Competition laws within the region are developing rapidly. Clampdowns on abusive activity are more frequent, while enforcement agencies are communicating more across borders to assist their investigations. There has never been a greater need for investors to strengthen compliance and update on laws across the region


Overview | Australia | China | Hong Kong | India | Indonesia | South Korea | The Philippines

Regional comparison (Competition law)

key points - fixed


Overview | Australia | China | Hong Kong | India | Indonesia | South Korea | The Philippines


There have been a number of important recent developments in Australian competition law. Significant reforms to Australian antitrust rules are imminent and we are seeing increased enforcement action and continued close scrutiny of mergers by the Australian Competition and Consumer Commission (ACCC).

In summary, current trends in competition law in Australia include:

  • Significant pending law reform, which generally broadens the anti-competitive conduct rules in Australia;
  • First prosecutions of criminal cartels;
  • Push for higher fines for antitrust breaches;
  • Continued close scrutiny of mergers;
  • Greater use of market studies.
Kon Stellios, Partner, Allens, Sydney
Kon Stellios
Partner at Allens in Sydney
Tel: +61 2 9230 3897

Pending law reform

In 2014, the federal government commissioned a review of Australia’s competition laws (the Harper Review). The government agreed to implement the majority of the review’s recommendations, and in September 2016 released draft legislation, which was introduced to parliament in March 2017. It is expected that this legislation will be passed imminently.

Key reforms

Misuse of market power. Currently, the law prohibits companies holding a “substantial degree of market power” from taking advantage of that power for the purpose of damaging competitors, preventing new entry or deterring competitive conduct. The proposed amendments will remove the “taking advantage” limb and introduce an “effects” test such that a company with a substantial degree of market power will be prohibited from engaging “in any conduct that has the purpose, or has or is likely to have the effect, of substantially lessening competition”.

Robert Walker Partner at Allens in Melbourne Tel: +61 3 9613 8879 Email:
Robert Walker
Partner at Allens in Melbourne
Tel: +61 3 9613 8879

Concerted practices. A new prohibition against “concerted practices” that have the purpose or effect of substantially lessening competition will be introduced. This is intended to capture a wider range of conduct than the current prohibition, which captures “contracts, arrangements or understandings” that have the purpose or effect of substantially lessening competition. This is likely to have most relevance in the context of information exchanges between actual or potential competitors.

Cartel conduct. The jurisdictional reach of the cartel conduct rules will be clarified. The cartel conduct rules will apply to conduct within Australia or between Australia and places outside of Australia. Certain joint venture arrangements are currently exempt from the cartel laws. It is also proposed that the joint venture exception be narrowed.

Criminal cartel prosecutions

Cartel conduct can constitute a criminal offence under Australian competition law. The criminal prohibitions on cartel conduct were introduced into Australian competition laws in 2009.

Criminal cartel prosecutions are one of the ACCC’s competition priorities for 2017. In 2016, the Commonwealth Director of Public Prosecutions (CDPP) commenced the first criminal cartel proceeding against Nippon Yusen Kabushiki Kaisha (NYK). In that case, NYK pleaded guilty to one charge of engaging in cartel conduct in connection with the transportation of vehicles to Australia between 2009 and 2012.

A sentencing hearing took place on 11 April 2017, and judgment is currently reserved. In 2016, the CDPP also commenced criminal cartel proceedings against Kawasaki Kisen Kaisha.

The ACCC has indicated that several investigations into other alleged criminal cartel conduct are well advanced and more criminal prosecutions are expected in the next few years.

Higher penalties

In Australia, only a court (as opposed to the ACCC) has the power to impose penalties. There is currently a trend towards imposing higher penalties for competition law breaches. The ACCC chairman, Rod Sims, has advocated strongly for higher penalties and the ACCC has been increasingly appealing penalty judgments at first instance. Judicial commentary suggests support from the courts for higher penalties.

H2h AUS Quote

In December 2016, Australia and New Zealand Banking Group (ANZ) and Macquarie Bank settled with the ACCC in relation to attempts to engage in cartel conduct to manipulate the Malaysian ringgit benchmark set in Singapore. As part of the settlement, ANZ agreed to a court imposed penalty of A$9 million (US$6.8 million) and Macquarie to A$6 million. The judge said that while the penalties were within the permissible range, had the matter been litigated he would have ordered higher, “possibly significantly higher”, penalties.

In May 2017, the ACCC appealed a judgment by the Federal Court to impose a penalty of A$9.5 million against Yazaki Corporation for engaging in collusive conduct in relation to the supply of wire harnesses used in the manufacture of motor vehicles. The ACCC had sought penalties between A$42 million and A$55 million to reflect “both the size of Yazaki’s operations and the very serious nature of its collusive conduct”. In announcing the ACCC’s decision to appeal the court’s judgment, the ACCC chairman commented that “if penalties don’t match the serious nature of the conduct, we run the risk that big businesses will simply view the penalties for breaking Australia’s competition laws as no more than a cost of doing business”.

Scrutiny of mergers

The ACCC continues to closely scrutinize mergers. Recent trends in merger reviews include:

Vertical integration. Vertical integration concerns have featured prominently in the ACCC’s recent merger reviews. This has, in part, been driven by a recent increase in the number of infrastructure deals that the ACCC has scrutinised.

Start-up acquisitions. The ACCC has commented publicly that it is interested in the acquisition of start-ups by established players and the impact on competition. There are no minimum turnover or other monetary thresholds for notifying mergers to the ACCC. Unlike other jurisdictions, the ACCC already has the ability to scrutinize acquisitions of start-ups.

Big data. The role of data has started to become an area of inquiry for the ACCC when reviewing mergers. For example, in its assessment of Tabcorp Holdings’ acquisition of Intecq, the ACCC considered the impact of Tabcorp’s control of customer and gaming data, and concluded that it was unlikely that control over this data would lead to a substantial lessening of competition due to both regulatory and competitive constraints.

International co-operation. The ACCC works closely with overseas merger control authorities when assessing international deals. This has been demonstrated most recently by the ACCC’s review of the proposed merger of Dow Chemical Company and DuPont. In that review, the ACCC concluded that its competition concerns were resolved by the global divestments agreed by the parties with the European Commission and found that local divestment undertakings were not required.

Market studies

While the ACCC does not have formal market study powers like those in the UK, it does have some ability to scrutinize markets and request information from market participants. The ACCC has recently initiated a number of market studies and reviews, including into: retail electricity supply and pricing; gas supply and pricing; retailing of new motor vehicles; the communications sector; and the beef and dairy industries.


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Overview | Australia | China | Hong Kong | India | Indonesia | South Korea | The Philippines


China’s Ministry of Commerce (MOFCOM) is increasingly baring its teeth when it comes to failure to notify reportable transactions. As of 2 June 2017, MOFCOM has published seven decisions, four of which were issued in the first half of this year. The number is more than the figure for the whole of 2016, when three decisions were published. There have been 15 published decisions in total since MOFCOM announced in 2014 that it would make such penalty decisions available on its website.

Among the total 20 companies that have been fined in the 15 decisions, 12 were Chinese companies and eight were foreign companies.

The Chinese companies included state-owned enterprises, listed companies and private companies. The industries involved include semiconductors, pharmaceuticals, rail traffic signal systems, games software, auto parts, healthcare check and petrochemicals.

Bao Zhi
Partner at FenXun Partners in Shanghai
Tel: +86 10 6505 4627

The fact that penalties were imposed on both domestic and foreign companies, and covered a variety of industries, indicates that MOFCOM is not targeting the nationalities of the companies, or specific industries. The clear message is that no companies are exempt from merger control enforcement.

Among the 15 penalties, nine related to acquisitions, and six to the establishment of joint ventures.

Regarding joint ventures, unlike under the EU Merger Regulation, where only the establishment of a full function joint venture is notifiable, full-functionality is irrelevant under the China merger control rules. Both the establishment of full-function and non-full-function joint ventures will give rise to a concentration.

Where the establishment of a joint venture is notifiable, the published decisions show that MOFCOM considers obtaining a business licence or certificate of incorporation for the joint venture is in itself implementation of the transaction. Accordingly, doing so without first securing clearance from MOFCOM is a violation of China’s Anti-Monopoly Law (assuming the transaction meets the relevant filing threshold) – even if there are no further steps to establish the joint venture’s commercial presence on the market. So the parties should carefully manage the timeline and make sure that the business licence or certificate of incorporation of the joint venture is not obtained prior to MOFCOM’s clearance.

Recently, there has been more enforcement actions against multi-step mergers. For example, in the OCI/Tokuyama Malaysia merger, OCI planned to acquire 100% shares of the target Tokuyama Malaysia through three steps. On 7 October 2016, OCI completed the first step by acquiring a 16.5% stake in Tokuyama Malaysia, and did not notify MOFCOM.

MOFCOM stated that the three steps were inter-dependent, aiming at helping OCI gain control of Tokuyama Malaysia. Although through the first step OCI did not obtain control of Tokuyama Malaysia, the first step was closely related to the following steps, and all three steps were inseparable parts of OCI’s move to obtain all of the shares of Tokuyama Malaysia; the parties should have notified the transaction prior to the first step.

There are multiple possible ways that MOFCOM may detect a case, including complaints by a third party, self-reporting by the companies, discovery by MOFCOM during the review of another transaction, and discovery from media reports or public sources.

For the cases where MOFCOM had disclosed how they were detected, complaints by third parties and discovery by MOFCOM during the review of another transaction were the two ways seen the most. It is not clear how many of the cases were discovered during the review of another transaction, but four of the 15 published decisions mentioned that the case was initiated as a result of third parties’ complaints to MOFCOM. Self-reporting also occurs frequently. The decisions show that five of the cases were self-reported.

If a case is detected by MOFCOM, the investigation process can be lengthy and burdensome. The investigation normally takes several months, but can take as long as one or even two years.

In recent decisions, the Cummins/Xiangyang Kanghao investigation spanned 18 months, and the Meinian OneHealth/Ciming investigation lasted more than nine months.

The lengthy investigation process may constitute a hurdle for other regulatory approvals. In the Meinian OneHealth/Ciming case, Meinian had to ask the China Securities Regulatory Commission to suspend its review of the proposed acquisition of 72.22% in Ciming until MOFCOM completed its probe into the failure to notify its previous takeover of Ciming’s shareholdings.

The current statutory maximum fine is RMB500,000 (about US$73,650). In extreme circumstances, MOFCOM could also require the parties to unwind the transaction, or offer other remedies, if it considers that the merger is likely to lead to anticompetitive effects in China. In all infringement cases published to date, MOFCOM has imposed financial penalties but has not ordered a transaction to be unwound or imposed other remedies.

Although the maximum RMB500,000 fine would not in itself appear to have a major deterrent effect for large companies against breaching the rules, companies should also take into account the potential damage to their reputation. Since 2014, MOFCOM has adopted such name-and-shame practices by publishing all the penalties for failure-to-notify decisions on its website.

The reputational damage that companies suffer is intensified by media reporting on the penalties, especially for public companies. The reputational damage and potential hurdles in dealing with other regulators constitute substantial risks arising from a failure to notify.

H2h CHN QuoteMOFCOM has noted in a number of decisions that self-reporting and a co-operative attitude during the investigation are considered mitigating factors. Also, in a penalty decision against establishment of a joint venture, MOFCOM indicated that the parties “deliberately ignored” the notifying obligations as the parties did not want to wait for the review process because they planned to put the joint venture into an upcoming bid for a project, and this was considered negatively by MOFCOM.

In the same decision, it seems that MOFCOM also considered recidivism as a factor that could lead to higher fines.

During any investigation, MOFCOM may ask the parties not to implement the transaction further, or to cease commercial operations pending the outcome. It appears from the published decisions to date that MOFCOM has not yet ordered any parties being investigated to suspend operations. That said, this is a matter for MOFCOM’s discretion.

Since 2014, top officials from MOFCOM have signalled a strengthening of its efforts to crack down on failures to notify mergers that meet notification thresholds. The active enforcement trend this year shows that MOFCOM is fulfilling its promise. According to reports, MOFCOM is studying the possibility of imposing tougher penalties on failure to notify. It is not clear whether MOFCOM will follow the European Commission’s model and penalize companies based on their business revenue in the year prior to merger.

The consequences for companies that fail to notify, especially public companies, go beyond the imposition of fines, and intensive enforcement efforts should ring alarm bells for companies. For future mergers and acquisitions, companies should manage risks by engaging antitrust lawyers at an early stage of planning the transaction to conduct a robust evaluation of whether the deal needs to be notified to MOFCOM. If companies do not do this, and find out later that the deal should have been notified, and this was not done, they should engage antitrust attorneys for their advice on whether to self-report the failure to notify to the regulator.

While regulators may have some level of understanding for oversights or honest mistakes, they will not have tolerance for deliberately remaining ignorant of the merger rules.


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Overview | Australia | China | Hong Kong | India | Indonesia | South Korea | The Philippines


After years of discussions, the Hong Kong Competition Ordinance finally came into force in December 2015. The ordinance includes a prohibition on agreements or concerted practices that have as object or effect preventing, restricting or harming competition (the so-called “first conduct rule”). It also includes a prohibition on abuses of a substantial degree of market power that have the object or effect of preventing, restricting or harming competition (the so-called “second conduct rule”). Finally, it prohibits mergers that substantially lessen competition, but its application is limited to the telecoms sector (the so-called “merger rule”). The ordinance applies to conduct having effect in Hong Kong.

The ordinance is enforced by the Hong Kong Competition Commission (HKCC) and, in telecoms matters, the Communications Authority. They have issued comprehensive guidelines regarding the ordinance.

Sébastien Evrard Partner at Gibson Dunn in Hong Kong Tel: +852 2214 3798 Email:
Sébastien Evrard
Partner at Gibson Dunn
in Hong Kong
Tel: +852 2214 3798

The regulators have wide investigative powers, including to obtain a warrant from the Court of First Instance to enter and inspect premises, without prior notice, if it possesses reasonable grounds to suspect that documents of potential relevance to its investigation are located on the premises. The HKCC’s Guideline on Investigations indicates that it will be more likely to conduct unannounced inspections where the practice under investigation is conducted in secret.

The regulators do not have the power to impose sanctions on their own, but need to apply to the Competition Tribunal for that purpose. The tribunal may impose a variety of sanctions, including fines of up to 10% of an undertaking’s total gross revenues generated in Hong Kong for the duration of the contravention (capped at three years). Other possible sanctions include the disqualification of directors. Importantly, there are no criminal sanctions for violations of the ordinance, except for obstructing an investigation.

If the HKCC concludes that any undertakings have violated the prohibition on anti-competitive agreements, but the conduct does not involve serious anti-competitive conduct (this is, essentially, price fixing cartels and bid-rigging), the HKCC must first issue a warning notice to the undertaking concerned, and provide it with a specified period within which to comply with the notice.

For other types of conduct, the HKCC may issue an infringement notice, or directly commence proceedings before the Competition Tribunal. In an infringement notice, the HKCC offers not to bring proceedings in case the undertaking concerned complies with the notice, which may include behavioural commitments and an admission of a violation.

The HKCC has issued a leniency policy, under which the first undertaking to report conduct will benefit from full immunity from any pecuniary penalty. Subsequent applicants may also benefit from reduced penalties, but the extent of the benefits is still unclear.

One of the peculiarities of the ordinance is that it is not possible to bring a private lawsuit (i.e., a “stand-alone action”). The only exception is that any party can raise a competition law defence, for example, in a contractual dispute before the courts. The case may then be transferred to the Competition Tribunal.

By contrast, follow-on claims before the Competition Tribunal will be permissible after there has been a ruling from the tribunal on the legality of the conduct in question (and where a person has suffered loss or damage as a result of the conduct).

The HKCC has described its enforcement priorities in a policy document, and the fight against cartels will be at the top of the list. The HKCC is also expected to take a hard stance against resale price maintenance (RPM), even if the business community has pushed back against the prohibition of RPM during discussions surrounding the drafting of the ordinance. As of the writing of this contribution, the HKCC had started court proceedings in only one case, involving an alleged bid-rigging scheme.


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Hong Kong

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Overview | Australia | China | Hong Kong | India | Indonesia | South Korea | The Philippines


Merger control in India commenced on 1 June 2011. Prior to that, there was no statutory obligation to seek and obtain prior approval in India or to notify any antitrust authority before concluding an M&A transaction. Even after the enactment of the Competition Act, 2002, the entry into effect of the merger control provisions (sections 5 and 6) of the act was delayed because of industry opposition. Notwithstanding the poor conceptualization of the act’s merger control provisions and even poorer drafting, in a little less than six years since the commencement of merger control under the act, the Competition Commission of India (CCI) has rendered orders in respect of more than 400 notified transactions, making the Indian competition authority one of the most active in merger control regulation in the world.

Sections 5 and 6 of the act read with the Competition Commission of India (Procedure in regard to transaction of business relating to combinations) Regulations, 2011 (combination regulations) issued by the CCI, both of which came into effect on 1 June 2011, together constitute the legal framework governing Indian merger control.

Anand S. Pathak Managing Partner at P&A Law Offices in New Delhi Tel: +91 11 4139 3939 Email:
Anand S. Pathak
Managing Partner at
P&A Law Offices in New Delhi
Tel: +91 11 4139 3939

Section 5 prescribes the jurisdictional thresholds (based on assets/turnover of the combining parties) for transactions (referred to as combinations under the act) that must be notified to the CCI prior to implementation. In other words, transactions that satisfy section 5’s jurisdictional thresholds are subject to mandatory notification to, and prior approval of, the CCI under section 6.

A transaction that qualifies as a combination (that is, it meets the section 5 thresholds) cannot be consummated until the CCI grants its approval or the review period of 210 days has lapsed, whichever is earlier.

Section 6 prohibits transactions that cause or are likely to cause an appreciable adverse effect on competition (AAEC) in India, and makes them void. The combination regulations provide important guidance on the procedural aspects, including rules for calculation of assets and turnover for purposes of determining the satisfaction of these thresholds, and the procedure for filing and scrutiny of a notification form. As if these rules were not already sufficiently complex and confusing, the government of India also issues opaque and badly drafted notifications from time to time to supplement the existing Indian merger control rules, ostensibly with a goal to making life easier for transacting parties, but which in reality add to the interpretational uncertainties of the Indian merger control rules.

It is important to note that the CCI’s approval to a notified combination does not provide parties with clearance/immunity from investigation under section 3 (anti-competitive agreements) or section 4 (abuse of dominance) of the act for subsequent violations or in respect of various restrictions that accompany the acquisition, commonly known as ancillary restrictions.

The notification obligation under Indian merger control law is triggered if the combined value of assets or turnover of the parties to the transaction meets the jurisdictional thresholds prescribed under the act and the transaction is not exempt from the filing requirement, whether because of the notifications issued by the government of India or the safe harbours provided by the CCI’s combination regulations.

The Indian merger control jurisdictional thresholds, difficulties in determining whether a particular transaction qualifies for mandatory notification, the absence of guidance from the CCI on these thresholds and the CCI-generated mystery of how these jurisdictional thresholds are to be applied, the entities in the corporate group of the parties whose assets and turnover must be considered, rules for calculating assets and turnover, the levels of control that could trigger a filing, the legal implications of “gun jumping”, the effects of keeping the transaction in suspension until CCI approval, the determination of relevant markets affected by the proposed transaction and whether the safe harbours provide absolute exemptions – all of these aspects make the Indian legal and regulatory framework for merger control unique, requiring guidance from experienced Indian merger control lawyers.

Having a clear understanding of these peculiarities of Indian merger control is crucial for avoiding penalties resulting from any inadvertent non-compliance and for securing the CCI’s approval in a timely manner.

Notifiable transaction

The following types of transactions are covered by Indian merger control law:

  • Acquisition of assets, shares, voting rights or control of an enterprise;
  • Acquisition of control over an enterprise, where the acquirer already has direct or indirect control over an enterprise engaged in the production, distribution, trading or provision of similar or identical or substitutable goods or services; and
  • Merger or amalgamation.

For acquisition transactions, the obligation to notify the transaction has been imposed on the acquirer. In mergers and amalgamations, all parties to the combination are required to file the notification jointly.

When to notify

Until recently, the Indian merger control regime provided for notification of a combination to the CCI either within 30 calendar days of the execution of a definitive agreement or any other document conveying or evidencing the decision to acquire, or within 30 calendar days of the approval (of the proposed merger and/or amalgamation) given by the board of directors of the company.

However, through a recent notification, dated 29 June 2017, the Government of India has eliminated the 30-day filing deadline. By this notification, the government has sought to streamline the Indian merger control rules.

In the context of global transactions that have an India element, where the combined value of the assets or turnover of the parties to the transaction satisfies the jurisdictional thresholds prescribed under section 5 of the act, the execution of the global transactional document would trigger the notification obligation. For transactions structured as acquisitions, the global transaction agreement or the public announcement of the global transaction to the Indian stock exchanges (under the applicable laws) would be treated as the trigger document. Similarly, for mergers or amalgamations, the board resolution approving the global merger could be treated as the trigger document.

Failure to notify

Failure to notify a notifiable transaction or consummating a notifiable transaction prior to the earlier of obtaining the CCI’s approval or expiry of the 210-day period, could attract a penalty extending up to 1% of the combined assets, or turnover, whichever is higher, of the parties to the transaction. In addition, the CCI is also empowered to declare the combination void.

The CCI has regularly imposed penalties for non-compliance with the notification obligation. Since the CCI’s consideration of mitigating factors depends on the specific facts of each case and the discretion of the CCI, mitigating factors considered by the CCI in one case may well be disregarded by the CCI in another case.

Fortunately, the 30-day timeline to notify a combination has now been removed. This comes as a major relief for the transacting parties as they have been penalized in the past for failing to notify a notifiable transaction within the stipulated deadline.

H2h India Quote 1

Jurisdictional thresholds

Under the Indian merger control regime, a filing requirement is triggered (subject to the applicable exemptions and safe harbours) where the thresholds based on the value of assets or turnover of the parties to a transaction are met. It should be noted that the entities that are relevant for purposes of threshold calculations depend upon the nature and structure of the transaction. If either the parties test or the group test is met, the transaction would qualify as a combination and the CCI must be notified.

However, if the transaction is able to avail the benefit of the de minimis exemption applicable to transactions involving relatively small targets, or the failing banks’ exemption, or the combination falls within the category of combinations ordinarily not likely to cause AAEC in India (ordinarily exempt transactions), then such a combination would not be subject to the act’s notification requirement.

Exemptions to notify

Both the government of India and the CCI have granted exemptions from the act’s notification requirement for combinations. While the government has notified the de minimis exemption and the failing banks’ exemption, the CCI has created the ordinarily exempt transactions categories, each of which have been discussed below. Whereas the government-granted exemptions have a stronger foundation based on the provisions of the act itself, the safe harbours created by the combination regulations have a weaker basis and merely represent the CCI’s views that certain kinds of transactions ordinarily are not likely to cause AAEC in India and, therefore, need not be notified; however, if a transaction falling within the ordinarily exempt transactions nevertheless raises competitive concerns, the transaction would still need to be notified to the CCI.

The safe harbours provided by the ordinarily exempt transactions categories are, therefore, not an absolute safe harbour (unlike the de minimis exemption and the failing banks’ exemption), and the onus is on the parties to a transaction categories to carefully assess if the transaction must be notified to the CCI under the act. Unfortunately, there are no objective bright line tests or guidelines provided by the CCI in this regard, and the CCI’s decisional practice is also of limited assistance.

Ultimately, whether or not a transaction should be notified under the act must be tested having regard to the ‘anti-avoidance rule’, which provides that the notification requirement must be assessed based on the substance of the transaction, and not on its formal presentation to the CCI, or as captured formally in an agreement. Stated differently, any transaction structure that has the effect of circumventing the filing obligation in respect of a transaction that would otherwise be subject to the notification requirement of the act, will be disregarded by the CCI. This again puts the onus of whether or not a transaction must be notified under the act squarely on the parties to the transaction.

The CCI makes it clear that where a proposed combination consists of a number of inter-connected transactions, all such transactions must be filed as a composite whole if even one such transaction satisfies the thresholds of section 5, even if one or more of these transactions, on a standalone basis, would have been exempt from the notification requirement, or not meet the section 5 jurisdictional thresholds.

Notification procedures

Parties have an option to informally consult CCI officials prior to notifying a transaction, in order to determine the nature of information required or the identification of the appropriate form to file the notification, or discuss the notifiability of the transaction. However, such consultations are oral, informal and non-binding.

The combining parties are required to suspend the closing/consummation of the transaction until the receipt of approval from the CCI, or the expiration of 210 calendar days from the date of notification, whichever is earlier. The CCI’s review may involve the following two steps, depending on the nature and complexity of the notified combinations:

  • Phase I Review. Upon receipt of a notification, the combination regulations provide the CCI a self-imposed time limit of 30 working days within which the CCI is required to provide the parties its prima facie opinion on whether the combination is likely to cause an AAEC in India.
  • Phase II Review. If at any time during the course of the phase I review, the CCI forms a prima facie opinion that the combination causes or is likely to cause an AAEC, a detailed investigation follows until the CCI approves/modifies/rejects the combination, or the statutory deadline of 210 days expires.

Generally, information provided to the CCI is open to the general public. However, the notifying party may request the CCI to keep certain information and documents confidential, provided the request is made in writing and is accompanied by detailed reasons for claiming confidentiality. The CCI normally grants confidentiality for the entire duration of the review and for a period of three years following the CCI decision.

Key concepts

Acquisition of “control” is one of the triggering events that may lead to notification of a combination. Explanation (a) to section 5 of the act defines “control” to include “controlling the affairs or management by (i) one or more enterprises, either jointly or singly, over another enterprise or group; (ii) one or more groups, either jointly or singly, over another group or enterprise”. The CCI has interpreted “control” to mean “the ability to exercise decisive influence over the management or affairs and strategic commercial decisions” of a target enterprise, whether such decisive influence is capable of being exercised by way of a majority shareholding or through contractual arrangements vis-à-vis shareholders.

The term “control” also includes “joint control”. The act does not define the term “joint control”. The combination regulations provide that if two or more persons jointly control the strategic commercial operations of the enterprise, then such enterprise will be said to be under joint control. The CCI has not provided any bright-line rule to determine control or joint control, and has made a finding of joint control on a case-by-case basis.

H2h India Quote 2

The acquisition of control includes a change from joint control to sole control. It is notable that mere minority protection rights, such as special resolution rights under the Indian Companies Act, will not confer joint control; joint control will arise only if the rights conferred by agreement on a party rise beyond the level of special resolution rights/minority protection rights and give such party approval/veto rights over strategic commercial decisions. Whether or not joint control arises in the context of a transaction will depend on a careful appreciation of the veto/approval rights conferred by the agreement on a party, and will require a fact-intensive inquiry. The CCI’s decision in Sony [C-2012/06/63] provides helpful guidance on when certain incidents of influence rise to the level of joint control. The rules here are similar to those in effect under EC Merger Control.

Indian merger control law recognizes the acquisition of minority shareholding/voting rights solely as an investment or in the ordinary course of business (not leading to acquisition of control) as an ordinarily exempt transaction. The meaning and import of the term “solely as an investment” was further clarified by the CCI in a recent amendment where the CCI has attempted to inject some objectivity. Specifically, any acquisition of less than 10% equity share capital, or voting rights of a target company, would be deemed to be “[treated] … solely as an investment” provided that: (a) the acquirer does not acquire any special rights and would have the ability to exercise only such rights that are exercisable by the ordinary shareholders of the target enterprise to the extent of their respective shareholding; and (b) the acquirer is not a member of the board of directors of the target enterprise and does not have the right or intention to nominate a director on the board of directors of the target enterprise, and does not intend to participate in the affairs or management of the target enterprise.

Merger review

Section 6(1) of the act prohibits any combination that causes or is likely to cause an AAEC in India. Therefore, the legal standard for merger review requires a competition assessment in the context of a relevant market and identification of the relevant market becomes the first step in the review process.

H2h India Quote 3The CCI has adopted a pragmatic approach to market definition and has left the market definition (in terms of product and geographic scope) open in most of the cases where the notified combination does not raise competitive concerns. For identifying the relevant market, the CCI considers the nature of the product, its characteristics, demand side substitutability and supply side substitutability. In relation to the geographic scope of the market, the CCI has considered localized markets to assess the impact of the notified combination in the smallest possible market, but in most cases, the CCI has considered a pan-India market.

The framework for determining whether the notified combination is likely to cause AAEC in the relevant market in India is provided under section 20(4) of the act. The CCI has largely focused on the following factors:

  • With respect to horizontal overlaps, the CCI frequently focuses on the individual and the combined market shares (of the parties to the proposed transaction), the incremental market shares, structure of the relevant market, level of competition remaining post-combination, combinations resulting in acquisition of a potential competitor, or elimination of a maverick player. The CCI also considers countervailing buyer power to assess the competitive effects of a proposed combination.
  • With respect to vertical relationships, the CCI reviews the extent to which the parties to the proposed combination are vertically integrated, that is, whether the vertical relationship of the combining parties would result in market foreclosure with either suppliers being unable to launch or maintain the supply of products/services in the market, or consumers being unable to procure the relevant products/services of other suppliers.

The CCI generally considers efficiency enhancement arguments on a transaction- specific basis, but only if they are credible and verifiable. Based on the author’s experience with the CCI relating to notifications of investments by private equity firms, the CCI often requires notifying parties to submit information on the entire spectrum of portfolio investments made by such private equity firms to determine the potential horizontal overlaps and vertical relationships.


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Eighteen years after the enactment of Indonesia’s first competition law, i.e., Law No. 5 of 1999 regarding the Prohibition of Monopolistic Practices and Unfair Business Competition, a new competition law draft bill has finally been reported out of committee and designated by Indonesia’s House of Representatives as a house-initiated draft law. The draft bill will have to be formally approved by both the government and the house of representatives before it can be passed as law. The law is expected to be issued at the end of the year.

The draft bill contains amendments in the following significant areas:

Astrid Emmeline Kohar Partner at MKK LAw Firm Email:
Astrid Emmeline Kohar
Attorney at MKK Office

Definition of “business person”. Under the draft bill, the definition of “business person” has been expanded to include individuals and enterprises established and domiciled or conducting activities outside Indonesia that have an impact on the Indonesian economy. The existing law arguably only covered business persons established and domiciled or conducting activities within Indonesia, although in some cases the Indonesia Commission for the Supervision of Business Competition (Komisi Pengawas Persaingan Usaha, or KPPU) has occasionally used the “single economic entity” principle to capture the conduct of offshore enterprises. This amendment will also confirm the position that the merger/acquisition (M&A) filing obligation applies to an offshore merger that has an impact on the Indonesian market.

Merger control procedure. Under current law, only a post-notification is required for a merger, consolidation or acquisition of shares exceeding a certain threshold set out by the KPPU. The present post-notification requirement gives rise to the risk of cancellation of a transaction that has already become effective, if it is later found to be non-competitive.

Ananda Aviati Partner at MKK Law Firm Email:
Ananda Aviati
Attorney at MKK Office

The amendments modify the mandatory reporting requirements to become a compulsory pre-approval, which must be obtained prior to a transaction becoming effective. In addition to a merger, consolidation or acquisition of shares, the prior notification will also apply to an acquisition of assets and formation of a new joint venture, terms of which are not easily defined and remain to be developed in implementing regulations.

Categories of Violations. The draft bill contains the same categories of violations (restricted agreements, restricted conduct and abuse of dominant position), but amends and provides that: (i) vertical integration, which is currently placed under the restricted agreement category, will become restricted conduct; and (ii) conspiracy, which is at present placed under the restricted conduct category, will become a restricted agreement. There are also a number of changes to amend the legal standard to be applied to: (i) conspiracy, which will be shifted from using the rule of reason to a per se approach; and (ii) majority share ownership in two or more companies, which will be shifted from the per se standard to the rule of reason basis.

H2h Indonesia Quote 1Sanctions. The existing law contains a generalized set of administrative sanctions for all types of non-compliance, including an order to cease illegal activities and fines ranging from IDR1 billion (US$75,000) to IDR25 billion rupiah. The draft amendments stipulate administrative sanctions for each specific group of infringements.

The new administrative sanctions in the draft bill, however, appear to be more stringent, as evident from the establishment of: (i) a financial fine that ranges from 5% to 30% of the business person’s sales value during the period of non-compliance; (ii) the possibility of a recommendation for business licence revocation; and (iii) a published black list of the business persons in violation.

Leniency. The draft amendments also introduce the possibility of leniency (and/or reduction to sanctions), which may be granted by the KPPU to a business person who admits and/or reports conduct that violates the competition law. The leniency programme covers a number of anti-competitive agreements and practices, namely oligopoly, price fixing, predatory pricing, market allocation, boycott, cartel, trust, oligopsony, an anti-competitive agreement with an offshore party, and conspiracy.

A leniency programme is commonly used in countries with more developed competition law systems as an incentive for individuals or enterprises involved in a cartel to become whistle-blowers. These individuals or enterprises are offered to voluntarily self-report or hand over evidence (as cartel agreements are generally conducted in secret and thus, are difficult to prove) and in return they would be granted an immunity or reduction of fines. Under the draft bill, however, the application of the leniency programme in Indonesia will not be limited to cartels.

H2h Indonesia Quote 2

No exemption to intellectual property rights and franchise. Intellectual property rights and franchise agreements, which are currently exempted from the application of Competition Law No. 5/1999, will be removed from the exception list in the draft bill. Following the promulgation of the draft bill, all agreements including those containing intellectual property rights and franchise arrangements will be subject to the competition law regime.

KPPU regulatory authority. The draft amendments clarify certain ambiguities about the status of the KPPU, including to confirm that its employees are government employees. Significantly, it also authorizes the KPPU to seek injunctions to stop certain activities on an interim basis, and to seek the assistance of the police if necessary. At present, the KPPU only has the authority to impose fines and issue remedial orders in its final decision.

Abuse of bargaining position. The draft amendments have a new provision in relating to abuse of superior bargaining power in a “partnership agreement”, terminology which refers to the “partnership” formed when large enterprises attempt to assist small and medium-sized enterprises as described in the 2008 Law on Small and Medium Enterprises. It is unclear from the text whether this provision is limited to “partnerships” registered under the 2008 law, or whether it may be applied across the board to any form of contract between two business enterprises.


14th Floor WTC 6 (formerly, Wisma Metropolitan II)

Kav. 31 Jl. Jend. Sudirman,

Jakarta 12920 Indonesia

P.O. Box 2844 Jakarta 10001

Tel: + 62 21 571 1130;


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Overview | Australia | China | Hong Kong | India | Indonesia | South Korea | The Philippines


With the election of President Moon Jae-in and his assumption of office on 10 May 2017, the new administration of the South Korean government has gained fresh momentum with regard to its agendas concerning antitrust and fair trade regulation, as reforming the existing conglomerate (chaebol) structure was a highlight of President Moon’s promises in his successful presidential campaign.

The policy of the new administration is to improve corporate governance structures and strengthen penalties and sanctions for unfair trade practices and corporate crimes, through enactingnew laws and revising existing regulations on corporate groups. So the government’s efforts and policies to reform conglomerates and corporate groups under the Monopoly Regulation and Fair Trade Act, South Korea’s principal law governing antitrust and fair trade regulation, are subjects of great attention, and discussions abound on the next direction of South Korea’s antitrust regime, as well as what corporate actions or reforms will be necessary to respond to the latest developments in the regime.

Paul Choi Ji-hoon Foreign Legal Counsel at Barun Law in Seoul Tel: +82 2 3479 5711 Email:
Paul Choi Ji-hoon
Foreign Legal Counsel at
Barun Law in Seoul
Tel: +82 2 3479 5711

Corporate groups

Some of the main policies relating to antitrust regulation of corporate groups that are expected to be prioritized by the government include: reviving a dedicated investigative department within the Korea Fair Trade Commission (KFTC) focusing on oversight of corporate groups; heightening thresholds for imposition of administrative fines under the fair trade act, such as administrative fines imposed under the Act on Fair Transactions in Large Franchise and Retail Business; installation of a special oversight committee for large corporations, with emphasis on overseeing monitoring actions such as forced reduction of prices for suppliers, misappropriation of technology, illicit internal transactions, etc.; expansion of the applicability of punitive damages to violations arising under statutes such as the Act on Fair Transactions in Subcontracting; bolstering regulations preventing owners of large corporations and their family members from fraudulently obtaining personal gains from the corporation; and allowing criminal accusations from private individuals to initiate prosecutions of antitrust or fair trade violations (which currently requires the criminal accusations to be filed by the KFTC).

H2h SK Quote 1

It is expected that the implementation of the above-mentioned policies would require only an amendment of the relevant enforcement decrees. Also, if a special oversight committee for large corporations is installed, such a committee is likely to focus heavily on monitoring and preventing illicit actions of owners of large corporations or corporate groups.

Societal consensus

Furthermore, convinced that there is a societal consensus on the need to curb illicit transactions and dealings by corporate owners and their family members for their own gain, the KFTC announced, in January 2017, that it would enact new guidelines for prevention of illicit actions of owners of corporations and their family members, to set up clear guidelines for regulatory actions against the same.

This calls for corporations operating in South Korea to gain knowledge of the direction of upcoming regulatory changes, particularly since the above-mentioned guideline provides for stricter controls on intra-group support as potential unfair trade practice.

First, corporations may need to consider adjusting the ownership ratio of interested persons in the entity, providing the support to fall below the following threshold and thereby decreasing the potential application of the new guidelines. The current relevant threshold under the fair trade act and its enforcement decree is 30%, or a higher percentage of ownership in an affiliate by a specially interested person for listed corporations (20% for non-listed corporations).

More transparency

Furthermore, the process of transacting with an affiliate should be made more transparent, such as allowing non-affiliate, third-party companies to contend with the affiliate company in a tender offer process to make the transaction more at arm’s length. Even if a tender offer or competition with non-affiliates is not feasible, the terms of the transaction should be that which may be deemed as arm’s-length terms – price, interest, etc. – by the KFTC.

H2h SK Quote 2If the terms of the transaction with an affiliate must differ from that which would be normally negotiated and agreed with a non-affiliate at arm’s length, it would be necessary to meticulously document the grounds why such differential (often preferential) treatment of an affiliate is necessary, as well as leaving a paper trail of all stages of negotiation with the affiliate, so that it may be proved that negotiations were duly conducted in determining the terms of the transaction with an affiliate.

Despite the above-mentioned, however, it is worth noting that other risks may arise even if the process of negotiation was well documented, and if the transaction is of a substantial volume or amount, as it can lead to allegations of undue support, or even the unlawful tunnelling of benefits or profits.

Case law developments

Finally, in addition to keeping abreast of the regulatory changes at the KFTC level, it would also be necessary to pay close attention to the development of case law in the courts with respect to the above-mentioned regulations on illicit or unfair transactions of a corporate group, as the courts may develop their own standards or tests based on the legislative intent of the relevant laws and regulations.


Barun Law Building, 92 gil 7,


Seoul 135-846

South Korea

Tel: +82 2 3476 5599


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Overview | Australia | China | Hong Kong | India | Indonesia | South Korea | The Philippines


Prior to the effectivity of the Philippine Competition Act (PCA), competition-related laws in the Philippines were widely fragmented. Enforcement of competition laws was assigned to various government agencies and sector regulators. This resulted in an unfocused and ineffective approach in addressing anti-competitive behaviour.

The PCA, which took effect in August 2015, is the country’s first comprehensive antitrust framework after almost three decades of attempts in congress. It contains broad prohibitions on anti-competitive agreements, abuse of a dominant position, and anti-competitive mergers and acquisitions (M&A). It also creates a new quasi-judicial administrative agency, the Philippine Competition Commission (PCC), with primary and original jurisdiction over all matters related to competition, and armed with extensive powers to investigate, issue injunctions, require divestment and disgorgement of excess profits, and impose penalties on companies violating the PCA.

Christina Macasaet Acaban Partner at Quisumbing Torres in Manila Email:
Christina Macasaet Acaban
Partner at Quisumbing Torres
in Manila

The previous year has seen the PCC, which was established in February 2016, took great strides in carrying out its mandate by issuing the Implementing Rules and Regulations of the PCA in June 2016, working with the National Economic Development Authority in formulating the National Competition Policy, and helping to create a legal and regulatory landscape that enhances competition in the business sector.

Merger clearance

Among the three pillars of competition in the PCA, the PCC has so far focused most of its efforts on merger clearance. This is largely due to the two-year moratorium on the imposition of penalties for anti-competitive agreements and abuse of dominance under the PCA, which does not cover merger clearance.

Under the PCA, M&A that would substantially prevent, restrict or lessen competition in the relevant market are prohibited. In addition, the PCA requires parties to any M&A with a transaction value exceeding 1 billion pesos (about US$20 million) to notify the PCC of the transaction, and prohibits them from consummating the same prior to clearance by the PCC or expiration of the relevant waiting period.

Alain Charles J. Veloso Partner at Quisumbing Torres in Manila Email:
Alain Charles J. Veloso
Partner at Quisumbing Torres
in Manila

To allay uncertainties in connection with M&A that took place after the effectivity of the PCA but prior to its implementing rules, the PCC issued circulars to deal with M&A during this period.

Regrettably, the lack of clarity in the language of the transitory circulars on the PCC’s power to review M&A during the effectivity of such circulars has caused some confusion, and sparked a controversial dispute between the PCC and the two major telecoms players in the Philippines: PLDT and Globe Telecoms. To date, the dispute is still pending in court.

Currently, the PCA’s implementing rules contain detailed provisions on merger clearance requirements, including how to determine the 1 billion pesos threshold that will trigger mandatory notification, and the timing and process for notification.

Despite these detailed provisions, challenges persist:

  • There is a widespread consensus in the business community that the pesos threshold is too low.
  • As the threshold is generally based on the target’s gross assets or revenues, there are views that the PCC has not considered the market in retaining this threshold. Some businesses have noted that the low threshold would capture M&A involving, by way of example, a floor in a major commercial building.
  • While the PCC has acknowledged these concerns, it announced earlier this year that it would retain the threshold, as the same is comparable with those in economies of comparable size, such as Colombia and South Africa.
  • The information required in the notification form is too detailed and may entail considerable time and effort to complete, particularly for multinational companies. For example, the notification form requires information on all the entities directly and indirectly controlled by the filing ultimate parent entity (UPE) of each party (notifying group), and any horizontal and vertical relationships between any of the entities within the notifying group of either party.
  • The requirements under the PCA’s implementing rules for a binding preliminary agreement prior to filing of a notification, and the prohibition against the signing of definitive agreements prior to the filing of the notification, result in several practical issues for parties. The PCC has issued clarification notes in light of queries that it has received from notifying parties, but the same fail to address the concerns raised by businesses. For instance, until the definitive agreement is signed, parties are not bound by the transaction, and it is not commercially sound to file a notification on the basis of a draft agreement. In addition, until the definitive agreement is signed, a transaction is generally confidential. For listed companies, this gives rise to the risk of leakage of sensitive insider information because public disclosure is generally made only upon signing of the definitive agreements.
  • The notification timelines and process for tender offer transactions do not consider the tender offer timelines and process under the Securities Regulation Code. Such a misalignment may have serious implications on the parties and the transaction.
    While the PCC has boasted that it has been able to complete its review of all covered transactions within the relevant waiting periods, this does not reflect the period within which the parties complete the submission to the satisfaction of the PCC, and the impact of the entire process on the transaction.
  • In a recent forum organized by the Presidential Assistant for Rehabilitation and Recovery (PaRR) and Quisumbing Torres, a number of suggestions have been raised to streamline the merger clearance regime of the PCC.
  • If the 1 billion pesos threshold will not be increased, the PCC should consider providing a fast-tracked route for clearing filings that may not give rise to competition issues.
  • The PCC may consider organizing review teams around certain industries to expedite review and to allow them to build a database of information that would minimize the need for notifying parties to submit detailed information to the PCC.
  • Allow the parties to submit a notification on the basis of a signed definitive agreement. This should not give rise to any competition concerns as long as the parties do not implement the agreement prior to obtaining the PCC’s approval.

In the midst of existing challenges in the merger clearance process, and coming to the end of a two-year moratorium period in August 2017, the PCC and businesses will start to focus on the enforcement of the provisions on anti-competitive agreements and abuse of dominance.

Questions are being raised as to how the PCA will regulate anti-competitive agreements, considering that, to date, the PCC has yet to come up with more detailed rules and guidelines.

For instance, while the anti-competitive horizontal agreements under the PCA are similar to the prohibited cartel conduct in other jurisdictions, production control agreements and market sharing agreements are not considered as “per se prohibited”. This appears to provide room to argue that production control agreements and market sharing agreements may not be, in some cases, anti-competitive by object or effect.

The broad definition of an “agreement” under the PCA, which includes “concerted action”, may be viewed as covering information exchange and price signalling as a form of anti-competitive agreement.

If so, it is not clear whether concerted action would be punished as a cartel, and subject to criminal penalties, or as among those that fall under the general prohibition against anti-competitive agreements, and subject only to administrative and civil liabilities.

Neither the PCA nor its implementing rules clarify to what extent the same may cover vertical restraints, such as resale price maintenance, non-compete and exclusivity clauses, outside of an abuse of dominance scenario. Considering how certain vertical restraints may have competitive effects and are not uncommon in commercial agreements, this lack of clarity is causing discomfort for businesses.

The PCA’s provisions on abuse of dominance contains broad exceptions for “permissible franchising, licensing, exclusive merchandising, or exclusive distributorship agreements”.

However, neither the PCA nor its implementing rules provide any clear standards to determine when restraints involving a dominant entity may be legitimate, and when conduct is abusive under the same circumstances.

There is also a challenge in delineating the jurisdiction of the PCC vis-à-vis other sector regulators. While the PCA grants the PCC primary and original jurisdiction over all matters related to competition, it did not expressly repeal the competition-related mandates of other sector regulators. Having several regulators review competition-related issues may give rise to inconsistency in policy and enforcement. To address this challenge, the PCC is deepening its relations with key sector regulators through memoranda of agreement, to ensure co-operation, information sharing and policy coherence.

Despite the challenges, the PCC has an opportunity to implement the PCA credibly and effectively. The PCA was envisioned to be a game changer in addressing the challenge of making the Philippines’ economic growth inclusive, and in alleviating poverty and inequitable wealth distribution. However, the PCC will need resources and capacity to fight powerful and well-entrenched oligopolies in the Philippines, while ensuring that its efforts do not deter investment and hinder economic activities.


12th Floor, Net One Centre

26th Street corner 3rd Avenue

Crescent Park West, Bonifacio

Global City, Taguig City,

Philippines 1634

Tel: +63 2 819 4700

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