ANNOUNCEMENT 24 Apr 2009In April 2009, the government of China announced changed rules for foreign investors.
NUMBER OF INTERVENTIONS
Ministry of Commerce of the People's Republic of China, Notice No. 28, 24 April 2009, http://www.mofcom.gov.cn/aarticle/b/c/200904/20090406198963.html
Mitsubishi Rayon Co., Procedures Completed for Acquisition of Lucite International, 29 May 2009, http://www.mrc.co.jp/english/pressroom/p09/press20090529.html
On 24 April 2009, the Ministry of Commerce of the People's Republic of China announced that restrictive conditions had been set for the acquisition of Lucite International Inc. by Japan's Mitsubishi Rayon Corporation (MRC). MRC submitted its acquisition request on 22 December 2008 and the Ministry of Commerce ruled that an investigation was required to determine whether the acquisition of Lucite International would give Mitsubishi Rayon an unfair advantage in the methylmethacrylate (MMA) market.
On 20 May 2009, the Ministry determined, through economic analysis and interviews of stakeholders and third-parties, that the combined company would control 64% of the PRC MMA market. Furthermore, the vertical integration implied by the acquisition would grant MRC the ability to block downstream competitors, allowing it to stifle competition in other markets.
In order to counter these anti-competitive effects of the acquisiton, the Ministry established a series of conditions to which MRC must agree before the transaction will be permitted. One condition is for the creation of a spin-off company with 50% of Lucite's MMA production capacity within five years. Should the sale of the spin-off to an unrelated firm not be completed in five years, a Chinese trust will take control of the new company until a suitable buyer may be found. Furthermore, until the spin-off is complete, Lucite's Chinese companies will be operated separately from those of Mitsubishi Rayon, with a separate Board and management team. No information about pricing in the Chinese market will be permitted to be passed from Lucite to its new owners until divesture is complete. Finally, Mitsubishi Rayon will be barred from acquiring or creating any new MMA producers or downstream firms in China until the spin-off is complete.
On 29 May 2009, Mitsubishi Rayon Co. announced on its corporate website that the company had completed all regulatory requirements for the purchase of Lucite International Corp. It did not, however, specify if it had agreed to all conditions imposed by the PRC Ministry of Commerce. Mitsubishi Rayon now holds a 100% equity stake in Lucite International, for which it paid US$1.6 billion.