March 5, 2021

Volume XI, Number 64


March 05, 2021

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China and Japan | Competition Currents January 2021


On Dec. 14, 2020, the State Administration for Market Regulation (SAMR), China’s antitrust regulator, imposed fines against three of the country’s largest technology companies for failing to submit for merger control review acquisitions of smaller companies. The fined companies are Alibaba Investment Limited, China Literature Limited, an affiliate of Tencent, and Shenzhen Hive-box Network Technology, an affiliate of the logistics company SF Express. 

Based on information released by SAMR, the penalized transactions all involved variable interest entity (VIE) structures, which are frequently used to facilitate foreign financing of Chinese businesses in industries where foreign equity is legally prohibited or restricted under the Chinese foreign investment regime. Under the VIE structure, a foreign “parent” company does not actually own any shares in its Chinese subsidiary, but rather controls the subsidiary through a series of contractual arrangements. In the past, there existed significant uncertainty as to whether businesses utilizing the VIE structure were required to undergo merger control review given the ambiguities involved with respect to the structure’s legality and the lack of regulatory guidance. In April 2020, however, the SAMR announced its acceptance of a merger control filing in relation to a different proposed joint venture, representing the first time a filing had been accepted by the Chinese regulator involving a VIE-structured entity. The SAMR also explicitly addressed VIE structures in the recent draft Anti-Monopoly Guide for the Internet Platform Economy Sector, which was released in November 2020. 

In addition to the fines, the SAMR recently engaged in a series of regulatory rulemaking and enforcement actions that increasingly signal an intent to enhance regulation in the technology sector. The moves follow a similar pattern of heightened scrutiny of technology companies worldwide, as regulators in the United States and Europe investigate whether companies have violated antitrust laws.


JFTC conducts a survey and revealed draft guidelines for business collaboration with startups

On Nov. 27, 2020, the Japan Fair Trade Commission (JFTC) revealed the result of a survey investigating the trade practices between start-ups and their investors or funders.  The questionnaires were sent to 5593 start-ups selected by the JFTC, and 1447 (approximately 25.9%) answered.

As the result of the survey, the JFTC confirmed that there were actions that could be problems from the perspective of the Antimonopoly Act in (1) transactions and contracts between startups and collaborating businesses (such as unilateral NDAs, license provisions without compensation, and unilateral attributions of intellectual property rights arising from joint development agreements); (2) transactions and contracts between startups and investors (such as a disclosure of trade secrets, breaches of NDAs, and a limitation of research and development); and (3) relationships between startups and competitors (such as competitors’ interference with startups sales activities and purchasing (procurement) activities).

On Dec. 23, 2020, the JFTC revealed draft guidelines for business collaboration with startups and started the Public Comment Procedure.

Follow-up – Prosecution of the major medicine wholesalers

On Dec. 9, 2020, the Special Investigation Department of the Tokyo District Public Prosecutors Office prosecuted three major medicine wholesale companies and seven persons in charge of the companies, who engaged in bid-rigging for pharmaceuticals made by the Japan Community Healthcare Organization (JCHO) in violation of the Antimonopoly Act. According to media reports, four major medicine companies have coordinated the winning bidder in advance and restricted competition, over general competitive bidding for pharmaceuticals made by the JCHO in June 2016 and June 2018. Before the bidding, the four companies gathered in a rented conference room and allocated orders to each company. One of the four major medicine wholesales companies involved reported the violation under the Leniency system that grants a reduction in or an exemption from surcharge payment to an enterprise that voluntarily discloses its own involvement in cartels or bid riggings to the JFTC. Therefore, JFTC didn’t file a complaint against the company that was the first to submit its reports and materials.

Edoardo Gambaro, Yuji Ogiwara, Stephen M. Pepper, Gillian Sproul, Hans Urulus, Dawn (Dan) Zhang, Mari Arakawa, Filip Drgas, Simon Harms, Marta Kownacka, Pietro Missanelli, Anna Rajchert, Jose Abel Rivera-Pedroza, Ippei Suzuki and Rebecca Tracy Rotem also contributed to this article.

©2020 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XI, Number 15



About this Author


Andrew G. Berg Chairs the Global Antitrust Litigation & Competition Regulation Practice and advises clients on litigation, mergers and acquisitions, and other antitrust and competition-related matters before the Federal Trade Commission (FTC), the Antitrust Division of the Department of Justice (DOJ), state attorneys general, and in private litigation. Andrew's practice includes a full range of antitrust transactional and mergers and acquisitions experience, including Hart-Scott-Rodino filings at the FTC and DOJ, and related merger analysis issues. He also counsels...

Gregory Casas, Greenberg Traurig Law Firm, Austin, Houston, Energy and Business Litigation Law

Gregory J. Casas is the Administrative Shareholder for the Austin office and focuses his practice on antitrust, complex business litigation, and energy and natural resources law. Greg's antitrust and complex business litigation practices are international in scope. His antitrust practice includes litigating price-fixing, bid-rigging, and market allocation claims, and providing counseling for DOJ/FTC investigations, joint venture formation, mergers and acquisitions, pricing plans, and other contractual relationships. Greg's complex business litigation experience includes...

Calvin Ding Corporate Attorney Greenberg Traurig Shanghai, China

As a U.S. attorney who has worked in China for over decade, Calvin Ding has deep experience in international anti-corruption advisory and investigations, cross-border litigation and e-discovery, as well as compliance with Chinese anti-trust, anti-bribery, and privacy laws.

In the anti-corruption space, Calvin frequently advises companies on comprehensive compliance programs, risk assessments, pre-transaction compliance diligence, government policies, and internal investigations. Having spent several years working on the day-to-day implementation of an FCPA compliance program in...

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Miguel Flores Bernés Antitrust & Competition Attorney Greenberg Traurig Mexico City, Mexico

Miguel Flores Bernés focuses his practice on antitrust and competition issues affecting clients in various industries, including government merger review, investigations of alleged anticompetitive conduct, litigation and counseling. He regularly represents clients before the two Mexican competition authorities: Comisión Federal de Competencia Económica and Instituto Federal de las Telecomunicaciones, and designed and implemented antitrust/competition compliance programs for clients in Mexico.

Prior to joining the firm, Miguel was a partner dedicated to antitrust and competition...

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Víctor Manuel Frías Garcés Commercial Law Attorney Greenberg Traurig Mexico City, Mexico

The practice of Victor Manuel Frías is focused on commercial law, including competition, mergers and acquisitions and arbitration.

On the competition side, Mr. Frías has represented clients in numerous cartel investigations before the Competition Commission in different industries for over 20 years. He frequently represents clients in pre-merger filings. Mr. Frías has been ranked by different publications as one of Mexico’s premier competition attorneys. He often appears before Mexico’s Federal Specialized Courts in Competition and Telecommunications matters.

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