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Business Articles Awards > Asian Antitrust

MOFCOM Blocks “P3” Shipping Joint Venture

Arthur Burke et al., Davis Polk, Client Memo, June 2014

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For only the second time since it began reviewing mergers and joint ventures in 2008, when China’s Anti-Monopoly Law (“AML”) came into effect, MOFCOM has blocked a proposed transaction rather than addressing its competition and trade policy concerns through some form of remedy. It did so notwithstanding the fact that both U.S. and European authorities had chosen not to challenge the joint venture. The transaction involved a proposed operational joint venture by three large global shipping companies. The joint venture, to be known as P3 and announced in June of 2013, called for Denmark’s A.P. Moller-Maersk along with Swiss firm Mediterranean Shipping Company (MSC) and France’s CMA CGM to pool about 250 ships in order to utilize more efficiently their combined capacity and thereby reduce costs. Notwithstanding the parties’ efforts to structure its venture so as to leave pricing, sales and marketing functions to the individual shipping companies, rather than in the joint venture, MOFCOM chose to effectively treat the proposed P3 Network as a merger. This is in sharp contrast to the approach taken in the EU and the US1, and has already engendered considerable speculation regarding the extent to which non-competition domestic concerns animated MOFCOM’s decision.

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