with school authorities are among the items prohibited.<\/p>\n Guidance (In Chinese): http:\/\/www.miit.gov.cn\/n11293472\/n11293832\/n12843926\/13933220.html<\/a><\/p>\n Commentary (in English): http:\/\/www.chinalawinsight.com\/2011\/07\/articles\/corporate\/antitrust-competition\/miit-issues-guidance-to-maintain-fair-competition-order-among-basic-telecom-operators-on-college-campuses\/<\/a><\/p>\n Although MIIT Is not officially one of the AML Enforcement Authorities Article 3 of the AML and Telecommunication Regulations \u00a0(\u4e2d\u534e\u4eba\u6c11\u5171\u548c\u56fd\u7535\u4fe1\u6761\u4f8b) http:\/\/www.miit.gov.cn\/n11293472\/n11294912\/n11296257\/11937080.html<\/a> authorize such supervision. Since the Tencent \u2013 Qihoo dispute erupted last Fall they have been trying to play a more active role with respect to the AML.<\/p>\n On June 15, 2011 the Ministry of Commerce held a press conference at which it advised that the State Council has officially approved the establishment of the Office of the Anti-Monopoly Committee (of all enforcers) within its Anti-Monopoly Bureau.<\/p>\n News Report (in Chinese): http:\/\/www.eeo.com.cn\/2011\/0610\/203383.shtml<\/a><\/p>\n Commentary (in English): http:\/\/www.chinalawinsight.com\/2011\/06\/articles\/corporate\/antitrust-competition\/formal-establishment-of-antimonopoly-commission-office-within-mofcom-approved\/<\/a><\/p>\n Last week there were reports that the NDRC Price Supervision and Inspection Bureau was renamed the \u201cPrice Supervision and Anti-Monopoly Bureau\u201d (\u4ef7\u683c\u76d1\u7763\u68c0\u67e5\u4e0e\u53cd\u5784\u65ad\u5c40).<\/p>\n News Report (in Chinese): http:\/\/www.chinanews.com\/cj\/2011\/07-27\/3213971.shtml<\/a><\/p>\n Commentary: (in English): http:\/\/www.chinalawinsight.com\/2011\/07\/articles\/corporate\/antitrust-competition\/the-department-of-price-supervision-of-ndrc-was-renamed-the-price-supervision-and-antimonopoly-bureau\/<\/a><\/p>\n2. Nestl\u00e9 Seeks Approval to Buy Hsu Fu Chi<\/h3>\n
3. Yum! Seeks Approval to Buy Little Sheep<\/h3>\n
4. Diageo Obtains Approval to Purchase Shuijingfang Baijiu<\/h3>\n
5. China, the DOJ and FTC sign an MOU<\/h3>\n
6. MIIT Issues Draft Guidance on Competition Among Telecom Providers on College Campuses<\/h3>\n
7. Organizational Re-Alignments<\/h3>\n