Post by Sapphire Capital on Aug 7, 2008 22:58:11 GMT 4
Chinese turnover thresholds still too low
Source: Nicholas Pettifer, IFLR
China's higher threshold limits for competition clearance are laudable. But they may still be too low.
When the draft implementing regulations for concentrations under the new Anti-Monopoly Law were published in March, there was widespread concern that too many deals would be affected.
"People are probably enthusiastic about the final regulations because they have increased the threshold slightly from the draft," said Kirstie Nicholson, of counsel at Lovells in Shanghai. "But they are still lower than the thresholds in Europe or the US, and will catch a lot of deals."
The final regulations were published on Sunday. They require a competition filing if the worldwide turnover of all undertakings in the concentration over the last accounting year exceeds Rmb10 billion ($1.46 billion) and the Chinese turnover of at least two of the parties exceeds Rmb400 million each.
A filing is also required if the same parties' Chinese turnover exceeds Rmb2 billion over the same time period. The Rmb400 million threshold for two individual parties still applies.
These thresholds are higher that the draft proposals, but remain relatively low compared to other systems.
Yet some argue that multi-national companies should be able to deal with the changes and China should be applauded for responding to industry concerns:
"This will increase the administrative burden on multi-national companies, but it is just another stop on the antitrust roundabout for them," said Gerry O'Brien, registered foreign lawyer in Mayer Brown JSM's competition group in Hong Kong.
"It is difficult to criticise the Chinese authorities when they have consulted and listened to feedback on threshold levels, and are trying to adopt a regime that looks at the same issues and the same fundamental level of transactions as other regimes."
Nicholson is not so sure:
"It is good that they have increased the thresholds, but they are still too low and these regulations leave lots of questions unanswered," she said.
Source: Nicholas Pettifer, IFLR
China's higher threshold limits for competition clearance are laudable. But they may still be too low.
When the draft implementing regulations for concentrations under the new Anti-Monopoly Law were published in March, there was widespread concern that too many deals would be affected.
"People are probably enthusiastic about the final regulations because they have increased the threshold slightly from the draft," said Kirstie Nicholson, of counsel at Lovells in Shanghai. "But they are still lower than the thresholds in Europe or the US, and will catch a lot of deals."
The final regulations were published on Sunday. They require a competition filing if the worldwide turnover of all undertakings in the concentration over the last accounting year exceeds Rmb10 billion ($1.46 billion) and the Chinese turnover of at least two of the parties exceeds Rmb400 million each.
A filing is also required if the same parties' Chinese turnover exceeds Rmb2 billion over the same time period. The Rmb400 million threshold for two individual parties still applies.
These thresholds are higher that the draft proposals, but remain relatively low compared to other systems.
Yet some argue that multi-national companies should be able to deal with the changes and China should be applauded for responding to industry concerns:
"This will increase the administrative burden on multi-national companies, but it is just another stop on the antitrust roundabout for them," said Gerry O'Brien, registered foreign lawyer in Mayer Brown JSM's competition group in Hong Kong.
"It is difficult to criticise the Chinese authorities when they have consulted and listened to feedback on threshold levels, and are trying to adopt a regime that looks at the same issues and the same fundamental level of transactions as other regimes."
Nicholson is not so sure:
"It is good that they have increased the thresholds, but they are still too low and these regulations leave lots of questions unanswered," she said.