Vetting of M&A deals to get a speed boost

International corporations seeking to expand their presence in China through mergers and acquisitions (M&A) may benefit from speedier anti-trust vetting of merger plans next year.

"As foreign investors increasingly use merger and acquisition transactions to further expand their Chinese business operations, the application and approval process for business operators will be more simplified and transparent," said Wang Xiaoye, a professor of anti-monopoly law at the Chinese Academy of Social Sciences.

The Ministry of Commerce has announced that in the coming year it will speed up the process of mergers and acquisitions reviews to handle the growing number of applications.

The ministry received 194 applications for both domestic and cross-border mergers and acquisitions between January and the middle of December, up 43 percent compared with the previous year. Nearly two-thirds of the cases involved manufacturers.

The ministry completed 160 cases, and 94 percent were approved, said Shang Ming, head of the ministry's anti-trust bureau.

Applications approved included one by Nestle to buy the Singapore-listed Chinese candy maker Hsu Fu Chi and one by Yum Brands to take over Little Sheep, a Chinese hot pot restaurant chain.

The number of completed cases was 40 percent higher than a year earlier and double that of 2009.

The continuing stagnant global economy had slowed organic business expansion and pushed business operators to boost sales through mergers and acquisitions, Shang said.

"Given the rapid increase in mergers and acquisitions cases this year, we are studying how to improve our methods and work efficiency next year to shorten the time for procedures."

He rejected criticism that China uses its anti-trust law to block the expansion of foreign and private firms.

In 2008 the ministry's rejection of Coca-Cola's proposed acquisition of the local fruit juice maker Huiyuan for $2.5 billion (1.9 billion euros) drew sharp criticism from overseas. It was claimed China was using a newly introduced anti-monopoly law, which came into force shortly before the Coca-Cola bid, to protect its industries.

"We treat all types of firms equally and fairly in implementing the anti-trust law, whether it is a State-owned enterprise, a private company or a foreign firm," Shang said.

Under China's anti-trust law, companies with annual revenue of more than 10 billion yuan ($1.58 billion, 1.2 billion euros) globally and 400 million yuan in China have to obtain government approval for takeovers.