The year 2024 proves pivotal for merger control with major reforms and stringent enforcement across the region

In summary

This chapter provides an overview of the key developments ofmerger control regimes in the Asia-Pacific region that took place in 2024, covering new legislations and case studies on merger remedies and blocked deals.

Discussion points

• Revision of jurisdictional criteria
• Legislative developments in substantive test and filing procedure
• Recent blocks and merger remedies

Referenced in this article

• Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024
• Competition (Amendment) Act 2023
• PRC Guidelines on Horizontal Merger Review

Overview

Most countries in the Asia-Pacific region have established an effective merger control regime. While there is considerable divergence in the approach to merger regulations, as well as significant differences in the national experiences, we see the overall trend that most Asia-Pacific regulators are striving to improve the transparency, efficiency and effectiveness of their merger control framework and enforcement.

The year 2024 witnessed significant merger control reforms and enforcement in the Asia-Pacific region, and this article provides a summary of the recent updates to key merger regimes in 2024 in countries including Australia, China, India, Indonesia, Japan, New Zealand, Philippines, South Korea, Vietnam and Taiwan.

Legislative development: revision of Jurisdictional Criteria

Australia: overhaul

On 28 November 2024, the Australian government passed the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (the Bill) following its introduction on 10 October 2024. The Bill introduces a single, mandatory merger clearance regime, replacing Australia’s longstanding voluntary informal review and merger authorisation processes. Transactions completing on or after 1 January 2026, even if signed before that date, will need to be notified under the new regime. From 1 July 2025, merger parties will be able to voluntarily notify the Australian Competition and Consumer Commission (ACCC) of proposed transactions under the new regime. Merger parties can continue to apply for merger authorisation until 30 June 2025, and may continue using the informal regime until 31 December 2025.

The jurisdictional test of the new regime will be more akin to most mandatory filing regimes in OECD countries that capture notification of transactions that lead to a change of control and meet the monetary thresholds. The definition of ‘control’ in the Bill closely aligns with the definition of the word in section 50AA of the Corporations Act 2001 (which turns on the ‘practical influence’ or capacity to determine the financial and operating policies of a body corporate). The indicative market share thresholds (where merger parties’ products are substitutes or complements and the merged entity will have 20 per cent or more market share) will be replaced by monetary thresholds:

• the merging entities’ combined Australian turnover exceeds A$200 million; and
• the target’s turnover is over A$50 million or the global transaction value exceeds A$250 million.

There are additional monetary thresholds capturing large businesses with Australian turnover above A$500 million acquiring smaller businesses with turnover above A$10 million, as well as cumulative acquisitions exceeding A$50 million (or A$10 million for very large businesses) within three years. ‘Roll up’ strategies or serial acquisitions will face more scrutiny and become subject to review even in cases where there are limited overlaps.

India: merger control 2.0

On 11 April 2023, the Competition (Amendment) Act 2023 was formally enacted and effected into law. The amendment bill introduces a deal value threshold on top of the existing jurisdictional thresholds. In addition, the amendment bill shortens the merger review timeline from 210 days to 150 days and dilutes the threshold of control. The Competition (Amendment) Act 2023 did not come into force until 10 September 2024, following the day when the Ministry of Corporate Affairs notified amendments in respect of merger control regime and introduced a revised set of new merger regulations. Key changes to the merger control regime enforced by the Competition Commission of India (CCI) from 10 September 2024 include:

• a new deal value threshold of 20 billion rupees (approximately US$238 million) has been introduced for transactions involving the acquisition of control, shares or assets, where the target has ‘substantial business operations’ in India. An enterprise is considered to have substantial operations in India if it has 10 per cent or more of its global business users (for digital services), 10 per cent or more of its global gross merchandise value or 10 per cent or total global turnover in India;
• the definition of control now includes the concept of ‘material influence’ over management or strategic decisions, reflecting a broader interpretation of control;
• exemptions for minority share acquisitions, intra-group transactions and others are now codified;
• certain transactions with asset values or turnovers below prescribed thresholds are exempt from notification; however, this exemption does not apply if the transaction meets the deal value threshold;
• the overall merger review timeline has been shortened from 210 days to 150 days, and a time limit of 30 days for forming a prima facie opinion failing which the transaction will be deemed to have been approved;
• open offers and stock acquisitions can be executed before the approval of the CCI, provided that a notice is filed within 30 days of the first purchase; and
• an automatic approval route for transactions where the acquirer and target have no horizontal overlaps or vertical and complementary relations is introduced. Such transactions are deemed to have been approved on the day of their notification to the CCI.

Interestingly, transactions that were partially consummated before 10 September 2024 will not face penalties for gun-jumping, but must still be notified if they now meet the new thresholds.

China: turnover threshold increased

China amended its merger filing thresholds for the first time on 26 January 2024. The new thresholds remain turnover-based but are raised to catch transactions involving parties with more significant business impact in China. Notably, the bolder move in the June 2022 draft to introduce a new limb of filing threshold for reining in killer acquisitions was eventually dropped in the published version.

The combined worldwide turnover threshold has increased to 12 billion yuan (US$1.70 billion) from the previously 10 billion yuan (US$1.41 billion), with the combined China-wide turnover threshold increased to 4 billion yuan (US$567.76 million) from the previously 2 billion yuan (US$283.88 million). Furthermore, the individual China-wide turnover threshold is now 800 million yuan (US$113.53 million), previously being 400 million yuan (US$56.77 million). According to statistics of the State Administration for Market Regulation (SAMR), the number of concluded merger cases dropped from 797 in 2023 to 643 in 2024.

Philippines: turnover threshold increased

The Philippine Competition Commission (PCC) announced its revised merger filing thresholds on 1 March 2024, which formally took effect on the same day. Under the revised thresholds, a mandatory filing will be triggered if the following two tests are both satisfied: (i) the size of party, that is, the value of the assets or revenues of a relevant party in the Philippines, exceeds 7.8 billion Philippine pesos (US$138 million), increased from the previous threshold of 7 billion Philippine pesos (US$124 million); and (ii) the size of transaction exceeds 3.2 billion Philippine pesos (US$57 million), increased from the previous threshold of 2.9 billion Philippine pesos (US$51 million). These adjustments reflect the country’s nominal GDP growth of 10.3 per cent in 2023. It is worth noting that according to the PCC, the revised thresholds will only apply to new filings (irrespective of underlying transactions being signed before or after 1 March 2024), and will not retroactively affect filings that were already submitted before 1 March 2024.

South Korea: exemption expanded

On 7 August 2024, South Korea enacted a set of amendments to the merger control regulations under the Monopoly Regulation and Fair Trade Act. Among other things, transactions exempted from mandatory notification are now extend to:

• formation of private equity funds that do not engage in transactions exceeding filing thresholds;
• interlocking directorates involving less than one-third of directors;
• statutory mergers or business transfers between parent companies and subsidiaries;
• mergers between affiliates valued below 30 billion won; and
• asset or business transfers falling below 10 billion won.

Developments in substantive test and filing procedure

Australia

Under the new regime, the substantive review test (the SLC test) will be expanded to include additional factors as to whether the transaction creates, strengthens or entrenches a substantial degree of market power. For transactions that cannot be cleared on the basis of the SLC test, parties may still apply for consideration under the ‘public benefits’ test (where public benefits outweigh public detriments), which will remain unchanged from the test currently applied under the existing merger authorisation process, following a decision by the ACCC not to grant clearance. Notably, public benefits related to sustainability have been considered outweighing SLCs in several cases. For example, in the review of the horizontal merger between the two largest cash transport companies in Australia, Armaguard and Prosegur (effectively a two-to-one merger), the ACCC considered cash-in-transit as a struggling industry due to declining cash use and acknowledged that the merger could maintain the sustainability of the industry.^[1]

Procedure-wise, the Bill also sets out review timeframes for Phase 1 (30 business days), Phase 2 (90 business days), the public benefit phase (50 business days) and timeline for tribunal review. The ACCC will retain scope to extend timelines in limited circumstances. There may also be less flexibility regarding the timing and consideration of remedy proposals under the new process. The ACCC will require a complete notification for the clock to start. It remains unclear at this stage what information and documents will need to be included. The ACCC will also be able to ‘stop the clock’ 10 business days after issuing a compulsory statutory request for information if the parties do not respond within this period or are late to respond to an informal information request. All notified acquisitions will be published on an ACCC public register with the exception of a small range of acquisitions that will not be made public for a temporary period.

China

SAMR made significant progress in its pilot programme of merger review delegation and simplified the notification form for simple cases. These developments reflect the Chinese government’s determination to improve the efficiency of merger review and reduce the filing burden on businesses. Meanwhile, to enhance the quality and transparency of the merger filing procedure, SAMR issued the Guidelines on Horizontal Merger Review at the end of 2024 and is in the process of drafting the Guidelines on Non-horizontal Merger Review. The Guidelines on Horizontal Merger Review outline both procedural requirements and substantial review criteria guiding SAMR’s review of horizontal mergers. They also provide illustrative examples to facilitate understanding. The final version largely mirrors the draft published on 17 June 2024. Among others, a few notable provisions and developments are as follows:

• On market definition, the Guidelines on Horizontal Merger Review provide clear guidance and illustrations on how to define relevant markets in different scenarios, including mergers, acquisitions and establishment of joint ventures. While this is in line with SAMR’s review practices, it helps provide more clarity and predictability by way of a formal document. Another breakthrough is that the Guidelines on Horizontal Merger Review propose that in the case of multiple possible market definitions, the exact market definition can be left open. Of particular note is that the draft version proposed the criteria for ‘non-principal business’ (if a company’s business only generates less than 5 per cent of the company’s total turnover and the business’s market share does not exceed 5 per cent in the relevant market, there would be no need to define markets for the business); however, this has been removed in the final version.
• On competition analysis, the Guidelines on Horizontal Merger Review underline the importance of qualitative economic analysis, introduce new criteria for HHI calculation and bring the criteria closer to those applicable in the European Union and the United States. The Guidelines on Horizontal Merger Review set forth ‘safe harbours’ for merger review based on combined market share (presumed to be no issue if the combined market share is below 15 per cent, and normally no issue if the combined market share is 15 to 25 per cent) or HHI (post-merger HHI is below 1,000 or the delta is below 100). Furthermore, a horizontal merger where the CMS reaches 50 per cent, or where post-merger HHI exceeds 1,800 and, cumulatively, the delta exceeds 200 is rebuttably presumed to be anticompetitive.
• The Guidelines on Horizontal Merger Review also, for the first time, mention that the impact of government subsidies may be assessed during the review of the concentration of undertakings, although no detailed implementing rules have been provided.

South Korea

On 30 April 2024, the Korean Fair Trade Commission (KFTC) announced the implementation of revised merger guidelines in relation to the digital economy sector effective from 1 May 2024. The guidelines clarified the scope of a simplified review, the factors considered to define the relevant markets and network effects considered in relation to potential competition constraints. Moreover, the amendments to merger regulations released on 7 August 2024 not only expanded the filing exemptions as discussed above, but also introduced new procedural devices. Specifically, merger parties may now seek guidance from the KFTC on complex deals before making a formal filing via the pre-filing consultation process. Merger parties may also voluntarily propose merger remedies to address potential competition concerns before receiving KFTC’s corrective orders, enabling an expedited review timeline for complex deals.

Philippines

On 16 October 2024, the PCC announced that it solicited public input, comments and suggestions until 25 October 2024 on its draft revised rules on expedited merger review. The updated rules aim to simplify the review process for specific mergers and acquisitions that are unlikely to cause significant competition concerns (those with no horizontal, vertical or complementary relationships, certain mergers between foreign entities, joint ventures for real estate development, etc). The draft revised rules, in comparison to the 2019 rules, provide greater procedural clarity and flexibility to some degree, including a one-time extension of the notification period. However, they also introduce additional formality requirements, such as requesting an affidavit to certify the accuracy of submissions. Furthermore, in cases of substantial modifications to the transaction after clearance, per the draft revised rules, the clearance decision will be rendered void.

Developments in merger control enforcement

Merger prohibitions

Several prohibitions of horizontal mergers were issued in 2024 by merger control authorities in the Asia-Pacific region, featured by concerns over concentration in the markets that closely related to consumers.

The grocery sector in New Zealand has recently been in a regulatory spotlight. Importantly, the first Annual Grocery Report published on 4 September 2024 paints a ‘concerning picture’, with the New Zealand grocery sector riddled with ‘red flags’ and showing no ‘meaningful’ competition a year since the introduction of new grocery laws. Notably, the report shows growing retail margins for all three major supermarkets as well as continued high levels of profitability and ongoing dominance of the sector by retailers Foodstuffs North Island, Foodstuffs South Island and Woolworths NZ. Against this background, the New Zealand’s Commerce Commission (NZCC) issued a first-ever block on a three-to-two merger based on buyer power concerns. In the review of the merger between the country’s largest supermarket operators, Foodstuffs North Island and Foodstuff South Island, the NZCC was not satisfied that the proposed merger would not have the effect of substantially lessening competition in multiple acquisition and retail markets. In particular, the NZCC was concerned that:

• the proposed merger would reduce the number of major buyers of grocery products in New Zealand from three to two, creating the largest acquirer of grocery products in New Zealand, which would result in the merged entity having greater buyer power than Foodstuffs North Island and Foodstuffs South Island each do individually, causing harm to the competitive process, as well as making price coordination between the merged entity and Woolworths NZ more likely, complete or sustainable;
• the merged entity would likely be able to extract lower prices from suppliers or otherwise

adversely impact suppliers in the relevant markets;

• the consolidation would lead to reduced investment and innovation by suppliers, meaning reduced consumer choice or quality of grocery products; and
• there was a real chance that the merged entity’s buyer power would make it harder for other grocery retailers to compete and grow, potentially depriving consumers of a more competitive grocery industry in the future.

In South Korea, the KFTC blocked the proposed acquisition of a 95.8 per cent shares in ST Unitas by MegaStudy on 21 March 2024, considering the competition concerns it may raise on the cram school market. After collecting opinions from the stakeholders and running economic analysis, the KFTC believed that the proposed horizontal transaction would lead to a combined market share around 70 to 75 per cent, resulting in increased membership fees for students. The KFTC was also concerned that proposed remedies were not sufficient to address the competition concerns.

The Taiwan Fair Trade Commission (TFTC) issued two of its three merger prohibitions to date in 2024. On 25 December 2024, the TFTC announced its decision to block Uber Technologies’ proposed acquisition of a 100 per cent stake in Foodpanda Taiwan and DH Stores (Taiwan) due to competition concerns.^[2] After comprehensive economic analyses and a wide range of consultations with third parties, the TFTC considered that, in the food delivery platform market, Uber Eats’s main competitive pressure comes from Foodpanda, and the merger would eliminate this competitive pressure. The TFTC further noted, in brief language, that the commitments offered by Uber were only temporary corrective measures and were inadequate to effectively address the identified competition concerns. On 19 June 2024, the TFTC prohibited a proposed acquisition in the steel industry, that is, Yieh United Steel Corporation and Yieh Phui Enterprise’s acquisition of Tang Eng Iron Works,^[3] for the second time after rejecting it 15 years ago in 2009. The TFTC rejected the transaction based on concerns that the anticompetitive effects would outweigh any efficiency to be brought by the merger. Specifically, the TFTC found that the combined market share of the merged entity would exceed 50 per cent in the stainless steel sheet market. The TFTC particularly expressed concerns about potential price increases after the merger as Tang Eng Iron Works primarily served the local market at lower prices. The reduction of competitors could also make it harder for downstream customers to negotiate favourable terms with suppliers.

Merger remedies

One of the features of the merger control enforcement in the Asia-Pacific region in 2024 is that behavioural remedies were widely employed to address horizontal mergers as well as vertical and conglomerate mergers, though structural remedies are still used in some horizontal mergers.^[4]

China has shown continued preference of behavioural remedies and established confidence in applying its own toolkit. In its only conditional clearance in 2024 in relation to the proposed acquisition of Tatsuta Electric Wire and Cable Co, Ltd (Tatsuta) by JX Nippon Mining & Metals (JX Nippon), SAMR identified that JX Nippon’s blackened rolled copper foils and stainless steel stiffeners for flexible printed circuits could be considered to have adjacent relationships with Tatsuta’s electromagnetic shielding films and isotropic conductive films, as these products are integral components for flexible printed circuits. JX Nippon and Tatsuta respectively rank No.1 in both global and Chinese markets for blackened rolled copper foils and isotropic conductive films. Based on an economic analysis, SAMR concluded that the merged entity would have potential incentive for tying or bundling practices, and should the merged entity engage in tying or bundling, it would reduce the choices of downstream customers. This is of particular concern given that the relevant products play a crucial role in the quality and performance of consumer electronics, and downstream customers could face significant barriers to entry and a high level of dependence as a result of the proposed merger.

To address the competition concern, SAMR imposed a series of eight-year-term behavioural remedies requiring the parties to:

• refrain from tying or bundling, or imposing other unreasonable transaction conditions or contractual terms, and to refrain from employing any restrictive or discriminatory measures against customers who choose to purchase JX Nippon’s or Tatsuta’s products separately;
• supply blackened rolled copper foils and isotropic conductive films to Chinese customers on fair, reasonable and non-discriminatory terms; and
• maintain the current level of compatibility of blackened rolled copper foils and isotropic conductive films with third-party products.

While it is still quite rare for global antitrust regulators to intervene in a merger purely through adjacent relationship-based theories of harm, SAMR has not shied away from doing so especially in the semiconductor sector. The transaction also triggered a merger filing in Japan and the JFTC unconditionally cleared the transaction on 3 March 2023.

On 5 March 2024, the Competition and Consumer Commission of Singapore (CCCS) conditionally approved three transactions after accepting commitments from Air India, Singapore Airlines and Tata SIA Airlines (which operates under the brand name Vistara). The approved transactions include:

• Talace Private Limited’s (Talace) acquisition of Air India’s shares and voting rights from the Government of India, along with the purchase of Air India’s 100 per cent stake in Air India Express Limited and 50 per cent stake in Air India SATS Airport Services Private Limited;
• the merger of each of Talace and Vistara into Air India, with Air India as the surviving integrated entity, and Singapore Airlines’ acquisition of 25.1 per cent of the enlarged equity capital of Air India; and
• the proposed commercial cooperation between Singapore Airlines and the integrated entity.

The CCCS identified competition concerns, especially as the parties possess the majority of the market share for carriers offering direct flights between Delhi, Mumbai, Chennai and Tiruchirapalli on the Indian side and Singapore on the other. The CCCS also found that the price and capacity coordination between the parties arising from the confluence of the transactions would significantly restrict competition on the affected routes. To address the CCCS’s competition concerns, the parties proposed commitments pertaining to scheduled air passenger transport services on the routes concerned; namely, maintaining capacity on the said flights at pre-Covid levels, appointing independent auditors to monitor compliance with capacity commitments and submitting annual as well as interim reports.

Examples of behavioural remedies imposed by other Asia-Pacific regulators in 2024 are summarised in the table below.

Compliance of merger remedies

Post-clearance compliance is also becoming a hot topic in China and Taiwan, as we have seen major investigations and fines on violation of behavioural remedies in 2024.

On 9 December 2024, SAMR published a brief announcement on its official website that it had launched an investigation into Nvidia Corporation over suspicions that Nvidia violated the Anti-Money Laundering (AML) Law and the commitments imposed when SAMR conditionally approved Nvidia’s acquisition of chip designer Mellanox Technologies Ltd in 2020. SAMR has not disclosed any further details on the investigation. Back in April 2020, SAMR cleared Nvidia’s proposed acquisition of Mellanox subject to seven restrictive conditions, among which five are public and two are confidential. The five known commitments include:

• ensuring no tie-in or bundled sales of Nvidia’s graphics processing unit and Mellanox’s high-speed network interconnection devices in China;
• ensuring supply under FRAND terms in China;
• maintaining interoperability;
• keeping open sources related to Mellanox’s high-speed network interconnection devices; and
• taking protection measures for information of third-party manufacturers.

The commitments are set to be effective for six years and will not terminate automatically.

While SAMR has not specified which conditions may have been breached, public discussions seemed to point to the question of whether Nvidia has ensured its supply in China, especially given the US export control restrictions over the recent years. In response to the probe, Nvidia stated that it is ‘happy to answer any questions regulators may have’ about its business, and refuted public allegations of Nvidia cutting off supply to China as false rumour, stressing that China is an important market for Nvidia. Investigations into non-compliance with merger commitments are not frequently seen in China (so far there were only three other published decisions made by SAMR’s predecessor). Despite all public debates surrounding the underlying facts and reasons, as well as the geopolitical landscape, our expectation remains that SAMR, as the competition authority, will substantiate any concerns or breaches of its 2020 decision under the legal framework of the AML Law and based on the merits of the case, although the review will likely involve intricate legal and policy questions. Nvidia has lately been under antitrust scrutiny in multiple jurisdictions around the world. Outside China, Nvidia has faced probes due to suspected abuse of market dominance by, for instance, the European Commission, the French Competition Authority and the US Department of Justice.

On 15 January 2024, the TFTC imposed a hefty fine of NT$100 million on Dafu Media and Kbro for their failure to comply with TFTC’s conditions subject to which their merger was cleared in 2010. Kbro and its affiliates cooperated with other cable TV systems and channel agents without TFTC’s prior approval, which violated one of the behavioural conditions imposed by TFTC. Due to the vertical relationships between cable TV systems and channel agents, the violation was considered by TFTC to have led to more substantial market power of Kbro and potential foreclosure in cable TV market and channel agent market. On 17 April 2024, the TFTC imposed a fine of NT$20 million on retailer Chuan Lian Enterprise for its failure to comply with conditions imposed as part of the clearance decision of Chuan Lian Enterprise’s acquisition of RT-Mart International in 2022. Back in July 2022, the TFTC had conditionally approved the transaction given the potential competition concerns about high combined market share, with risks of unilaterally increased prices and reduced promotions, etc on the Taiwan markets for hypermarkets and supermarkets. One of the conditions imposed by the TFTC was not to adopt a ‘most-favoured-customer policy’. Chuan Lian was found to have continued to demand, from suppliers, a certain level of discounts on top of the prices offered to other distribution channels. Additionally, Chuan Lian engaged in price negotiations with suppliers during promotional events, benchmarking against prices provided by suppliers to Chuan Lian’s competing channels.

Endnotes