China Sets Tough Regulations on Foreign M&A

Already this year China has shut down several possible M&A deals, including that of Coca-Cola's proposed takeover of China Huiyan, due in part to the protectionist ideals of Mofcom, China's ministry of commerce. However, not only is China shutting down deals but they are also imposing restrictions on many other deals, including deals that do not directly involve Chinese companies. For example when Mofcom permitted Belgium-based InBev’s $52 billion acquisition of Anheuser-Busch they imposed restrictions to stop InBev acquiring further interests in four Chinese companies.

In August of 2008 China passed a very strict law on monopolies. The law gave Mofcom power to influence any M&A activity that they believed could eventually effect China. Clearly China feels it necessary to involve itself in M&A because of either antitrust issues or industrial policy.