Merger control and foreign investment issues in Asia M&A

I recently joined my colleague Marcus Pollard, an antitrust and foreign investment partner in our Hong Kong office, on our Asia Bitesize Antitrust podcast to discuss how deal making in Asia continues becomes increasingly complicated with the ever-growing reach of antitrust regulators. 

Our multidisciplinary tech sector team at Linklaters is focused on helping investors best prepare for and navigate through a fast-moving environment. As an M&A practitioner I work regularly with Marcus on deals in Asia, and on the podcast we share insights into the merger control and foreign investment issues to should consider in M&A transactions from start to finish to secure timely clearance and steer clear of gun-jumping behaviours.

Given that most jurisdictions require a mandatory preclosing approval to be obtained - it is critical to consider whether a merger control or foreign investment filing be needed and Marcus's team can provide a multi-jurisdictional assessment. Regulatory filings will have a significant impact on deal documents and timing so is important understanding what is going to be required as early as possible.

There is also a key difference between technical filings and filings with substantive issues to be navigated. Where there are potential issues, more often than not risk allocation with respect to these filings may be a contested and fraught discussion. Sellers what to exit smoothly making deal certainty critical and may require “hell or high water” clauses or break fees (which can be significant). This makes the situation trickier for the buyer which needs the time and flexibility to engage with the regulator to find a solution to any issues.

The merger control regimes and expectations of regulators differ across the Asia region which creates complexity in multijurisdictional deals, but the good news is that overall, remedy cases and conditional clearances are still much less common in Asia than in the US and Europe.

Marcus and I also discuss the latest foreign investment trends and the implications for investors as the number of active regimes impacting the region is more than ever. Foreign investment filings are less predictable in terms of timing, out come and the review process - capturing transactions at a much lower threshold – and scrutiny of the tech industries is also increasing. Again, risk allocation in deal making may need to cover foreign investment approvals.

Tune in to explore the practical tips for mitigating potential antitrust risks when doing M&A deals.