China’s antitrust regime comes of age

By Henny Sender

Regulators in Beijing will shortly rule whether the $18bn purchase of Toshiba’s semiconductor chip operations by a group led by Bain Capital and South Korean chipmaker SK Hynix violates Chinese antitrust rules.

The decision will mark the latest show of power by Chinese regulators, with competition rules increasingly becoming a key lever for Beijing to influence global industries in which its so-called “national champions” take part.

The role of national regulators has become a key factor for cross-border mergers and acquisitions, with sensitivities heightened after the Committee on Foreign Investment in the United States, which reviews national security implications, moved to block the takeover of Qualcomm by Singapore-based Broadcom.

The now-pulled deal would also have gone before China’s authorities, which have become no less stringent in their protection of national interests. This month, for example, Bayer gained conditional approval from China’s commerce ministry for its $62.5bn acquisition of Monsanto, but only after granting “fair, reasonable and non-discriminatory access” to digital agriculture offerings in China to Chinese developers of farm management software.

With the next decision likely to be on Toshiba, analysts say that China’s 10-year-old antitrust regime has grown to match those in the US and Europe for impact on competition. In doing so, they argue, China will also have achieved a second, more intangible goal to further national economic and development interests.

“In only 10 years, China has become a global pillar of antitrust enforcement, at par with the United States and with Europe, with a strict merger control regime impacting many deals, and far-reaching investigations sanctioned by sometimes very high fines,” says Clara Ingen-Housz, who heads Linklaters’ antitrust department in Hong Kong.

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