Competition Law Bulletin
“PRC Law Firm of the Year” for 2014 by Chambers Asia Pacific
October 2014 Issue 6
Prepared by
Zhong Lun Antitrust Practice Group
Advisory Board
WU Peng, JIANG Xiansheng, XUE Yi, XU Yunhe, CEN Zhaoqi
ZHANG Baisha, YU Xingang, XIONG Rong
Editorial Staff
CAO Meijuan, ZHENG Haiming, YIN Yue, QIN Ying
CHEN Zhao, HOU Huiying, LAO Wenjie
Contact us
36-37/F, SK Tower, 6A Jianguomenwai Avenue, Chaoyang District
Beijing 100022, P.R. China
Tel: + (8610) 59572288
Fax: + (8610) 65681022
E-mail: [email protected]
Website: http://www.zhonglun.com
Enforcement
China
MOFCOM unconditionally clears
48 concentrations of undertakings in
the third quarter of 2014
Review of the first six months since
the debut of MOFCOM’s Simple
Case Announcement Form
MOFCOM answers media questions
on investigation and sanction of
foreign firms
SAIC imposes penalties on Chifeng
Tobacco Company for abuse of
dominance
SAIC imposes penalties on Chifeng
fireworks vendors for monopolistic
conducts
SAIC launches anti-monopoly dawn
raids against Microsoft
Xiamen Municipal Price
Supervision Bureau orders Express
Delivery Industry Association to
cease price agreement
Hubei Province Price Supervision
Bureau holds reprimanding
conference for the pricing behaviors
of automobile dealers
Twelve Japanese firms committing
auto parts and bearings price cartel
fined RMB 1.235 billion by NDRC
NDRC fines Zhejiang insurance
firms RMB 110 million for
infringing Anti-Monopoly Law
NDRC fines three cement firms
RMB 114 million for committing
price monopolistic conducts
NDRC admonishes the People's
Government of Hebei Province to
correct the conducts of Department
of Transportation and others which
infringed the Anti-Monopoly Law
United States
FTC imposes a fine of $896,000 on
Berkshire Hathaway Inc. for its
violation of premerger filing requirements
FTC requires Professional
Associations of Property Managers
and Vocal Arts Teachers to eliminate
rules that restrict competition
G.S. Electech Inc. executive pleads
guilty to bid rigging and price fixing
on automobile parts installed in U.S.
cars
DOJ and the Pennsylvania Office of
Attorney General requires
divestiture from Sinclair Broadcast
Group in order to proceed with its
acquisition of Perpetual Corp
DOJ requires divestiture in
Landmark Aviation’s Acquisition of
Ross Aviation
DOJ requires divestiture in Tyson
Foods Inc.’s acquisition of the
Hillshire Brands Company
FTC puts conditions on Valeant
Pharmaceuticals’ proposed
acquisition of Precision
Dermatology
FTC puts conditions on Akorn,
Inc.’s proposed acquisition of
Versapharm Inc.
FTC puts conditions on proposed
acquisition of Insight
Pharmaceuticals by Marketer of
Dramamine
European Union
EC sends statement of objections to
Bulgarian Energy Holding for
suspected abuse of dominance on
Bulgarian wholesale electricity
market
EC fines Servier and five generic
companies for curbing entry of
cheaper versions of cardiovascular
medicine
EC fines Marine Harvest € 20
million for taking control of Morpol
without prior EU merger clearance
EC cleares acquisition of parts of
Rolls-Royce by Siemens
EC condititionally approves
acquisition of part of Honeywell's
friction material business by rival Federal-Mogul
EC conditionally clears acquisition
of E-Plus by Telefónica Deutschland
Australia
ACCC institutes proceedings against
OmniBlend Australia
ACCC takes action against
Informed Sources and petrol
retailers for price information
sharing
Korea
KFTC imposes penalty on
Caffebene Corporation for violating
Franchise Business Act
Japan
JFTC rejects the requisition of
Fujikura Corporation for reducing
the payment of suspecting
monopoly conducts
JFTC imposes penalty on
manufacturers of corrugating
paperboard and corrugating
paperboard boxes
Brazil
CADE fines some driving schools
for price fixing
CADE fines cartel in the market of
generic medicines in BRL 4.2
million
CADE conditionally approves
Fleury’s transaction in the
diagnostic medicine market
Russia
FAS fines Baxter for the refusal to
conclude a contract with Medical
Service Company Ltd
India
CCI fines 14 car makers for their
anti-competitive practices
South Africa
Competition Commission raids
Precision, Eldan offices and Vehicle
Accident Assessment Centre
Legislation
China
China (Shanghai) Pilot Free Trade
Zone issues the legislations of
Anti-Monopoly enforcement work
European Union
EC extends validity of special
competition regime for liner
shipping consortia until April 2020
EC adopts revised safe harbour rules
for minor agreements (De Minimis
Notice)
EC consults on possible
improvements of EU merger control
rules
Korea
KFTC amends the Guidelines for
reporting conducts in violation of
Fair Trade Act
Zhong Lun in the News
Zhong Lun Partner Mr. Zhang
Baisha speaks at the lecture held by
Guangdong Commercial Bureau on
anti-monopoly review of
concentrations of undertakings
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Enforcement
China
MOFCOM unconditionally clears 48 concentrations of undertakings in the third
quarter of 2014
On October 11, MOFCOM issued a case-review list setting out the 48 concentrations
of undertakings unconditionally cleared in the third quarter of 2014. >>Read More
Back
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Review of the first six months since the debut of MOFCOM’s Simple Case
Announcement Form
As of October 28, 2014, since publication of the summary form for the first case in
May 2014, MOFCOM has published the summary information of 51 simple case
notifications on its Anti-Monopoly Bureau’s official website.
Based on a review of those 51 case summary forms, we would like to share the
following observations:
For the transaction types, most involve acquisition of equity (about 52.9%)
and joint venture projects (about 39.2%), the remainder includes group
restructuring and “take private” transaction, etc.
For the rationale of simple case applications, most applicants invoked one
or more items of the “market share” criteria (about 86.3%), while other
criteria such as offshore joint venture establishment without China nexus,
acquisition of overseas target without China nexus and change of joint
control were also invoked (respectively 13.7%, 2.0% and 5.9%).
For the industries involved, there was significant diversity, including
aerospace and defense, automobile and auto parts, heavy equipment,
chemicals, construction materials, metals, power generation, electronics,
real estate, resale, entertainment, agriculture, jewelry and so on.
For the review period, based on an analysis of MOFCOM’s Unconditionally
Cleared Cases List and the public announcement summary forms of the
simple cases which were unconditionally cleared, we note that 23 simple
cases were cleared in the second and third quarters of this year with an
average review period of 24 calendar days after the date of public
announcement. Among these simple cases, the shortest review period was
18 days, for the notification of Rolls-Royce Holdings' acquisition of sole
control over its joint venture Rolls Royce Power Systems, while the longest
was 37 days, for the notification of Sony China and Shanghai Oriental
Pearl’s joint venture. Based on our experience, the pre-docketing review
period for simple cases has also been shortened compared to ordinary cases. Back
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MOFCOM answers media questions on investigation and sanction of foreign
firms
Recently, related departments of the Chinese government conducted anti-monopoly
investigations against Microsoft, Qualcomm and Mercedes-Benz, and punished OSI
for supplying expired raw-food materials. The move had attracted high attention from
all circles. On August 9, Shen Danyang, spokesman of MOFCOM answered questions from the media.
Shen Danyang pointed out that the related departments of the Chinese government
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conducted anti-monopoly investigations into some foreign-owned firms according to
the law, which is a major content of promoting fair competition and protecting
consumer rights and interests. Punishing monopoly is a common practice worldwide,
and all those firms in China, no matter domestic or foreign invested, should be
punished and assume their legal liabilities if they violate the law. During the six years’
enforcement of Anti-Monopoly Law, firms receiving anti-monopoly investigations
include not only domestic firms, but also foreign-owned firms. All firms are equal
before the Anti-Monopoly Law, and there is no “anti-foreign” enforcement. >>Read
More Back
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SAIC imposes penalties on Chifeng Tobacco Company for abuse of dominance
On July 30, SAIC announced on its official website the administrative punishment
decisions against Chifeng Tobacco Company of the Inner Mongolia Autonomous
Region (the party) for its abusing of dominance in the market. During the three
months’ investigation, Inner Mongolia Administration for Industry and Commerce
(IMAIC) required the party to correct illegal conduct, and to submit rectification
measures within time limit as well as imposed a total fine of RMB 5,957,000 (1% of
the revenue of the preceding year).
On March 15, upon the complaint of tobacco resellers, IMAIC started investigation
and found that the party classified its products into different categories and
combinations, and then forced resellers to buy “bundled” tobaccos. The tobacco
resellers would be penalized unless booking “bundled” tobaccos. Upon investigation,
IMAIC was of the view that, the party was involved in abusing the market dominance
in the process of tobacco wholesale sales.
On April 21, as authorized by SAIC, IMAIC docketed the case and conducted
anti-monopoly investigation against the party. The party had a dominant market
position on the tobacco wholesale market in Chifeng City and there was no real and
potential competition. According to evidence materials, IMAIC was of the view that,
the party had violated Article 17(5) of the Anti-monopoly Law, which provides that,
an undertaking with dominant market position is prohibited from abusing its
dominant market position, through tying products or imposing any other unreasonable
additional transaction terms in the course of a transaction without justifiable
cause. >>Read More Back
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SAIC imposes penalties on Chifeng fireworks vendors for monopolistic conducts
On June 25, SAIC announced on its official website the administrative punishment
decisions against 6 fireworks wholesalers (the parties) suspected of carrying out
horizontal monopoly agreement in Chifeng central urban area. The parties were
imposed a total fine of RMB 583,700, including 8% of 2013 annual revenue of 4
firms which have imposed unreasonable terms; and 7% of 2013 annual revenue of
other 2 firms which have not imposed unreasonable terms.
The relevant firms complained that the parties implemented monopolistic conducts
through dividing up wholesalers’ sales in the name of the regulation of the
administrative department. In January 2014, as authorized by SAIC, IMAIC docketed
the case and conducted investigation against the parties. Upon investigation, the
parties divided sale markets among competing firms and carried out monopolistic
conducts in spite of the absence of manifest monopoly agreement. >>Read More
Back
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SAIC launches anti-monopoly dawn raids against Microsoft
In June 6, upon complaints of the relevant firms, SAIC verified Microsoft’s relevant
issues such as interoperability caused by incomplete disclosure of relevant
information of its Windows operating systems and Office software, tying, and file
verification, and the suspected violation of the Anti-Monopoly Law. SAIC was of the
view that, the preliminary verification cannot eliminate the suspicion that Microsoft’s
above conducts are anti-competitive. Therefore, in accordance with the law, SAIC had
docketed the case and launched investigation into Microsoft’s suspected monopolistic
conducts.
On July 28, 2014, under the organization of SAIC, nearly one hundred law
enforcement officials from 9 provinces, including Beijing, Shanghai, Guangdong,
Sichuan, Fujian, Hubei, Jiangsu, Chongqing and Hebei’s industrial and commercial
bureaus, carried out simultaneous dawn raids on four of Microsoft’s offices in China,
including Microsoft (China) Co., Ltd. in Beijing and its three branches in Shanghai,
Guangzhou, and Chengdu (collectively “Microsoft”). The law enforcement officials
copied some of Microsoft’s contracts and financial statements, collected large amount
of electronic data such as internal communication documents and e-mails from
computers and servers on-site, as well as sealed and seized two computers. Currently,
the investigation is still on going. >>Read More Back
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Xiamen Municipal Price Supervision Bureau orders Express Delivery Industry
Association to cease price agreement
On July 27, National Development and Reform Commission (NDRC) announced on
its official website that Xiamen Municipal Price Supervision Bureau(XMPSB)ordered the Express Industry Delivery Association to cease price agreement on the
express delivery market of Xiamen City (Price Agreement). Price Agreement was
sponsored by Express Delivery Industry Association of Xiamen City and sets the
bottom line price, as well as unifies the behaviors of minimum pricing.
Upon investigation, XMPSB was of the view that, the Price Agreement shall cease
promptly for violating the Price Law and the Anti-Monopoly Law. The Express
Delivery Industry Association of Xiamen City stated the difficult position of express
delivery industry at present, including part of e-commerce players jointly pushing
down and there are indeed mutually destructive competitions among the express
delivery firms. Regarding above questions, XMPSB interpreted the relevant price
policies and regulations for them to solve this problem and pointed out that they could
protect their own benefit by reporting the unfair competition to the price supervision
department. >>Read More Back
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Hubei Province Price Supervision Bureau holds reprimanding conference for the
pricing behaviors of automobile dealers
On August 13, in consideration of major complaints from consumers in the process of
automobile sales, Hubei Province Price Supervision Bureau (HPPSB) held a
reprimanding conference and ordered the companies to abstain from charging PDI
inspection fees in the name of “Service”, and to take the initiative to report price
alliance among the firms, as well as ordered the firms to operate in accordance with
Anti-Monopoly law.
At the conference, HPPSB announced that 4 BMW auto dealers in Wuhan auto
market carried out price monopoly agreement for charging PDI inspection fees, and
briefly explained its decision of administrative punishment, imposing a fine of RMB 937,900, RMB 341,600, RMB 197,200, and RMB 150,000 to Ebao, Wh Summit,
Handebao, Baoze respectively. In addition, HPPSB launched anti-monopoly
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investigation against Audi and other automobile production firms. Currently, the case
was in the phase of administrative punishment in accordance with Anti-Monopoly
law. >>Read More Back
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Twelve Japanese firms committing auto parts and bearings price cartel fined
RMB 1.235 billion by NDRC
On August 20, National Development and Reform Commission (NDRC) imposed a
fine of RMB 831,960,000 on eight auto parts suppliers according to Anti-Monopoly
Law, including Sumitomo of Japan, for their price monopolistic conducts, as well as a
fine of RMB 403,344,000 on four bearing suppliers for their price monopolistic
conducts. The total amount of the fine is RMB 1.235 billion.
Upon investigation and verification, from January 2000 to February 2010, in order to
lessen competition and secure auto parts orders from auto makers at the most
favorable prices, eight auto parts suppliers including Hitachi, Denso, Aisan,
Mitsubishi Electric, Mitsuba, Yazaki, Furukawa and Sumitomo, frequently held
bilateral or multilateral meetings in Japan to consult on prices with each other. Then
they reached agreements on order quotation and implemented such agreements many
times. The auto parts concerned in such price consultations were used for over 20
vehicle models of brands such as Honda, Toyota, Nissan, Suzuki, and Ford. By the
end of 2013, most orders in connection with China market under price consultation
among the parties concerned were still being executed.
In addition, NDRC also found that from 2000 to June 2011, four bearing makers
including Nachi, NSK, JTEKT and NTN organized Asian Study Association and held
conferences in Japan, as well as held Export Market Conference in Shanghai
discussing the scheme, timing and range of bearing price increases in Asia and China
markets, and exchanged information on the implementation of price increases. The
parties concerned increased their prices in accordance with the price increase
information agreed or exchanged through Asian Study Association and the Export
Market Conference while selling bearings in China.
The eight auto parts suppliers and four bearing makers were suspected of concluding
and implementing auto parts and bearing price monopoly agreements, and violating
the Anti-Monopoly Law of China to eliminate or restrict market competition, thus
unlawfully affecting the price of China’s auto parts, finished automobiles and
bearings, and harming the legitimate rights and interests of downstream
manufacturers and welfare of Chinese consumers. In both cases, the parties concerned
concluded and implemented price monopoly agreements many times, and their
infringing conducts had lasted for over 10 years constituting severe circumstance.
Therefore, NDRC imposed aggravated sanctions in accordance with the law and
applied mitigated sanction or exempted sanction by virtue of the leniency scheme
under Anti-Monopoly Law on those parties who had voluntarily provided important
evidences.
Fines on auto parts price monopoly case included:
Hitachi, the first subject firm which voluntarily reported relevant information of concluding monopoly agreement to anti-monopoly enforcement authority and provided important evidence, was exempted from sanction.
Denso, the second subject firm which voluntarily reported relevant situations and provided important evidence, was imposed a fine of RMB150.56 million (4% of its revenue of the preceding year).
Yazaki, Furukawa and Sumitomo, who only participated in the collusion of one product were respectively imposed a fine of RMB241.08 million, RMB34.56 million and RMB290.4 million, 6% of their respective revenue of the preceding year.
5
Aisan, Mitsubishi Electric and Mitsuba, who participated in the collusion of two or more products were respectively imposed a fine of RMB29.76 million, RMB44.88 million and RMB40.72 million, 8% of their respective revenue of the preceding year.
Fines on the bearings price monopoly case included:
Nachi, which voluntarily reported relevant information of concluding monopoly agreement to anti-monopoly enforcement authority and provided important evidence, was exempted from sanction.
NSK, the second subject firm which voluntarily reported relevant situations and all evidences and sales data relevant to China market, was imposed a fine of RMB 174.92 million (4% of its revenue of the preceding year).
NTN who retreated from the Asian Study Association in September 2006 but continued to attend the China Export Market Conference, was imposed a fine of RMB119.16 million (6% of its revenue of the preceding year).
JTEKT who proposed to convene the China Export Market Conference in connection with the China market, was imposed a fine of RMB 109.36 million (8% of its revenue of the preceding year).
Meanwhile, all subject firms had proposed rectification measures as follows:
rectify the sales policy and sales conduct in accordance with Chinese laws immediately;
give anti-monopoly law training to all employees and ensure the compliance of their conducts with the requirements of Chinese laws;
take concrete actions to eliminate the consequences of the previous illegal conducts, and proactively safeguard competition order and benefit consumers. >>Read More Back
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NDRC fines Zhejiang insurance firms RMB 110 million for infringing
Anti-Monopoly Law
On September 2, NDRC announced the administrative punishment decisions on
Zhejiang insurance firms for infringing Anti-Monopoly Law. According to the
complaints of the consumers, Zhejiang Insurance Firms Association used to hold
meetings to consult on price with each other, which were attended by 23 provincial
property insurance firms. The meetings reached the agreement on arranging the
discount factor of new car and unifying commercial insurance agency commission
according to market share. Upon investigation, NDRC was of the view that, Zhejiang
Insurance Firms Association had violated Article 16 of Anti-Monopoly Law, which
provides that, an industry association may not organize the undertakings in such
industry to engage in any monopolistic conduct prohibited by this article. Property
industry firms involved in the case had violated Article 13 of Anti-Monopoly Law,
which provides that, Competing undertakings are prohibited from fixing or
collectively changing product price.
Fines included:
Zhejiang Province Insurance Association which had primary responsibility was imposed a fine of RMB 500,000.
Property industry firms involved in the case that had secondary responsibility was imposed a fine totaling RMB 110 million (1% of auto insurance sales of the preceding year).
The investigations on the 9 firms including Liberty Insurance Zhejiang Branch, Aioinissaydowa Insurance Zhejiang Branch and others were terminated, as they didn’t participate in reaching or enforcing the monopoly agreement.
The penalty for PICC Zhejiang Branch、China Life Insurance (Group)
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Company Zhejiang Branch and Ping An Insurance (Group) Company Zhejiang Branch applied mitigated sanction or exempted sanction as they have voluntarily reported the situation and submitted important evidence concerning the monopoly agreement. >>Read More Back
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NDRC fines three cement firms RMB 114 million for committing price
monopolistic conducts
On September 9, NDRC announced on its official website its decision of
administrative punishment against three cement firms suspected of committing price
monopolistic conducts. As authorized by NDRC, Jilin Province Price Supervision
Bureau docketed the case and conducted investigation against three cement firms for
price monopolistic conducts, including Jilin Yatai Group Cement Sales Co., Ltd.
(Yatai Company), Northern Cement Limited (Northern Company) and Jilin Jidong
Cement Co., Ltd. (Jidong Company). The total amount of the fine was RMB 114
million.
Since March 2013, Price Supervision Bureau of NDRC started anti-monopoly
investigation into the price monopolistic conducts in some local cement markets.
Upon investigation, since April 2011, the relevant management from Yatai Company,
Jidong Company and Northern Company used to hold meetings to consult the sales
price of the regional cement and reached price monopoly agreement, as well as
carried out the price agreed at the meeting. Therefore, NDRC was of the view that,
three cement firms had violated the Anti-Monopoly Law, and eliminated or restricted
competition in the market, as well as controlled the sales price of cement and
damaged the interests of downstream industries and consumers.
In consideration of the surplus situation of Chinese cement production, moreover, the
company committing the price monopoly agreement lasted for only a short period and
the impaired competition is limited within certain area. Therefore, Yatai Company and
Jidong Company which did not cooperate with the investigation, were respectively
imposed a fine of 60.04 million and 13.38 million (2% of its annual sales of 2012);
Northern Company which cooperated with the investigation, was imposed a fine of
40.97 million (1% of its annual sales of 2012). >>Read More Back
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NDRC admonishes the People's Government of Hebei Province to correct the
conducts of Department of Transportation and others which infringed the
Anti-Monopoly Law
On September 26, NDRC announced on its official website the decision of
admonishing the People's Government of Hebei Province to correct the infringing
behaviors of Hebei Transportation Department, Price Supervision Bureau, and
Finance Department (the parties) infringed the Anti-Monopoly Law in accordance
with the law. The parties implemented preferential policies for the provincial tolls of
passenger bus, and abused administrative power to eliminate or restrict competition in
the relevant market.
Upon the complaint, NDRC docketed the case and conducted the investigation. Upon
investigation, in October 2013, departments of Hebei province, including Department
of Transportation, Price Supervision Bureau and Department of Finance issued jointly
the Notice on the Unity of the Province Turnpike Tolls Passenger Bus Vehicle
Classification Standard for adjusting the Pay Vehicle Classification of all provincial
road vehicles and implementing preferential policies for the province tolls of
passenger bus. On October 30, 2013, Department of Transportation issued another
notice on the implementation of the related matters of the province's turnpike tolls passenger bus vehicle classification criteria. The Notice further clarifies that policy
"apply only to the approval of the province by road transport by the regulatory
7
agencies and for the operators with fixed vehicle passenger lines".
The conducts of Hebei departments impaired the fair competition among the bus
firms between Hebei Province and others, and violated the Anti-Monopoly Law,
which provides that, administrative bodies and organizations empowered by the
relevant laws and administrative regulations to administer public affairs may not
abuse their administrative power to eliminate or restrict competition, through
imposing discriminatory charges, fee standards, prices on non-local products. >>Read
More Back
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United States
FTC imposes a fine of $896,000 on Berkshire Hathaway Inc. for its violation of
premerger filing requirements
On August 20, investment holding company Berkshire Hathaway Inc. agreed to pay
$896,000 in civil penalties to resolve Federal Trade Commission (FTC) allegations
that it violated premerger reporting laws in connection with the 2013 acquisition of
voting securities in USG Corporation.
The Hart-Scott-Rodino (HSR) Act requires parties to notify the FTC and the
Department of Justice (DOJ) of large transactions that affect commerce in the United
States and otherwise meet the statutory filing requirements. After submitting this
notification, parties must observe a waiting period before closing their transaction,
while one of the two agencies determines whether the transaction may substantially
lessen competition in violation of U.S. law. >>Read More Back
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FTC requires Professional Associations of Property Managers and Vocal Arts
Teachers to eliminate rules that restrict competition
On August 22, the National Association of Residential Property Managers, Inc.
(NARPM) and the National Association of Teachers of Singing, Inc. (NATS) agreed
to eliminate provisions in their respective codes of ethics that limit competition
among their members.
The FTC’s complaint against NARPM, which represents more than 4,000 real estate
managers, brokers, and agents, alleges that NARPM and its members restrained
competition in violation of the FTC Act through provisions in its code of ethics that
restrict comparative advertising and solicitation of competitor’s clients. >>Read More
Back
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G.S. Electech Inc. executive pleads guilty to bid rigging and price fixing on
automobile parts installed in U.S. cars
On July 31, an executive of Japanese auto parts maker G.S. Electech Inc. pleaded
guilty and was sentenced to serve 13 months in a U.S. prison for his role in an
international conspiracy to rig bids and fix prices on auto parts used on antilock brake
systems installed in U.S. cars, the Department of Justice announced.
Shingo Okuda, the former Engineering and Sales Division Manager for G.S. Electech,
pleaded guilty in the U.S. District Court for the Eastern District of Kentucky in
Covington, to a one count charge of bid rigging and price fixing. >>Read More Back
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DOJ and the Pennsylvania Office of Attorney General requires divestiture from
Sinclair Broadcast Group in order to proceed with its acquisition of Perpetual
Corp
On July 15, DOJ announced that it would require Sinclair Broadcast Group and
Perpetual Corp. to divest their interests in WHTM-TV, an ABC affiliate in Harrisburg,
Pennsylvania, in order to proceed with Sinclair’s proposed $963 million acquisition of
Perpetual. The department said that, without the required divestiture, prices for
broadcast television spot advertising would likely increase in parts of central
Pennsylvania.
The department’s Anti-Monopoly Division and the Pennsylvania Office of Attorney
General filed a civil anti-monopoly lawsuit in the U.S. District Court for the District
of Columbia to block the proposed acquisition. At the same time, the department filed
a proposed settlement that, if approved by the court, would resolve the competitive
concerns alleged in the lawsuit. >>Read More Back
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DOJ requires divestiture in Landmark Aviation’s Acquisition of Ross Aviation
On July 30, DOJ announced that it would require Landmark Aviation to divest fixed
base operator assets (FBOs) used to provide flight support services to general aviation
customers at Scottsdale Municipal Airport, in Arizona, in order to proceed with its
$330 million acquisition of Ross Aviation. The department said that without the
required divestiture, the transaction would have combined the only two FBOs serving
general aviation customers at Scottsdale Municipal Airport, resulting in higher prices
and lower quality of services.
The Justice Department’s Anti-Monopoly Division filed a civil lawsuit in the U.S.
District Court for the District of Columbia to block the proposed transaction. At the
same time, the department filed a proposed settlement that, if approved by the court,
would resolve the department’s competitive concerns alleged in the lawsuit. >>Read
More Back
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DOJ requires divestiture in Tyson Foods Inc.’s acquisition of the Hillshire Brands
Company
On August 27, DOJ announced that it would require Tyson Foods Inc. to divest
Heinold Hog Markets, its sow purchasing business, in order to proceed with its $8.5
billion acquisition of The Hillshire Brands Company. The department said that,
without the required divestiture, the transaction would have combined companies that
account for more than a third of sow purchases from U.S. farmers, thereby likely
reducing competition for purchases of sows from farmers.
Three state attorneys general – of Illinois, Lowa, and Missouri – joined the
department in the civil lawsuit filed in the U.S. District Court for the District of
Columbia to block the proposed transaction. At the same time, the department filed a
proposed settlement that, if approved by the court, would resolve the competitive
concerns alleged in the department’s lawsuit. >>Read More Back
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FTC puts conditions on Valeant Pharmaceuticals’ proposed acquisition of
Precision Dermatology
On July 3, Valeant Pharmaceuticals International, Inc. and Precision Dermatology, Inc.
agreed to sell or relinquish rights to Precision’s branded single-agent topical tretinoins and generic Retin-A, common acne treatments, to settle FTC charges that Valeant’s
proposed $475 million acquisition of Precision would likely be anticompetitive.
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According to the FTC complaint, Valeant and Precision are the only two significant
suppliers of branded single-agent topical tretinoins, and the proposed acquisition
would eliminate current competition between them. The companies are also the two
largest suppliers of generic Retin-A. >>Read More Back
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FTC puts conditions on Akorn, Inc.’s proposed acquisition of Versapharm Inc.
On August 4, pharmaceutical company Akorn, Inc. had agreed to sell its rights to
develop, manufacture, and market the generic injectable tuberculosis drug, rifampin,
in order to settle FTC charges that Akorn’s proposed acquisition of VersaPharm Inc.
and its parent company, VPI Holdings Corp., would likely be anticompetitive.
The FTC’s proposed settlement with Akorn required the company to divest its
Abbreviated New Drug Application for generic injectable rifampin – which was
currently pending before the Food and Drug Administration – to Watson Laboratories,
Inc. Akorn proposes to acquire VersaPharm for approximately $324 million, under an
agreement dated May 9, 2014. >>Read More Back
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FTC puts conditions on proposed acquisition of Insight Pharmaceuticals by
Marketer of Dramamine
On August 28, Pharmaceutical Company Prestige Brands Holdings, Inc., the maker of
Dramamine, agreed to divest assets and marketing rights for the over-the-counter
motion sickness drug Bonine to settle Federal Trade Commission charges that
Prestige’s proposed acquisition of Insight Pharmaceuticals Corporation would likely
be anticompetitive. The FTC’s proposed settlement with Prestige required the
company to divest Bonine to Wellspring Pharmaceuticals within 10 days after the
acquisition takes place.
According to the FTC’s complaint, Prestige’s Dramamine, which is the best-selling
branded product in the market for over-the-counter motion-sickness drugs, and
Insight’s Bonine, are the only two branded products with significant sales. Absent a
remedy, the acquisition would eliminate the close competition between Dramamine
and Bonine, likely leading to higher prices for consumers. >>Read More Back
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European Union
EC sends statement of objections to Bulgarian Energy Holding for suspected
abuse of dominance on Bulgarian wholesale electricity market
On August 12, the European Commission (EC) had informed Bulgarian Energy
Holding (BEH) of its preliminary view that territorial restrictions on resale contained
in BEH's electricity supply contracts with traders on the non-regulated Bulgarian
wholesale electricity market may breach EU anti-monopoly rules. Such restrictions
limit purchasers' freedom to choose where to resell the electricity bought from
BEH. >>Read More Back
---------------------------------
EC fines Servier and five generic companies for curbing entry of cheaper versions
of cardiovascular medicine
On July 9, EC had imposed fines totalling €427.7 million on the French
pharmaceutical company Servier and five producers of generic medicines for
concluding a series of deals all aimed at protecting Servier's bestselling blood pressure medicine, perindopril, from price competition by generics in the EU.
Through a technology acquisition and a series of patent settlements with generic
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rivals, Servier implemented a strategy to exclude competitors and delay the entry of
cheaper generic medicines to the detriment of public budgets and patients in breach of
EU anti-monopoly rules. >>Read More Back
---------------------------------
EC fines Marine Harvest € 20 million for taking control of Morpol without prior
EU merger clearance
On July 23, EC had imposed a fine of € 20 million on salmon farmer and processor
Marine Harvest ASA for acquiring its rival Morpol ASA, both of Norway, without
having received prior authorisation under the EU Merger Regulation. EC concluded
that Marine Harvest should have been aware of its obligations to notify and await
clearance from EC before proceeding with the acquisition. >>Read More Back
---------------------------------
EC clears acquisition of parts of Rolls-Royce by Siemens
On August 4, EC had authorized under the EU Merger Regulation the proposed
acquisition of Rolls-Royce's aero-derivative gas turbine business, compressor
activities and aftermarket services as well as Rolls Royce's 50% stake in Rolls Wood
Group, both of the UK, by Siemens of Germany. EC's investigation confirmed that
the proposed transaction does not raise competition concerns, in particular because
the parties are not close competitors and a number of competitors will remain in the
market after the transaction. >>Read More Back
---------------------------------
EC conditionally approves acquisition of part of Honeywell's friction material
business by rival Federal-Mogul
On June 16, EC had cleared the proposed acquisition of the European part of
Honeywell's friction material business by another large US friction material
manufacturer, Federal-Mogul Corporation. Both companies produce friction material,
in particular brake pads for trucks and passenger cars. In these segments, both
companies have a strong presence in the EEA for original equipment and original
equipment spare parts (OEM/OES). The clearance was conditional upon the
divestment of the OEM/OES business at a German and a French factory producing
brake pads for commercial and light vehicles. EC had concerns that the transaction, as
originally notified, would have significantly reduced competition in these markets in
the EEA. The commitments offered by Federal-Mogul addressed these
concerns. >>Read More Back
---------------------------------
EC conditionally clears acquisition of E-Plus by Telefónica Deutschland
On July 2, following an in-depth investigation, EC had approved the proposed
acquisition of Dutch Telecom operator KPN's German mobile telecommunications
business E-Plus by Telefónica Deutschland. The approval was conditional upon the
full implementation of a commitments package submitted by Telefónica. EC had
concerns that the merger, as initially notified, would have removed two close
competitors and important competitive forces from the German mobile
telecommunications market and that it would have further weakened the position of
Mobile Virtual Network Operators (MVNOs) and Service Providers to the detriment
of consumers. To address these concerns, Telefónica submitted commitments ensuring
that new competitors would enter the mobile telecommunications market in Germany
and that the position of existing competitors is strengthened. These commitments
removed the concerns of EC. >>Read More Back
---------------------------------
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Australia
ACCC institutes proceedings against OmniBlend Australia
On August 14, the Australian Competition and Consumer Commission (ACCC) had
instituted proceedings in the Federal Court against OmniBlend Australia Pty Ltd
(OmniBlend Australia), alleging it attempted to engage in price fixing with a
competitor. It was also alleged that OmniBlend Australia induced a supplier to direct
Omniblend Australia’s key competitor not to discount its prices for blenders.
Omniblend Australia supplies various kitchen blenders through its online store to
businesses and consumers in Australia, New Zealand and the United Kingdom.
OmniBlend Australia and its competitor were the two major distributors of
OmniBlend branded blenders in Australia.
The ACCC alleged that OmniBlend Australia attempted to enter into an agreement
with its competitor to fix prices. The ACCC further alleged that when this attempt
failed, OmniBlend Australia induced the supplier to engage in resale price
maintenance by refusing to supply the competitor unless it stopped discounting the
price of certain blenders. >>Readmore Back
---------------------------------
ACCC takes action against Informed Sources and petrol retailers for price
information sharing
On August 20, ACCC had instituted proceedings in the Federal Court of Australia
against Informed Sources (Australia) Pty Ltd (Informed Sources) and several petrol
retailers alleging in breach of 45 of the Competition and Consumer Act 2010 (the
Act).
ACCC alleged that the information sharing arrangements between Informed Sources
and the petrol retailers, through a service provided by Informed Sources, allowed
those retailers to communicate with each other about their prices, and that these
arrangements had the effect or likely effect of substantially lessening competition in
markets for the sale of petrol in Melbourne. >>Readmore Back
---------------------------------
Korea
KFTC imposes penalty on Caffebene Corporation for violating Franchise
Business Act
On August 4, 2014, South Korea Fair Trade Commission (KFTC) announced on its
official website the decision against Caffebene for its abuse of dominance by forcing
franchisees to bear the cost of promotional activities and accept their (or their
designated firms) conducts providing franchise store decoration services in violation
of Franchise Business Act. KFTC required Caffebene to correct above conducts and
imposed a fine of KRW 1.942 billion. KFTC expected that this punishment can deter
unfair phenomenon in the franchise industry.
On August 29, 2010, Caffebene and KT (Korea’s mobile communications providers)
signed the service and cooperation agreement. The agreement provided that if the
members of KT buy all commodities from Caffebene, they can enjoy 10% discount,
and the relevant cost shall be born respectively by KT and Caffebene at 50% each. On
October 26, 2010, Caffebene notified unilaterally all franchisees regarding the
agreement of cooperation and discount in spite of oppositions of 40% of franchisees,
and notified that franchisees would bear all cost. The conducts of Caffebene had
violated the principles relating to bearing promotional expenses in the franchisee agreement signed between Caffebene and Franchisees, also constituted abuse of
dominant market position.
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In addition, from November 17, 2008 to April 3, 2012, Caffebene forced 735
franchisees to accept franchise store decoration services and the supply of machine
equipment under the pretext of unifying internal style. With regard to franchise store
decoration and the procurement of machine equipment, franchisee shall choose
Caffebene, there is no other choice. >>Readmore Back
---------------------------------
Japan
JFTC rejects the requisition of Fujikura Corporation for reducing the payment of
suspecting monopoly conducts
On June 11, Japan Fair Trade Commission (JFTC) started investigation to Fujikura
Corporation’s suspecting monopoly conducts on April 25, 2012 and finally
surcharged payment order of 1,182,320,000 Yen against it. Fujikura Corporation
applied reconsideration and requested to reduce the payment to 236,460,000 Yen. On
June 9, 2014, JFTC rejected its request pursuant to Article 66(2) of Anti-Monopoly
Law. >>Read More Back
---------------------------------
JFTC imposes penalty on manufacturers of corrugating paperboard and
corrugating paperboard boxes
On June 19, 2014, JFTC inspected manufacturers of corrugating paperboard and
corrugating paperboard boxes according to Anti-Monopoly Law and found that their
behaviors violated Article 3 of Anti-Monopoly Law (prohibition on unfair trading), and
therefore rendered cease and desist order and surcharge payment order against them
pursuant to Article 7(2) of Anti-Monopoly Law. >>Read More Back
---------------------------------
Brazil
CADE fines some driving schools for price fixing
On June 4, the Administrative Council for Economic Defense (CADE) announced its
decision of punishment against some driving schools for committing price fixing. The
fines applied to four companies and two individuals totalized BRL 267,000.
The condemned companies developed the tables aiming at standardizing the prices of
theoretical and practical training services for drivers. The group also emitted
communications to the driving schools orienting them to adopt the minimum
established prices and threatened those that refused to follow this orientation. Price
tables induce uniform conducts and create difficulties to companies in the same
segment to offer lower prices on goods and services in their possibilities. >>Read
More Back
---------------------------------
CADE fines cartel in the market of generic medicines in BRL 4.2 million
On August 6, CADE announced its decision of punishment against the pharmaceutical
laboratory Merck for committing cartel formation to prevent the sales of generic
medicines, and imposed a fine of BRL 4.295 million. Merck united with the country’s
larger pharmaceutical laboratories aiming at preventing distributors of medicines to
work with generic medicinal products. Merck participated in the meeting and showed
the attempt to boycott the generic medicines’ market. The agreement between
competing labs could hamper the entrance of generic medicines in Brazil, harming the market and the consumers.
The anticompetitive effects in practice were clear, since the no-entry or a delay in the
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entrance of the generic products in the market, even for a short period, would avoid
the loss of profits by part of the companies, once these products presented a cheaper
option and, possibly, better and more accessible to the population. >>Read More Back
---------------------------------
CADE conditionally approves Fleury’s transaction in the diagnostic medicine
market
On August 6, CADE conditionally approved three mergers in the market of support
services for diagnostic medicine. By acquiring 100% of the social capital of Cardiolab,
Fleury held the direct control of Clínica Radiológica Menezes da Costa and of Clínica
Luiz Felippe Mattoso Ltda. – companies incorporated by Cardiolab in other
transactions, both with activities in the sector of support to diagnostic medicine in Rio
de Janeiro.
Through the transactions, Fleury gained large market shares in the markets of the
echocardiogram, computerized tomography, ultrasonography, MRI, bone
densitometry and mammography tests in the city of Rio de Janeiro.
To solve the identified competition problems, CADE determined that Fleury must
divest assets in Rio de Janeiro that, together, represent a turnover of BRL 28 million.
The units to be divested must be conjointly transferred to a single acquirer, which
cannot own more than 20% of the diagnostic medicine services market in the city. The
acquirer also cannot possess corporate link with Fleury at the moment of the
acquisition, neither keep corporate or contractual relationship with the company in the
next five years, after the acquisition of the assets.
Furthermore, the group cannot carry out acquisitions in the city of Rio de Janeiro for a
three-year period. In the two subsequent years, it must inform CADE of any merger,
even if it does not meet the mandatory criteria for notification established by
law.>>Read More Back
---------------------------------
Russia
FAS fines Baxter for the refusal to conclude a contract with Medical Service
Company Ltd.
On July 1, the Federal Antimonopoly Service (FAS) imposed the administrative fine
of 9.23 million RUB for the refusal to conclude a contract with “Medical Service
Company” Ltd. for supplying a unique drug – “Extranil” for treating renal deficiency
through peritoneal dialysis.
Earlier FAS warned “Baxter” CJSC to eliminate elements of violating the
antimonopoly law. Due to failure to execute the warning, FAS opened and
investigated a case against “Baxter” CJSC for violating Clause 5 Part 1 Article 10 of
the Federal Law “On Protection of Competition”.
The FAS Commission established that the procedures used by “Baxter” CJSC to
select counteragents did not have clear criteria for choosing counteragents, the
deadlines and decision-making procedures, as a result of which FAS found that the
refusal of “Baxter” CJSC to conclude a contract with “Medical Service Company”
Ltd. for supplying "Extranil'' was economically and technologically
unjustified. >>Read More Back
---------------------------------
India
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CCI fines 14 car makers for their anti-competitive practices
On August 25, Competition Commission of India (CCI) fined 14 car makers,
including both local car manufacturers and international car manufacturers such as
BMW, Ford, General Motors, Mercedes-Benz, Nissan, Skoda Toyota and Honda. The
penalty imposed totalizes 254.4 crores.
Among those penalized manufacturers, India's Tata Motors Ltd suffered the highest
penalty of 134.6 crores, followed by Maruti Suzuki 47.1 crores, Mahindra &
Mahindra 29.2 crores and General Motors 8.5 crores, accounting for 2% of their
respective turnover. Based on the investigation, CCI found that those involved car
manufacturers refuse to supply genuine spare parts and technological equipment for
providing maintenance and repair services in the open market and in the hands of the
independent repairers, resulting in the restriction of market access of independent
repairers and the choice of the consumers. >>Read More Back
---------------------------------
South Africa
Competition Commission raids Precision, Eldan offices and Vehicle Accident
Assessment Centre
On July 4, the Competition Commission was conducting a dawn raid at the offices of
Precision, Eldan, and Vehicle Accident Assessment Centre (VAAC). The dawn raided
operation forms part of the Competition Commission’s ongoing investigation into
collusive conduct in the market for auto body repairs.
Precision and Eldan are approved auto body repairers to Original Equipment
Manufacturers such as Mercedes Benz, Toyota and Jeep. VAAC is an assessment
centre which renders vehicle assessment services to customers of both Precision and
Eldan. The Competition Commission had reasonable grounds to believe that
information relevant to this investigation was in the premises of the two companies.
The Competition Commission was conducting the operation with due regard to the
rights of the firms and all the affected persons. During the search the Competition
Commission would seize documents and electronic data, which would be analyzed
together with other information gathered to determine whether a contravention of the
Competition Act had taken place. >>Read More Back
---------------------------------
Legislation
China
China (Shanghai) Pilot Free Trade Zone issues the legislations of Anti-Monopoly
enforcement work
Recently, Shanghai Municipal Commission of Commerce, Shanghai Municipal
Development & Reform Commission and Shanghai Administration for Industry &
Commerce issued the legislations regarding the Anti-Monopoly enforcement work of
China (Shanghai) Pilot Free Trade Zone, including the work of Anti-Price monopoly
on China (Shanghai) Pilot Free Trade Zone, the work of Anti-Monopoly review on
China (Shanghai) Pilot Free Trade Zone and the enforcement work of anti-monopoly
agreement, abuse of dominant market and administration monopoly. These
legislations took effect on October 15, 2014.
According to the relevant legislations, in Anti-price monopoly, the Management
Committee of Pilot Free Trade zone shall accept the report and consultation, in addition, shall assist the anti-monopoly investigation of Shanghai Municipal Price
Supervision Department and so on. >>Read More In Merger Review, Management
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Committee of Pilot Free Trade zone shall be in charge of case discovery, case
investigation, supervision, assessment and training and so on. >>Read More In
anti-monopoly agreement, abuse of dominant market and administration monopoly,
the Management Committee of Pilot Free Trade zone shall assist the anti-monopoly
enforcement work of Shanghai Administration for Industry & Commerce, set up the
mechanism of consultation and information-sharing. >>Read More Back
---------------------------------
European Union
EC extends validity of special competition regime for liner shipping consortia
until April 2020
On June 24, the European Commission (EC) had extended by another five years until
April 2020 the validity of the existing legal framework exempting, if certain
conditions are met, liner shipping consortia from EU anti-monopoly rules. After a
public consultation, EC had concluded that the exemption had worked well, providing
legal certainty to agreements which bring benefits to customers and do not unduly
distort competition, and that current market circumstances warrant a
prolongation. >>Read More Back
---------------------------------
EC adopts revised safe harbour rules for minor agreements (De Minimis Notice)
On June 25, EC had issued revised rules for assessing when minor agreements
between companies are not caught by the general prohibition of anticompetitive
practices under EU competition law. The Notice facilitated the assessment of
compliance with EU anti-monopoly rules for companies, especially SMEs. At the
same time it allowed EC to concentrate its resources on agreements with a higher risk
of distorting competition in the Single Market. >>Read More Back
---------------------------------
EC consults on possible improvements of EU merger control rules
On July 9, EC had launched a public consultation on proposals to improve merger
control at EU level outlined in a White Paper. The reform of the Merger Regulation in
2004 had made the EU’s merger control regime more efficient and predictable,
preserving effective competition in the Single Market for the benefit of businesses
and consumers. Nevertheless, the experience of the last ten years had also shown that
there was scope for further improving some aspects of EU merger control. In its
White Paper "Towards More Effective EU Merger Control" EC made proposals that
would allow it to better deal with non-controlling minority shareholdings which may
affect competition, and that would make referral procedures simpler and
faster. >>Read More Back
---------------------------------
Korea
KFTC amends the Guidelines for reporting conducts in violation of Fair Trade
Act
On August 20, South Korea Fair Trade Commission (KFTC) issued the amendment
on the guidelines for reporting conducts in violation of Fair Trade Act. The
amendment would take effect on August 22, 2014.
The amendment included:
The improper benefits of the president relatives and reporting criteria of the
conducts in violation of Large-scale Franchise and Retail Industry Act. The
16
amendment stipulated the large enterprise groups with assets totaling over
KRW5 trillion provide improper benefits for the president relatives or the
enterprises directly controlled by president relatives, can be as reporting
targets. But, infringement index of the enterprises calculated by KFTC shall
reach more than 2.5. In addition, regarding reporting criteria in violation of
Large-scale Franchise and Retail Industry Act and compelling exclusive
transaction or providing business information, if infringement index of the
enterprises shall reach more than 2.5, they can be reporting targets.
Refining reporting criteria of improper supporting conducts;
Reporting criteria of the people in violation of legal obligation or impeding
the investigation of KFTC. The amendment stipulated if a person violates
legal obligation or effectively impede the investigation of KFTC, the person
can be targets. But, if the person is actively cooperating in the process of the
investigation and review, they shall be exempted from legal
liability. >>Read More Back
---------------------------------
Zhong Lun in the News
Zhong Lun Partner Mr. Zhang Baisha speaks at the lecture held by Guangdong
Commercial Bureau on anti-monopoly review of concentrations of undertakings
On August 28, Zhong Lun Partner,Attorney Zhang Baisha was invited to the lecture
held by Guangdong Commercial Bureau on anti-monopoly review of concentrations
of undertakings as a speaker. Mr. Zhang detailed the entity and procedure question of
the concentrations of undertakings, including control analysis, the definition of
relevant market, the factors of merger review, and the theory of competition damage,
merger filing and the review procedure. In addition, he also shared practice
experience and analyzed the representative cases of the concentrations of
undertakings. At the lecture, Mr. Zhang won praise from the audience.
The lecture focused on the current and complex Anti-Monopoly issues, covering
theory and practice. More than 130 guests attended the lecture, including the officers
from Department of Commerce of Guangdong Province and Municipal Commerce
Authorities from more than ten cities, and the representatives from firms, industry
association and law firms. Back
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Disclaimer: This bulletin is provided for informational purposes only and is not legal advice. The
transmission and receipt of information contained in the document do not form or constitute an
attorney-client relationship.
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