With the combination of a well-established Japanese practice and a strong antitrust and competition team, Zhong Lun has assisted Panasonic in obtaining MOFCOM's conditional antitrust clearance for its US$9.4bn acquisition of Sanyo Electric.

The landmark ruling is the most recent of a series of cases where MOFCOM imposed conditions when issuing antitrust clearance, and has demonstrated its increasing confidence in handling complex global merger cases.

"Considering the wide variety of the products involved in the merger, the complexity of the relevant market analysis, the comprehensiveness of the review procedures, the specifics of remedial measures and the extraterritorial application of the remedies, this decision is another milestone signifying PRC antitrust authority's capability to comprehensively and effectively conduct antitrust review of offshore mega-mergers," said Zhong Lun partner John Jiang, a member of the firm's team led by senior partner Wu Peng (pictured).

In addition to advising on the merger filing, Zhong Lun is also serving as the merger parties' counsel in the on-going implementation of the remedial measures to which they have committed, as well as providing PRC M&A related legal services for this transaction.

As the transaction involves two Japanese companies, Zhong Lun's reputable Japanese practice is one of the major factors in its winning the mandate; its antitrust and competition team's capacity is another key factor - 11 lawyers from the team have worked on this merger.

The challenging process of the merger filing has tested each lawyer's diligence and adroitness.

"In this case, PRC local lawyers prepared all the merger filing materials and led the analysis of, and resolution to, relevant legal issues during the merger filing and negotiation process with MOFCOM. Due to the lack of precedents for many of the competition concerns and remedial measures in connection with this merger, analysis and resolution of the relevant legal issues posed significant challenges for the local lawyers involved," said Jiang.

The successful conditional approval of this merger illustrates the development of PRC lawyers' growing capability in dealing with complex anti-trust issues. And, since the antitrust review for this merger was concurrently carried out in several of the world's major jurisdictions, the interactions among authorities and the interaction among counsels in different jurisdictions are also worth noting.

Panasonic - Sanyo merger – worldwide antitrust counsels 

　Client
China
Japan
EU
USA
Panasonic
Zhong Lun
Nagashima Ohno & Tsunematsu
Weil, Gotshal & Manges
Weil, Gotshal & Manges
Sanyo
Zhong Lun
Mori Hamada & Matsumoto
Arnold & Porter
Simpson Thacher & Bartlett

Compared with all prior decisions by MOFCOM, this antitrust clearance decision is ground-breaking in the following aspects:
  • Involved largest number of product categories, and most complex definition and analysis of relevant markets among all cases handled so far
  • most detailed and comprehensive decision to date, covering review process, substantive aspects of review, competition concerns identified and stipulated remedies
  • first PRC merger review which covered all three phases of review stipulated by the PRC Anti-monopoly Law ("AML"): preliminary review (phase I, pursuant to Art. 25 of AML), substantive review (phase II) and extended review (phase III, pursuant to Art. 26 of AML)
  • the first decision which concurrently requires divestiture of both onshore and offshore assets
  • applied new remedial measures for first time [First instance: (i) in respect of Civilian-use Nickel Hydrogen Battery, allowing the parties to choose from two divestiture alternatives; (ii) in respect of Automotive Nickel Hydrogen Battery market, Panasonic is not only required to reduce its equity stake in Panasonic EV Energy Co., Ltd. ("PEVE"), but also to waive its voting rights in PEVE's shareholders' assembly, the right to appoint directors to the board of PEVE, and its veto right in respect of Automotive Nickel Hydrogen Battery business in the Joint Venture Contract between Panasonic and Toyota (PEVE's parent company).]

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