China's Mofcom speeds up approval of deals

The mainland's mergers and acquisitions watchdog is getting much faster at approving domestic and foreign deals, cutting legal costs for companies and marking a shift in the outlook of a regulator that has been a thorn in the side of bankers since its creation.

While the Ministry of Commerce's anti-monopoly bureau has blocked only two deals since its inception in 2008, the entity known as Mofcom has attracted international criticism from merger and acquisition lawyers and bankers.

Mofcom has been slammed for being slow to clear even small-sized deals and for imposing conditions, such as business divestments, on foreign-to-foreign mergers that barely touch the Chinese market and which have been unconditionally cleared by the United States and Europe.

But the introduction of a new procedure in April for what Mofcom describes as "simple cases" has nearly halved the length of time it takes to win clearance. Lawyers say the move is part of a broader strategy to increase efficiency at the resource-strapped regulator and to help improve its professional image.

This month, Mofcom also published its most comprehensive data set yet tracking transaction filing and approval dates. Lawyers say it is a milestone for the agency, which has become notorious for its opacity.

"Our experience, and we are hearing from others, is that Mofcom is getting much better at transparency and at getting on with it," said Mark Jephcott, the head of the Asia antitrust practice at Herbert Smith Freehills. "We did a deal recently from start to finish in three months - that was phenomenal, and would not have been possible a year ago."

Mofcom is making it easier for companies to plan and execute acquisitions, and that is reducing legal costs by up to 40 per cent to about US$80,000 on average for simple cases, lawyers say.