Competition law developments in East Asia - July 2016

This month’s editors: Maxime Vanhollebeke, Emir Pohan, Pearl Yeung, Michael Kim, Sophie Chen, Yui Ota, Lydia Fung and Ada Lam.

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).

This month the Antimonopoly Bureau of China’s Ministry of Commerce announced that it had cleared close to 100 transactions during the second quarter, bringing the total at the half-year mark to 174. At the current pace, total transactions subject to the merger control regime will exceed 300 as it did last year, which renders the level of merger control activities in China to be around par with other administrative review regimes like those of the EU and Japan.

The quarter also marked the second year since the introduction of a simple cases procedure, which has been an undeniable success. More than three fourths of all cases are now handled under the procedure, providing a less burdensome process to merging parties. As at 30 June, the new procedure had been applied in 456 cases. While the procedure does not offer a guarantee for a speedy review, the vast majority of transactions had been approved within one month upon acceptance of the filing. The average clearance time of all transactions stands at 29 days.

Perhaps the most significant change relates to the approach to difficult transactions. As the month came to a close, the Antimonopoly Bureau issued a public announcement regarding its conditional approval of Anheuser-Busch InBev’s acquisition of rival brewer SABMiller. The announcement explains that parties had engaged in a three-month pre-notification consultation before formally seeking approval, and that they had submitted their proposed remedy (essentially a commitment not to merge their respective activities in China and to divest the target’s activities to a third party) before the procedure had formally started. This more flexible procedural approach allows parties in difficult transactions to better coordinate multijurisdictional filings, as the merger review process in China now more closely follows the timetable and practice adopted in the EU and the US.

On 14 July, the Competition Commission of Singapore (CCS) issued a press release announcing that it had commenced an abuse of dominance investigation into the allegation that several suppliers of branded lift spare parts were refusing to supply spare parts to third-party maintenance contractors.

In Singapore, town councils are required to carry out regular lift maintenance for lifts installed in the Housing and Development Board estates. Town councils can choose to appoint the maintenance service of the original lift brand or third-party maintenance contractors, who rely on original branded spare parts suppliers to provide their service. In its press release, the CCS stated that a refusal to supply proprietary but essential lift spare parts to third-party lift maintenance contractors by dominant or sole lift spare parts suppliers prevents these third-party contractors from effectively competing with other contractors which could constitute an abuse of market dominance contrary to section 47 of the Competition Act.

In the context of this investigation, one supplier of branded lift spare parts, E M Services, provided commitments to the CCS to supply its branded products in Singapore to third-party maintenance contractors, subject to certain conditions including an undertaking by these contractors not to reverse engineer or modify the purchased lift spare parts. Although these commitments fully address the competition concerns raised by the CCS, the agency will continue to pursue its investigation in respect of other suppliers of branded lift spare parts.