Overview

On August 13, China's Ministry of Commerce, MOFCOM, announced its conditional clearance of the acquisition of Alcon Inc by Novartis AG. This was the first conditional clearance announced by MOFCOM in ten months and only the sixth to have happened since the enactment of China's first ever comprehensive Anti-Monopoly Law. Eversheds looks more closely at the decision and reflects on some of the key moments in the first two years of China's new and still developing antitrust regime.

Analysis

The decision in Novartis/Alcon to prohibit the exclusive distribution agreement between subsidiaries of Novartis and Ginko is the first time that MOFCOM has imposed a condition to react to possible "coordinated effects" arising from a merger. Coordinated effects are those that arise between the merged entity and another competitor in the market place. Whilst MOFCOM did not provide a full analysis of the coordinated effects in its decision, this shows that MOFCOM is increasing the potential range of reasons for its intervention in merger cases in line with practice in European jurisdictions.

Whilst the Novartis/Alcon decision shows encouraging signs that MOFCOM is being more sophisticated in its approach to reviewing transactions that have an impact on the Chinese market. However, the necessity of MOFCOM's intervention is questionable and a European jurisdiction may not have chosen to take such action in a case where there was less than a one per cent increment to the pre-merger market share of the market leader.


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