Anti-monopoly requirements for M&A, reorganizations of listcos (II)

A review of recent feedback of the China Securities Regulatory Commission finds that the regulator focuses on two aspects related to anti-monopoly issues: (1) whether the deal complies with the provisions of Article 11 (1) of the Measures for the Administration of Major Asset Restructuring of Listed Companies and anti-monopoly laws and regulations, and needs to go through an operator concentration review procedure with the Ministry of Commerce (MoC); and (2) process of the MoC’s approval procedure, the expected date of completion or any potential obstacle to completing the procedure, and potential impact on the transaction.

FILING AN APPLICATION

First, it is necessary to assess if the deal involves any operator concentration under Article 20 of the Anti-Monopoly Law of the People’s Republic of China. In Shanxi, a reply from Blue Flame Holding (000968) to the CSRC states that, according to the restructuring report, the transaction where Taiyuan Coal Gasification and Shanxi Jincheng Anthracite Coal Mining Group acquire assets representing 100% equity in Shanxi Lanyan Coalbed Methane Group for a consideration comprising a major asset swap, a share issue and a cash payment does not involve any monopolistic agreement between or among business operators or abuse of dominant market positions by business operators as specified under the aforementioned Items (1) and (2) of Article 3 of the Anti-Monopoly Law of the PRC. Besides, while Taiyuan Coal Gasification’s current main business involves production and sales of raw coal and clean coal, Shanxi Lanyan Coalbed Methane Group focuses on coal mine gas control and exploration, development and utilization of coalbed methane. On completion of the proposed restructuring, all production and operational assets of Taiyuan Coal Gasification related to its existing business will be transferred to Taiyuan Coal Gasification (Group), which will shift its business focus from production and sales of raw coal and clean coal to coal mine gas control and exploration, development and utilization of coalbed methane. The transaction does not involve operators in related markets or the same industry. It is does not involve concentration of operators that either has or may have the effect of eliminating or restricting competition. Therefore, the transaction does not require anti-monopoly review because it does not involve Article 3 (3) of the Anti-Monopoly Law of the PRC as discussed earlier.

Cao Yiran is a partner and Zhang Yu is an intern at Grandway Law Offices