China to introduce more foreign M&A rules

China is going to introduce more than 20 supporting regulations on foreign mergers and acquisitions of domestic companies before the new anti-monopoly law takes effect on August 1, 2008, a senior Chinese legislator said on Saturday.

Cheng Siwei, vice chairman of the Standing Committee of the National People’s Congress told a forum in Beijing that the new rules would help ensure that foreign M&A deals promote China’s economic growth without threatening its economic security.

The anti-monopoly law, passed on August 30, 2007 by the National People’s Congress, took nearly 13 years to draft and bans monopolistic agreements, such as price-fixing and other forms of collusion, and provides for investigation and prosecution of monopolistic practices. It aims to protect fair competition by prohibiting three kinds of monopoly acts: reaching monopolizing agreements; abusing a dominant market position; and concentration of business operations that which may exclude or restrict competition. Conduct subject to an anti-monopoly inspection includes mergers and acquisitions, JVs, as well as licensing and technology transfer.

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