Competition law developments in East Asia - November 2015

This month’s editors: Maxime Vanhollebeke, Emir Pohan, Shan Hu, Pearl Yeung, Serena Gingell, Sophie Chen, Yui Ota, Lydia Fung and Arthur So.

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).

Remedies play an important role in an effective merger enforcement policy as they allow parties to proceed with their merger transaction while addressing an authority’s concerns. The Antimonopoly Bureau of the Chinese Ministry of Commerce introduced its first regulation on remedies in 2010. It was significantly revised and replaced by the current Regulation on the Imposition of Restrictive Conditions on Concentrations of Undertakings (Trial) which took effect in January of this year. The new rules provide detailed guidance on the suitability of behavioural and structural remedies: they must effectively remove restrictions of competition, their implementation must be feasible, and parties should be able to put them in effect promptly. Structural remedies taking the form of divestitures must as a rule be implemented within six months of receiving approval. However parties may be required to proceed to the disposal ahead of closing in some circumstances, including where there is a high risk that the competitiveness and merchantability of the divested business may be compromised prior to the disposal (this is sometimes called a “fix-it first” remedy).

Parties have obtained clearance subject to remedies from the Antimonopoly Bureau in 27 cases since the Antimonopoly Law entered into force in 2008. The most recent decision was adopted this month, and relates to the acquisition by NXP of Freescale. Both parties are significant players in the semiconductor industry, and their activities present a very significant overlap in relation to radio frequency power transistors. The Antimonopoly Bureau allowed the parties to proceed with the transaction subject to divestiture of NXP’s radio frequency power transistor business, but for the first time required the divestiture to take place before closing. The Bureau does not explain in its public announcement why it imposed a “fix-it first” remedy in the context of this transaction, but this may signal a more stringent approach from the authority in a context where the Korean competition authorities did not insist on a similar prior disposal in their own conditional clearance of the same transaction.

On 19 November, the Hong Kong Competition Commission published two policy documents, an Enforcement policy and a Leniency policy, paving the way for the Hong Kong Competition Ordinance’s entry into force on 14 December.

The Leniency policy sets out how the Competition Commission intends to implement the immunity mechanism while the Enforcement policy provides high-level guidance on how it intends to exercise its enforcement function and set priorities more generally.

The adoption of these two documents follows the release by the Chief Justice on 29 October of the first two practice directions for the Competition Tribunal – Proceedings before the Tribunal and Confidential Information.