Competition law developments in East Asia - August 2015

This month’s editors: Maxime Vanhollebeke, Emir Pohan, Shan Hu, Pearl Yeung, Sophie Chen, Yui Ota 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).

More than a year after the transaction closed, this month Microsoft resolved remaining issues which the Korean competition authorities had raised in relation to its acquisition of Nokia’s mobile telephone business. As was the case during the review of the transaction by other competition authorities in Asia, concerns arose regarding the impact the transaction would have on Microsoft’s licensing of key technologies used in mobile telecommunications. These concerns had led authorities in China and in Taiwan to obtain commitments on these licensing terms as a condition for granting their approval. These commitments were offered in the framework of pre-closing merger review procedures in these countries, paving the way to the closing of the transaction last year.

The procedure in Korea was different, highlighting both the risks and opportunities under different merger control procedures. While the transaction was apparently initially notified as a merger under applicable Korean rules, parties restructured it before closing. This however did not prevent the authorities from pursuing their investigation, ultimately obtaining commitments from Microsoft after the transaction had closed.

While the transaction was eventually allowed to stand, the case illustrates the possibility for competition authorities in many jurisdictions in the region to investigate and challenge transactions which are not subject to mandatory notification requirements. Shortly after the Antimonopoly Law took effect, the Chinese Ministry of Commerce had released proposed rules governing such transactions. These rules have been left in draft form since 2009, but authorities in China are known to have investigated mergers which were not notified – either because parties were not required to do so, or because they had failed to abide by their notification obligations.

Following the introduction of a draft law in early July in the National Assembly, the Lao press has now reported that the Assembly had passed a Business Competition Law to supplement the existing Prime Ministerial Decree No. 15 on Trade Competition of the Lao People’s Democratic Republic, which entered into force in 2004. The new Law is understood to form a comprehensive piece of competition legislation similar to most mature jurisdictions that governs both domestic and foreign business activities and prohibits restrictive agreements, monopolistic practices, mergers and acquisitions which substantially reduce or limit competition, and unfair trade practices.

The passage of the Business Competition Law is in line with Laos’ commitments to introduce a competition policy by 2015, in accordance with the ASEAN Economic Community Blueprint adopted in 2007. The adoption of a new statute in Laos follows the enactment of news laws in Myanmar and the Philippines earlier this year, leaving Cambodia as the only remaining jurisdiction to fulfil its ASEAN commitment.