The process to enact a comprehensive set of antitrust laws in China has spanned an entire cycle of the Chinese zodiac calendar (12 years), with little success. No concrete laws have been set despite multiple drafts being drawn up and circulated, but the March 8 release of the Guidelines on Antitrust Filing for Mergers and Acquisitions of Domestic Companies by Foreign Investors by the Ministry of Commerce is a step in the right direction to clarify the antitrust review process in China.
These new guidelines, which supersede a version issued on April 20 last year, clarify the procedures and documents required to file for a merger in China. The main contents of the guidelines are below.
Pre-filing consultation: The filing party or its agents are encouraged to initiate information contacts with the Anti-Monopoly Investigation Office of the Ministry of Commerce prior to the formal filing.
Filing materials: China's Ministry of Commerce says it requires information on:
Timing: The formal filing must be made prior to the public announcement of the proposed transaction, or for extraterritorial transactions, at the same time the pre-merger filing submitted to other authorities.
Review period: The initial review period is 30 days upon receipt of the complete filing materials, but may be extended to 90 days.
Confidentiality: The filing may be confidential, but if so, an additional non-confidential set of materials must also be submitted. Lawyers have commented that these guidelines, while well-intentioned, are troublesome. The guidelines increase the filing burden already required. It is unclear exactly what documentation the parties involved must provide in practice. Furthermore, certain key terms in the filing requirements, such as ?control,? are ambiguous.
Currently, the antitrust review process for all M&A transactions in China is governed by a separate law called the M&A Provisions. It is unclear which set of laws will ultimately govern the M&A antitrust review process. For now, the decision is still pending, as a draft of the guidelines is awaiting its second reading before China's congress.
GMB, Permira attempt to settle differences
The GMB trade union said it would seek to build a ?constructive dialogue? with Permira following a first meeting with the buyout firm's boss Damon Buffini. After two and half hours of talks, Permira and the GMB issued a joint statement saying that they had held ?constructive discussions about the AA and GMB's role as an independent union.? An ongoing row between the two parties began over job cuts at the AA, a vehicle-breakdown service owned by Permira, where the GMB was the official union before being de-recognised last year. The GMB took a list of demands concerning the AA to the talks with Permira, including proposals for staff increases, pay hikes and an end to the ?culture of bullying and harassment.?
EU's McCreevy urges industry to sell itself better
Charlie McCreevy, the European Union's internal market commissioner, has reiterated his support for the private equity industry, while conceding that it has a lot of work to do to convince sceptics that it is a force for good. Speaking at a meeting of the UK government's all-party Parliamentary group on private equity, McCreevy said there was a ?big selling job to be done.? He added that the industry ?must go out and tell the many stories of success.? This meant spreading the message about the returns the industry can deliver to ?present and future pensioners? as well as about job creation and innovation. But despite admitting the need for a selling job, McCreevy also said he was ?perplexed? by some of the recent criticisms of the industry.
Walker assembles big guns for transparency debate
Sir David Walker, the former banker charged with drawing up a voluntary code of transparency and disclosure for the UK private equity industry via the BVCA, has revealed the line-up for his working party. Representing big buyouts are: Adrian Beecroft (Apax Partners); David Blitzer (The Blackstone Group); Lord Hollick (KKR); Robin Hall (Cinven); and Dwight Polar (Bain Capital). Mid-market proponents are William Jackson (Bridgepoint) and Rod Selkirk (Hermes Private Equity), while the lone venture capital voice is Anne Glover (Amadeus Capital Partners). Completing the line-up are Baroness Hogg (3i chairwoman) and Sir Michael Rake (international chairman of KPMG). The group will assess the appropriate levels of narrative and financial reporting; whether and to what extent the case is made for increasing the level of reporting for portfolio companies; and the timing of any increased reporting.
TPG sharpens focus
In February 2007, Texas Pacific Group formally changed its name to TPG, an acronym the Texas-based firm had already been using for sometime. Two months earlier, when it participated in the buyout of Biomet, the firm was only identified as ?TPG.? Its Asian joint venture had long been known as Newbridge Capital. But what has also happened, behind the scenes and with little fanfare, is the separation of TPG's investment activities by size and name: TPG Capital for buyouts and TPG Growth for venture capital and growth capital deals. The activities are not new, but the lines have been drawn. The firm also has two alliances: TPGAxon Capital, which focuses on public and private markets; and TPG Credit Management, which focuses on distressed debt. TPG-Axon, a spin out of TPG, is run by former Goldman Sachs head of principal strategies Dinakar Singh and is currently investing its $5.8 billion fund. TPG Credit is led by former Cargill executive Rory O'Neill and is investing through its first fund, believed to be less than $1 billion.