SAN FRANCISCO — Microsoft’s purchase of Nokia’s devices and services business finally closed Friday, about nine months after the deal was announced. Blame China’s antitrust regime, which has emerged in the past few years as a high—and long—hurdle in the global regulatory approval process.
Bay Area deal lawyers at firms with deep benches in China say their ability to navigate the Anti-Monopoly Bureau of the Ministry of Commerce, or “MOFCOM,” is giving them a leg up in the race to get and close big international deals.
“Clearance through the antitrust process in China is often the long pole in the tent,” said Kenton King, a partner in charge of Skadden, Arps, Slate, Meagher & Flom’s Palo Alto office, who, along with Michael Miles, led the team of lawyers counseling Nokia on the deal.
Chinese antitrust authorities intervened on 22 deals in the last five years, according to King, and, on average, those deals took 332 days to clear. Not only is the antitrust regime “relatively new,” he said, but also “understaffed in terms of the volume of the deals they need to clear.”
As a result, the agency, which was established with the country’s antimonopoly law in 2008, is like a black box, said Jaclyn Liu, cochairwoman of Morrison & Foerster’s corporate finance group. “They don’t just look at competition, but how the transaction serves general commerce,” she said. “Most of the time, antitrust authorities will consult with other ministries in China and that gives rise to unpredictably.”
About three years ago, Skadden transferred antitrust partner Andrew Foster to its Beijing office to work in conjunction with local counsel on antitrust and competition matters, a move Steven Sunshine, head of the firm’s antitrust and competition group, called “essential.”
Liu said her firm took a similar step by adding partner Sherry Xiaowei Yin, who is PRC-qualified, to its Beijing office in 2008. Yin has led the effort in beefing up the firm’s antitrust capability in China. “A lot of time they’re making calls to MOFCOM itself. It’s a very interpersonal connection,” said Liu.
Both Liu and King say their firms’ ability to counsel clients on the corporate and antitrust issues gives them a competitive edge in the local market.
“The firms we see all the time, whether it’s Wilson, Cooley or Fenwick, don’t have a strong presence in Asia,” said Liu. “Their clients would really need to go outside for special antitrust counsel.”
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