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Antitrust lawyers a 'hot commodity' in China

2014-07-04 11:13 China Daily Web Editor: Qin Dexing

Foreign corporations turning to 'hired guns' for deal clearances

China's increasing regulatory influence over international mergers and acquisitions has helped create the hottest new commodity in its legal industry: antitrust lawyers.

Six years ago, China did not even have a legal system for regulating the impact of M&A on competition. But now, its Ministry of Commerce is the biggest wild card for those trying to get a major cross-border deal past antitrust regulators.

The ministry's decision last month to reject Danish shipping group A.P. Moller-Maersk Group's planned alliance with Swiss and French rivals came as a "big surprise" to Maersk Chief Executive Nils Smedegaard Anderson, whose team had been in close contact with the regulator up until just days earlier.

That rejection, on grounds that it was not in the interest of Chinese consumers, was the first time the regulator had blocked a deal that involved no company from China.

With global M&A volume reaching $1.75 trillion in the first half of the year, up 75 percent year-on-year, according to Thomson Reuters data, lawyers who can help companies steer a deal past China's antitrust regime are much in demand.

International law firms such as Linklaters LLP and Mayer Brown JSM have recently bolstered their teams, while Norton Rose Fulbright LLP and King & Wood Mallesons said they are looking to expand their China competition practices.

"From last year, I really feel like spring has come," said Zhaofeng Zhou, counsel at Taylor Wessing LLP in Beijing.

"At the beginning, headhunters would not call you because there were too few jobs, but now they call you all the time."

While recruitment of competition lawyers has been growing since China introduced an antitrust law in 2008, headhunters say there has been a sharp uptick in the past year, even for foreign law firms that are shrinking in other practice areas.

Janet Chan, manager of the legal division at recruiter Michael Page, said she has seen a 20 percent increase in demand for antitrust attorneys over the past 12 to 18 months.

A string of large cross-border deals are expected to need approval from the Ministry of Commerce, which is typically required when the combined companies' annual sales in China exceed 400 million yuan ($64.4 million).

These include United States-based conglomerate General Electric Co's $16.9 billion bid for the energy business of French engineer Alstom, a deal that has already been revised to deal with the French government's concerns over jobs.

US medical device maker Medtronic Inc's $43 billion purchase of Dublin-based rival Covidien Plc will need the Ministry of Commerce approval just as China is focused on trying to bring down domestic medical costs.

Linklaters in Hong Kong hired Clara Ingen-Housz from US firm Baker and McKenzie last year to bolster its practice. Mayer Brown JSM has hired a new competition associate who will be joining the Hong Kong practice in September.

Other firms looking to expand have their work cut out for them.

"The talent pool for competition specialists in this region is not a deep one," said Mark Jephcott, head of competition for Asia at Herbert Smith Freehills LLP in Hong Kong.

Aside from M&A, joint ventures in China may also need Ministry of Commerce approval. They have also soared with the estimated value of alliances formed in China up 277 percent in 2013 from 2012, according to Thomson Reuters data.

Multinational companies are also turning to antitrust lawyers for advice on other areas of competition law in China such as price-fixing, due to closer regulatory scrutiny.

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