Merger Control: Overview

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Merger enforcers in the Asia-Pacific region reviewed many of the most significant international transactions occurring in the last year. These agencies undertook efforts to develop and clarify domestic merger rules, strengthen domestic and cross-border enforcement efforts, and build on the harmonisation and transparency efforts of recent years. Recent activity in the region indicates that corporations and counsel should expect continued close scrutiny of proposed transactions in Asia-Pacific jurisdictions.

Australia saw a decrease in the number of informal clearance applications processed when compared to 2009, but is attracting attention for its opposition to recently proposed mergers. China continued to enforce its relatively new merger regulation, reviewing more merger applications than in the previous year. While the application of the Anti-Monopoly Law is still developing, the release of new measures and guidelines and the application of its merger rules in new contexts addressed some of the questions surrounding China’s merger regime. Japan’s Fair Trade Commission continued to be an aggressive merger enforcer, requiring divestitures in mergers where it believed anti-competitive effects would result from the transactions. Likewise, Korea’s Fair Trade Commission continued its aggressive enforcement of its merger rules and pursued further opportunities for cross-border cooperation in merger enforcement. New Zealand’s Commerce Commission provided clarity by releasing additional guidelines on the analytical framework for its merger process and cleared each of the mergers it reviewed during the 2010 calendar year. Singapore’s Competition Commission considered the likelihood of new entry and countervailing buyer power in clearing a significant international merger.

This article briefly highlights key merger control developments in these jurisdictions in 2010.


Established in 1995, the Australian Competition and Consumer Commission (ACCC) is the national agency primarily responsible for overseeing competition in Australia.1 It is charged with administering and enforcing the Competition and Consumer Act 2010 (CCA) (formerly known as the Trade Practices Act 1974)2 and state/territory ‘application laws’ (laws of state or territory that apply provisions of the CCA as the law of that jurisdiction). The ACCC offers both formal and informal clearance procedures, pursuant to which a merger is assessed on the basis of its competitive effects.3 A separate body, the Australian Competition Tribunal (ACT), is authorised to grant merger ‘authorisations’ based on public interest grounds.4 The ACCC has not yet received an application for a formal merger clearance but regularly considers informal applications for merger clearance, with 22 applications for informal clearance currently under consideration5 and 118 applications processed throughout 2010, down from 145 in 2009.6 As of 10 March 2011, the ACCC has processed 18 applications in 2011.7 As the ACT has not yet considered an application for a merger authorisation,8 informal clearance remains the only Australian merger clearance procedure used in practice. In a noteworthy speech on 30 September 2010, Graeme Samuel, chairman of the ACCC, responded to criticism that the ACCC was blocking too many mergers and was taking too long to clear deals.9 Mr Samuel defended the ACCC’s overall track record in merger review and clarified the role of coordinated effects in the ACCC’s merger analysis.

Enforcement activity

On 9 September 2010, the ACCC announced that it had rejected remedies offered in connection with the proposed acquisition of AXA Asia Pacific Holdings Ltd’s Australian and New Zealand businesses (AXA) by National Australia Bank Ltd (NAB).10 The companies had agreed to divest AXA’s investment business platform to IOOF Holdings Limited in order to alleviate any anti-competitive concerns. After considering information from a range of industry participants, the ACCC determined that the divestiture would not provide a sufficient anti-competitive constraint on the merged entity.11

At least one company is seeking to proceed with a transaction that is being opposed by the ACCC. On 1 July 2010, Metcash Trading Limited entered into an agreement with Pick n Pay Retailers (Pty) Ltd to acquire 80 corporate stores of Interfrank Group Holdings Pty Ltd.12 On 17 November 2010, the ACCC publicly stated that it would oppose the deal, expressing concern that the transaction would effectively give Metcash a monopoly on grocery wholesaling to independent supermarkets in New South Wales and increase barriers to entry into this market.13 Despite the ACCC’s stance, Metcash has continued to publicly assert its interest in consummating the transaction.14 On 10 December 2010, the ACCC applied to the Federal Court of Australia for a final injunction preventing the merger.15 This marks the first time in more than a decade that the ACCC has sought an injunction to block a merger. A court hearing on the injunction is scheduled for March 2011.16

Most recently, on 9 March 2011, the ACCC announced that it will oppose the acquisition of P&N Beverages Australia Pty Ltd by Asahi Holdings (Australia) Pty Ltd.17 The ACCC explained in a public statement that the acquisition would weaken competitive constraints in the carbonated soft drinks and cordial markets, which would lead to higher prices for those products.18


August 2010 marked the two year anniversary of China’s Anti-Monopoly Law and observers have been eager to evaluate the efforts of the Ministry of Commerce (MOFCOM) for signs of its effectiveness in merger control. MOFCOM is the executive agency primarily responsible for competition matters in China and is empowered to formulate and enforce policies on foreign trade, export and import regulations, consumer protection, and market competition.19 In 2010, MOFCOM accepted 120 merger filings, up from 77 filings in 2009.20 MOFCOM issued only 1 conditional clearance during the 2010 calendar year (the Novartis/Alcon merger), down from five conditional clearances in 2009. Two other applications were withdrawn voluntarily.21 Signs of China’s openness to dialogue on competition also emerged in 2010. On 28 September 2010, Sun Miao of China’s Ministry of Commerce told delegates at an international conference that China is open to dialogue on competition and called on experts from private practice and government agencies to help MOFCOM develop its enforcement practice.22

Enforcement activity

On 13 August 2010, one month after the issuance of its divestiture rules (discussed below), MOFCOM conditionally cleared the acquisition of Texas pharmaceutical company Alcon, Inc by Swiss biopharma company Novartis AG.23 MOFCOM expressed concerns that Novartis would obtain significant market power after the merger in the ophthalmological anti-infection product market in China, which could restrict or eliminate competition in the market. MOFCOM also expressed concerns that the merged entity would have an incentive to collude with Hydron Contact Lens Co, Ltd in pricing, quantity and sales regions of contact lens care products, which would further restrict or eliminate competition in the relevant market. To mitigate the adverse impacts of the merger, MOFCOM required Novartis to refrain from selling its ophthalmological anti-infection products in China for five years and terminate its distribution partnership with Hydron.24

Some insights about MOFCOM’s enforcement policies can be discerned from this decision. First, MOFCOM did not seek divestiture as a remedy; rather, it relied on assurances from the parties that they would cease or refrain from conducting certain activities in the relevant markets. Also, this case confirms MOFCOM’s willingness to intervene in global mergers where it identifies a competition concern.

Measures addressing combinations of business operators

On 27 November 2009, MOFCOM released the Measures for the Notification of the Concentration of Business Operators and the Measures for the Examination of the Concentration of Business Operators, both of which went into effect on 1 January 2010.25 On 15 January 2010, MOFCOM released a set of interpretations of the measures.26 While these measures to some extent merely codify existing practices, the new rules also clarify key terms in China’s developing merger regime, enhance the transparency of regulation by MOFCOM and offer guidance on such issues as turnover calculation.

MOFCOM divestiture rules

On 8 July 2010, MOFCOM published the Provisional Measures on the Implementation of Assets or Business Divestiture for Concentrations of Undertakings, which had an effective date of 5 July 2010.27 According to the divestiture rules, an undertaking whose merger is conditioned upon a divestiture of assets will be required to identify an appropriate purchaser within a time period prescribed by MOFCOM’s review decision. If the undertaking fails to find a buyer within the stipulated time frame, an independent trustee will be empowered to conduct a trustee divestiture of the assets. A third-party divestiture supervisor will oversee the entire divestiture process in both an undertaking and trustee-initiated divestiture and report to MOFCOM on the process. The divestiture rules further stipulate that the divested assets or business must be transferred to the selected buyer within a specific time frame; however, MOFCOM may, in its discretion, grant an extension on a case by case basis.

New regulations on foreign acquisitions

On 14 February 2011, the Chinese State Counsel issued a circular on a new review regime that will allow MOFCOM to assess a merger’s effects on national security.28 MOFCOM subsequently issued interim rules and guidelines for the review process, which went into effect on 5 March 2011 and will remain in force until 31 August 2011. The interim rules state that a national security review will form part of the foreign investment approval process and no approval will be given until the security review is complete. The rules state that applicants may have discussions with MOFCOM about procedural issues before filing and require prospective investors to submit national security filings to MOFCOM before the security review process begins. According to the rules, an inter-ministerial committee formed of officials from MOFCOM and the National Development and Reform Commission will evaluate the transaction.


The Japan Fair Trade Commission (JFTC) is the administrative agency primarily responsible for enforcing Japan’s competition laws, including the Japanese Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (otherwise known as the Anti-Monopoly Act or the AMA).29Following the recent amendments to the Anti-Monopoly Act, which went into effect on 1 January 2010, the enforcement of competition laws in Japan has been strengthened. Also, JFTC statements and activities in 2010 demonstrate an increased attention to global aspects of merger review and commitment to cross-border merger control.

Key legislation

On 1 January 2010, amendments to the Anti-Monopoly Act substantially revising Japan’s pre-merger notification system went into effect.30 These amendments revised the merger review process in Japan to make it more consistent with the process in other jurisdictions and narrow the scope of transactions that will be subject to notification requirements. Two significant changes will impact mergers and acquisitions. First, the amendments introduce a pre-closing notification system for transactions involving acquisitions of voting securities. Second, the amendments change the basis and size of certain other thresholds that trigger a notification obligation.

The Merger Rules31 and Merger Guidelines32 were also amended to correspond with the changes introduced in the amendments.

Enforcement activity

On 9 June 2010, the JFTC publicly announced that it would not oppose the proposed acquisition of Varian Inc by Agilent Technologies Inc after accepting certain divestitures proposed by the parties, which are active in the supply of scientific instruments and related products.33 In the course of its review, the JFTC identified three product markets in Japan as relevant markets: micro/portable gas chromatography, triple quadrupole gas chromatograph mass spectrometry and inductively coupled plasma mass spectrometry. In its analysis of the competitive effects of the merger, the JFTC expressed concern that the acquisition would significantly increase the merged companies’ shares in these markets. The JFTC accepted the proposed acquisition on the condition that Agilent sell its micro/portable GC business and Varian sell its triple quadrupole GC-MS and ICP-MS businesses. The JFTC made note of evaluations conducted by competition authorities in other jurisdictions, such as the United States and European Commission, and confirmed that it exchanged information with the US Federal Trade Commission in the course of its investigation.34

Also, a potentially important new steel merger is currently being evaluated by the JFTC.35 In February 2011, Nippon Steel and Sumitomo Metal Industries, two of Japan’s largest steel manufacturers, announced that they would merge pursuant to a US$13 billion deal. At a press conference, the JFTC gave indications that it may consider the global effects of the merger and not limit its analysis to domestic market share.

New merger review reforms

In March 2011, the JFTC unveiled a plan for major merger review reforms.36 The revised merger review process, which is subject to public comment, would do away with prior consultations in the interest of making it easier for companies to predict the length of the review process. Importantly, the plan is also oriented toward global markets. Under the market share standards, the global market, not Japan, will be the basis for evaluating a merger in cases where a product is offered for the same price worldwide.

Policy address on cross-border mergers

On 17 February 2011, Commissioner Akira Groto gave a presentation on cross-border merger control in Japan at the Global Forum on Competition. In his speech, Commissioner Groto discussed Japan’s experiences in reviewing the Agilent-Varian acquisition and the proposed joint venture between BHP Billiton and Rio Tinto, and highlighted what he saw as three key lessons from these experiences:

  • first, the importance of having a merger review process in place to deal with cross-border mergers;
  • second, the importance of cooperation with other agencies for cross-border merger control; and
  • third, the importance of cooperation between agencies in light of increasing globalisation in many industries.37

South Korea

The Korea Fair Trade Commission (KFTC) is the regulatory agency primarily responsible for the enforcement of Korea’s competition laws. In recent years, Korea has adopted a less restrictive approach to transactions involving large corporations and taken numerous steps to increase its level of cooperation with enforcement agencies in other jurisdictions. Korea has also increasingly applied its competition policies to anti-competitive behaviour of foreign corporations outside of Korea, such as the proposed joint venture between BHP Billiton and Rio Tinto.

Enforcement activity

On 19 October 2010, the KFTC closed its review of a business combination notification filed on behalf of BHP Billiton and Rio Tinto to establish a joint venture for co-production of iron ore in Western Australia after the companies issued a press release stating they would abandon the proposed joint venture.38 The KFTC found the proposed joint venture would have anti-competitive effects in production and sales in the worldwide seaborne market. In the course of its review, the KFTC worked closely with competition authorities in Japan, the European Commission and the German Federal Cartel Office.

Most recently, on 10 March 2011 the KFTC approved the proposed acquisition of Korea Exchange Bank by Hana Financial Group.39 The KFTC said in a statement that the acquisition would not restrain competition and would, in fact, create more competition in the banking market.

New guidelines on the submission of economic evidence

In an effort to clarify the standards for submission of economic evidence, the KFTC issued new Guidelines on Submission of Economic Analysis Evidence on 21 July 2010.40 The guidelines outline the basic principles for the submission of economic evidence and provide examples to aid applicants.

KFTC priorities

On 16 December 2010 the KFTC issued a press release setting forth its policy priorities for 2011.41 One statement in particular is worth highlighting: ‘The Commission will… conduct close review on M&As between large distribution companies and large scale cross-border M&As that could harm small and medium suppliers to provide protection for domestic industries and consumers.’ This statement indicates that the KFTC will pay close attention to global mergers and acquisitions that may adversely impact Korea’s domestic market.

New Zealand

Under the Commerce Act of 1986, the New Zealand Commerce Commission (NZCC) is empowered to grant both ‘clearances’ and ‘authorisations’ of proposed mergers and acquisitions.42 As of early March 2011, the NZCC considered 14 applications for clearance of a proposed acquisition in 2010 and 2011, all of which were cleared by the NZCC.43 The NZCC did not consider an application for authorisation of an acquisition in 2010, but is in the process of considering one application for authorisation filed in early 2011.44 A decision on the application is expected in April 2011.

Enforcement activity

On 6 May 2010, the NZCC cleared the proposed Novartis AG acquisition of Alcon, Inc.45 The acquisition met with less resistance in New Zealand than in China, as the NZCC cleared the Novartis-Alcon acquisition without objection and did not require undertakings by the parties.46 The NZCC concluded that competition from other global pharmaceutical corporations such as Allergan, Bausch & Lomb, Aspen, Sigma, Abbott and others would provide sufficient competitive constraints to mitigate any anti-competitive concerns.

Divestment guidelines

In June 2010, the NZCC released the final guidelines on the process and analytical framework that it will use to assess divestment undertakings offered in connection with clearance applications for mergers and acquisitions.47 The divestment guidelines not only outline the NZCC’s approach when assessing divestment undertakings, but also identify the information applicants will need to provide when offering divestment undertakings.

Further, the NZCC issued a press release on 10 December 2010 indicating that it is consulting about updating its Mergers and Acquisitions Guidelines and its Benefits and Detriments Guidelines.48 In the press release, the NZCC explained that it intends to update these guidelines to reflect current court judgments and the NZCC’s current practices. The press release further notes that the NZCC will examine recent updates to merger guidelines in other jurisdictions as part of its consultation process.


Created in July 2007, the Competition Commission of Singapore (CCS) is the statutory body charged with administering and enforcing Singapore’s Competition Act.49 In 2010, the CCS considered seven mergers and acquisitions, clearing five of them (the remaining two were withdrawn voluntarily).50 The CCS continues to review one merger application filed in 2009.51 This workload is consistent with that of previous years: the CCS cleared three mergers in 2009, seven mergers in 2008, and four mergers in 2007.52

Enforcement activity

On 20 May 2010, the CCS cleared the proposed Novartis AG acquisition of Alcon, Inc.53 As in New Zealand, the acquisition met with less resistance than in China as the CCS cleared the Novartis-Alcon acquisition without objection and did not require undertakings by the parties.54 The CCS concluded that any concerns about anti-competitive effects arising from the acquisition were mitigated by low barriers of entry into the market and the presence of countervailing buyer power.


Mergers having potentially significant effects in global markets were reviewed by merger enforcers in the Asia-Pacific region in 2010. These agencies also reviewed mergers of purely domestic concern. Agencies in this region also continued to develop and clarify merger rules in their respective jurisdictions, and to harmonise process and analysis methodologies with other regimes. Anticipating increased economic activity in 2011, observers can expect to see merger enforcement at least as extensive as in recent past years. Over time, these enforcement decisions will provide greater predictability and transparency to businesses and those who counsel them in merger decisions.







































38 (hotlink: KFTC Closed Review on Rio Tinto-BHP Billiton Joint Venture, Press Release 269).


40 (hotlink: Guideline on Submission of Economic Analysis Evidence, Press Release 267).

41 (hotlink: KFTC announced its 2011 Work Plans, Press Release 272).














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