US M&A lawyers with cross-border practices have cautiously welcomed moves in China and India to introduce new antitrust legislation based on the European Union model.
The new rules have raised fears that deals will be blocked or delayed as a result of the thresholds that would trigger a merger clearance filing. In China, any deal that would create a company with a combined turnover of $1.5bn (£750m) and where at least two of the parties have a Chinese turnover of at least $60m (£30m) is expected to require regulatory approval.
However, China and India’s move towards the introduction of an antitrust regime similar to that which exists in the US and EU has left lawyers in New York largely unconcerned.
“Will it add another layer of complexity to deals?” said Clifford Chance New York corporate partner Sarah Jones. “Yes, it will. Might it mean that transactions take a little longer to complete? Possibly. Will it stop deals from being done? No. The reality is that it is better to have new rules that provide some certainty about the process and that are based on a framework that everybody understands.”
Over at Sullivan & Cromwell, M&A partner Frank Aquila echoed Jone’s sentiments.
“People will take it very seriously but will be prepared,” Aquila said. “Clearly when there is a deal involving either Chinese or Indian companies or companies with significant assets in these jurisdictions, you’re going to have to put on your list to review what the implications are in those countries, just as you’d expect to do in relation to the significant antitrust regimes in the US or EU. Will it mean significant numbers of deals won’t get done? I doubt that.”
The new rules are set to come into effect this Friday (1 August) in China and later this year in India.