News Roundup

Summarized below are a number of AML news items from the past 6 weeks or so. The most significant is today’s announcement of the first administrative monopoly case concluded by the SAIC. But in the long term the merger cases described below will may indicate the attitude of the Chinese authorities to the acquisition of well-known Chinese retail brands. Ever since the failed acquisition of Huiyuan Juice by Coca Cola in 2009 there has been considerable discussion of this point.

1. SAIC’s First Administrative Monopoly Case

Today the State Administration for Industry and Commerce posted on its web site a description of its first case under Chapter 5 of the AML regarding the abuse of administrative power:

Report (in Chinese):

It was undertaken by it Guangdong Provincial office in response to the decision of an unnamed city in Guangdong province to require the use of the GPS service of a private company, 新时空导航科技有限公司(New Horizon Navigation Technology Company web site: )  to monitor hazardous goods transportation. When competitors complained the Guangdong AIC investigated and concluded that the specific administrative order constituted an abuse under the AML. The provincial AIC sought the guidance of the SAIC (the national body) and then the provincial body made a recommendation to the Government of Guangdong Province to correct the abuse. On June 12 the Provincial Government ruled that the order violated Articles 8 and 32 of the AML as well as provisions of the Road Transportation Safety Law and cancelled the orders.

2. Nestlé Seeks Approval to Buy Hsu Fu Chi

After it became known this month that Nestlé Sa and China’s second largest candy maker,  东莞徐记食品有限公司  (Hsu Fu Chi Foods Ltd.) based in Dongguan City, Guangdong Province were in talks regard an acquisition, a deal was formally announced on July 11, 2011.

WSJ (Subscription Required):

On July 15, 2011 the Ministry of Commerce AML unit announced that the notification materials had been submitted and that the review process has started.

News Report (in Chinese): ; (in English):

Although based in Dongguan, the company was founded in 1992 by a Taiwanese family (as the spelling of its name in English suggests) and is listed publicly in Singapore.

3. Yum! Seeks Approval to Buy Little Sheep

On July 15, 2011 the Ministry of Commerce received notification regarding the proposed purchase of the内蒙古小肥羊餐饮连锁有限公司 (Inner Mongolia Little Shee Catering China Co., Ltd.) the franchisor of a chain of hotpot restaurants, by Yum! Brands Inc.

News Report (In Chinese):


Since 2009 Yum! Has owned a 20% equity position in Little Sheep. Little Sheep was founded in 1999 and has become one of China’s most successful restaurant chains and franchise systems. It had started to expand overseas but found it more difficult than expected. Little Sheep is publically listed in Hong Kong.

4. Diageo Obtains Approval to Purchase Shuijingfang Baijiu

On June 27, 2011 Daigeo PLC announced that its acquisition of baijiu maker四川水井坊股份有限公司(Sichuan Shuijingfang Share Co. Ltd. – also known as “Sichuan Swellfun Co. Ltd.”) had been approved by MOFCOM some 14 months after it was first announced.

WSJ (subscription required):

Company web site: ;

Diageo press release:

Baijiu is a white spirit distilled from sorghum, although other grains can be used. The best know brand in the West is probably “MAOTAI” as it was presented to Richard Nixon when he re-opened relations with China during his visit in 1972. Shuijingfang ranked fifth in the market with a 10% share. Still is considered by many to be a famous brand and the term “Shuijing” dates back to the 14th Century and is now protected as an indication of geographical origin.

5. China, the DOJ and FTC sign an MOU

On July 27th in Beijing the DOJ, FTC and the three official Chinese enforcement authorities, the NDRC, MOFCOM and SAIC signed a memorandum of understanding on cooperation in a number of areas, including enforcement.


DOJ: ;

NDRC (in Chinese):

WSJ (subscription required):


6. MIIT Issues Draft Guidance on Competition Among Telecom Providers on College Campuses

The Ministry of Industry and Information Technology (工业和信息化部) also known as “MIIT” (工信部) issued a guidance on June 30, 2011 regarding competition between telecom providers on college and university campuses. Exclusive agreements with school authorities are among the items prohibited.

Guidance (In Chinese):

Commentary (in English):

Although MIIT Is not officially one of the AML Enforcement Authorities Article 3 of the AML and Telecommunication Regulations  (中华人民共和国电信条例) authorize such supervision. Since the Tencent – Qihoo dispute erupted last Fall they have been trying to play a more active role with respect to the AML.

7. Organizational Re-Alignments

On June 15, 2011 the Ministry of Commerce held a press conference at which it advised that the State Council has officially approved the establishment of the Office of the Anti-Monopoly Committee (of all enforcers) within its Anti-Monopoly Bureau.

News Report (in Chinese):

Commentary (in English):

Last week there were reports that the NDRC Price Supervision and Inspection Bureau was renamed the “Price Supervision and Anti-Monopoly Bureau” (价格监督检查与反垄断局).

News Report (in Chinese):

Commentary: (in English):

However as of today the old name still remains on the web site:

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