“Gun Jumping” under the AML Merger Control Rules – Analysis of the two-stage transactions of Canon takeover Toshiba Medical Systems

CPI Asia Column edited by Vanessa Yanhua Zhang (Global Economics Group) present:

“Gun Jumping” under the AML Merger Control Rules – Analysis of the two-stage transactions of Canon takeover Toshiba Medical Systems – By Liang Ding (DeHeng Law Offices)

On January 4th, 2017, MOFCOM released its Decision of Administrative Penalty ([2016] No.965) in which it concluded that Canon’s failure to notify MOFCOM of the concentration before the first stage of the transaction (the acquisition of all the shares of Toshiba Medical System) constituted a violation of the AML.  As stated in MOFCOM’s decision, the transaction consists of two stages, and Canon didn’t notify MOFCOM until the first stage of the transaction had been completed.  MOFCOM found that Cannon is liable for its non-notification relating to its purchase of all shares of Toshiba Medical Systems and fined Canon CNY 300,000.

Since this is the first time MOFCOM concluded that the completion of the first stage of a transaction, even the control of the target company has not been transferred, is in violation of the AML, there is no doubt this case will have important guiding significance for all the undertakings facing similar situations.

 

  1. What is “gun jumping” under the AML Merger Control Rules?

Gun-jumping, means the acquisition of control of the target company before the approval of the anti-monopoly enforcement agencies (for example, MOFCOM), including using all kinds of methods to influence the…

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