Several transactions in IP-heavy industries (particularly healthcare and technology) attracted the close scrutiny of Asian competition authorities during the year, leading to several remedies and the abandonment of one transaction.
In the healthcare sector, Japan’s Fair Trade Commission required significant divestitures as a condition for its approval of the Zimmer/Biomet merger. Its counterpart in Korea required divestitures by Bayer in connection with its acquisition of Merck’s consumer care business. Facing significant opposition from the Singaporean competition authority, Medi-Rad abandoned its proposed transaction of Radlink-Asia.
In technology markets, NXP’s acquisition of Freescale was subject to divestiture requirements as a condition for approval in China and Korea, on account of the merged entity’s high market shares. This is also the first transaction where MOFCOM ordered a “fix-it first” remedy, requiring that the divestitures occur prior to closing of the transaction. Another transaction involving technology markets is Nokia’s acquisition of Alcatel-Lucent, which was approved by MOFCOM subject to commitments by Nokia that it license certain standards-essential patents on fair, reasonable and non-discriminatory terms. These terms are similar to those imposed by authorities in China and Taiwan in connection with Microsoft’s acquisition of Nokia’s mobile telephone business in 2014, a transaction that was only cleared in Korea in August of this year, almost one year after it had closed. While the transaction was apparently notified as a merger under applicable Korean rules, the parties had undertaken a restructuring before closing. However, this factor neither prevented the pursuit of an investigation, nor the securing of commitments from Microsoft as regards its licensing practices, after the transaction had closed.
Competition authorities in the region have long had an interest in technology markets and related competition issues involving technology licensing. In October, MOFCOM revised the 2012 conditions it attached to Western Digital’s acquisition of Viviti’s hard disk drive business (Hitachi) and the 2011 conditions imposed in relation to Seagate’s acquisition of Samsung’s hard disk drive business, absolving the parties from some of their commitments on account of changing market circumstances. This followed an earlier decision adopted in the first days of the year, in which MOFCOM released Google from earlier commitments following the sale of its mobile handset business to Lenovo.