In a provocative dispatch yesterday, the Associated Press is reporting that the chief of the Anti-Monopoly Bureau of China’s Ministry of Commerce, Mr. Shang Ming, acknowledged in a news conference that the only companies that have been required to scrap or change merger or acqusition plans under the 2008 Anti-Monopoly Law have been foreign companies.
Regulators have examined 140 cases [of mergers and acquisitions and whether they violated the Anti-Monopoly law] and rejected outright only one, Coca-Cola’s 2008 bid to buy Chinese fruit juice maker Huiyuan, said Shang Ming, chief of the Commerce Ministry’s anti-monopoly bureau. He said five other deals, all involving foreign companies, were passed with conditions such as selling off some assets.
This upsets foreign businesspeople in China, because it has been the abiding suspicion of many of our number since the drafts of the law began circulating in 2006 that the law was aimed squarely at foreign companies. I have been on the somewhat more reserved side of the equation, believing that the history of China demonstrates that what is important is not the law, but how it is enforced.
The frank admission by Mr. Shang that the foreign companies are bearing the brunt of the law tends to support the critics who saw its passage as Protectionism by Another Name. I am not yet convinced.
First, the outright rejection of a single foreign deal does not constitute a trend, and as I have argued elsewhere (“Seven Reasons for the Coke-Huiyuan Epic Fail“) there were enough other miscalculations in Cokes attempt to buy Huiyuan, so it cannot be used as a litmus test. That would, I would suggest, leave us with the five deals that required some rearrangement of assets that would need to be evaluated individually before we can make a call.
Second, Mr. Shang’s contention that
