King & Wood Report: Collusive Behaviour Amongst Chinese Banks?

Susan Ning, Ding Liang and Jiang Liyong of? King & Wood’s Competition Practice write….

In mid-August, it was reported in the press(1)? that the National Development and Reform Commission (NDRC) had received complaints that the commercial banks in China have engaged in price-fixing conduct. Pursuant to the Anti-Monopoly Law, conduct amounting to price-fixing is prohibited.
The following are some details of what has been alleged:

several commercial banks have come together and agreed to raise various fees and charges to similar amounts (including bill printing fees, small account management fees and inter-bank ATM fees);

it was alleged that this collusive conduct was facilitated by meetings hosted by the China Banking Association between 2005 and 2010.

It remains to be seen if the NDRC will formally launch an investigation into this issue. We note that currently the China Banking Regulatory Commission (CBRC) and the NDRC are putting together rules which would regulate the service fees of commercial banks (entitled ?Interim Measures on the Administration of Service Fees of Commercial Banks) (service fee rules). These service fee rules, once enacted, will no doubt provide clearer guidance in relation to what conduct is permitted, both pursuant to the proposed rules as well as pursuant to the AML.

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http://www.chinalawinsight.com/2010/08/articles/corporate/antitrust-competition/collusive-behaviour-amongst-banks/index.html

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Also here’s another report from them this week

Antitrust & Competition > Regulations on Divesting Assets – Enacted Regulations on Divesting Assets – Enacted

http://www.chinalawinsight.com/2010/08/articles/corporate/antitrust-competition/regulations-on-divesting-assets-enacted/index.html

By Susan Ning, Jiang Liyong and Angie Ng, King & Wood’s Competition Practice

On 5 July 2010, the Ministry of Commerce (MOFCOM) enacted regulations which set out the rules and procedures to do with divesting assets. These regulations are entitled ?Interim Regulations on Implementing the Divestiture of Assets or Businesses in Concentration of Business Operators? (divestiture regulations). A copy of the divestiture regulations are located here.

The following are some salient features of these recently enacted divestiture regulations:
the objective of the regulations are to ensure that any divestiture or assets or business pursuant to the merger control regime is conducted smoothly (Article1);
business operators who are required to divest assets pursuant to the merger control regime (known as ?divestiture obligors?) would have to divest their assets within a time limit stipulated within a merger control decision by MOFCOM (including finding a purchaser and enter into the relevant sales agreements) (Article 3);
divestiture obligors may appoint a ?supervision trustee? and a ?divestiture trustee? to assist in the divestiture process. The former will supervise the divestiture process and the latter would assist with locating a purchaser as well as assist with the actual sale process (Article 4);
supervision trustees and divestiture trustees must
be equipped with the resources and capabilities necessary for conducting trust businesses; and
not possess substantial interests in any of the business operators participating in the merger under scrutiny.
In addition, supervision trustees and divestiture trustees may be the same natural person or legal entity (Article 5); and
purchasers of divested business must satisfy the following requirements;
they must not possess substantial interests in any of the business operators participating in the merger under scrutiny;
they must be equipped with the necessary resources and capabilities and must be willing to maintain and develop the business to be divested; and
the purchase of the business to be divested must not result in eliminating or restricting competition (Article 8).
It is timely that MOFCOM has enacted these divestiture regulations. These regulations provide some sort of structure from which business operators can expect to divest their assets pursuant to a merger control decision issued by MOFCOM. In our view, these regulations are consistent with the divestiture regulations in the more experienced antitrust jurisdictions such as the European Union.
In practice, it is important to work closely with MOFCOM when a business has been told to divest pursuant to a merger control decision. Regular consultations with MOFCOM will ensure that the divestiture process goes smoothly. In our experience, it takes approximately 6 months for a business to find a suitable purchaser for the divested business and to reach the relevant agreements for the sale. It is also noteworthy that MOFCOM has stipulated that divested businesses should be transferred to the purchaser within 3 months after the execution of the sales and other agreements, although this time limit may be extended with MOFCOM?s consent.