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EU and China agree on best practices framework for merger review cooperation

20 October 2015
On 15 October 2015, the Directorate General for Competition of the European Commission ("DG Competition") announced that it signed with China's Ministry of Commerce ("MOFCOM") a best practices framework for cooperation in the review of mergers (see link to the document: English here, Chinese here).

What is the document?

Whilst the detail of how it will be implemented in practice is not yet clear, the document is meant to be "practical guidance" to strengthen cooperation and coordination between the European Commission and MOFCOM. The guidance is designed to facilitate communication throughout the entire merger review processes on issues of procedure and substance, including

  • the definition of relevant markets
  • theories of harm
  • competitive impact assessments
  • the design of remedies.

The guidance notes that DG Competition and MOFCOM "may, where necessary, coordinate information requests to the merging parties and third parties, including exchanging draft questionnaires". It also notes that both "may each designate a liaison officer for receiving and facilitating requests regarding case cooperation".

What is the track record for cooperation?

Cooperation between the European Commission and Chinese antitrust authorities has been increasing steadily over the last years. In 2004, DG Competition concluded Terms of References on the EU-China Competition Policy Dialogue with MOFCOM. In September 2012, DG Competition signed a Memorandum of Understanding with China's National Development and Reform Commission and the State Administration for Industry and Commerce, creating a framework for the strengthening of cooperation and coordination, particularly as regards cartels, restrictive agreements and abuse of dominance.

In the merger control area, actual cooperation between the authorities has taken place in a number of recent complex cases. Cooperation has taken place as early as at the pre-notification/pre-acceptance stage, and officials have discussed relevant markets, theories of harm, and remedies.

Cooperation in certain cases can be challenging. The European Commission and MOFCOM have different procedural timetables. For instance, the chances of a Phase 2 in-depth investigation being opened are higher in China than it is in the EU, and it can be difficult to synchronise the timing of parallel remedies discussions with the European Commission and MOFCOM.

What is next?

China's merger control regime is now a critical consideration for global transactions. Since China's Anti-Monopoly Law came into force in 2008, MOFCOM has reviewed more than 1,000 transactions. Together with the United States, the European Union and some of its member states, China can now be considered as one of the major merger control enforcement regimes in the world.

It remains to be seen how the best practices framework will be used in practice, but market players can hope that – to the extent that the framework leads to greater cooperation between the European Commission and MOFCOM – the review processes will become more aligned and efficient to use for merging parties.

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