This month, the Antimonopoly Bureau of China’s Ministry of Commerce conditionally approved the merger between Dow and DuPont. It is the first conditional approval decision adopted this year.
At the time of the Chinese approval, the parties had already agreed on remedies with competition authorities in several other jurisdictions, including the European Union and Korea. While these remedies overlap in part with those agreed with the Chinese authorities, the parties had to address specific concerns on the Chinese markets.
In common with the solution accepted in other jurisdictions, the parties committed to divest certain business activities prior to completing their transaction. It is only the fourth time that the Antimonopoly Bureau’s approval has been made conditional on a “fix-it first” divestiture commitment. While there appears to be a growing willingness to adopt solutions that are implemented ahead of completion, there remains no discussion in the public announcement that would indicate a marked preference for this type of remedy.
Also of interest to parties to difficult M&A transactions is the continued reliance by the Antimonopoly Bureau on so-called “behavioural” remedies, under which parties commit to supply their products at reasonable prices and on a non-exclusive basis as a way to address concerns expressed by Chinese customers and distributors. These remedies offer parties more flexibility, although it subjects them to ongoing supervision by the authorities (in this case, five years); they also offer the Antimonopoly Bureau a way to address concerns that are specific to Chinese stakeholders (of note is that the beneficiaries are defined as “Chinese companies whose headquarters are located in China”, and as such do not appear to include competing multinationals operating in China but not headquartered in China).