Issued by: Ministry of Commerce of the People’s Republic of China
Notice No. 6, 2012
Dated: February 9, 2012

The Ministry of Commerce of the People’s Republic of China (MOFCOM) received an anti-monopoly notification of concentration of undertakings regarding Henkel Hong Kong Holding Limited (Henkel Hong Kong) and Tiande Chemical Holdings Limited (Tiande Chemical) establishing a joint venture enterprise. After review, MOFCOM decided to approve with additional restrictive conditions this concentration of undertakings. According to Article 30 of the Antimonopoly Law of the People’s Republic of China (the Antimonopoly Law), MOFCOM hereby announces the following:

1. The filing and review procedures

On August 8, 2011, MOFCOM received a notification of concentration of undertakings regarding Henkel Hong Kong Holding Limited (Henkel Hong Kong) and Tiande Chemical Holdings Limited (Tiande Chemical) establishing a joint venture enterprise. MOFCOM decided after review that the notification materials are incomplete, and supplementary materials should be provided by the notifying party. On September 26, MOFCOM confirmed that the notification materials were in line with the provisions in Article 23 of the Antimonopoly Law, and started the filing review of the notification of concentration of undertakings.

According to the preliminary review, MOFCOM believes that the concentration may eliminate or restrict competition in the cyanoacrylate monomer market. On October 25, MOFCOM decided to conduct a further review. On January 19, 2012, MOFCOM decided to extend the review to March 19. In the process of the further review, MOFCOM raised competition concerns to the notifying party about the concentration, and the notifying party submitted a solution to MOFCOM in reply. After assessment, MOFCOM believed that the solution could reduce the adverse effects of the concentration on market competition.

During the process of review, MOFCOM solicited opinions of relevant government departments, industrial associations, competitors in the cyanoacrylate monomer industry and downstream enterprises, and acquired information including the definition of relevant markets, market structure, industrial characteristics and future development trend.

2. Competitive Analysis

After the review in accordance with the provisions in Article 27 of the Antimonopoly Law, MOFCOM made an in-depth analysis of the impact of the concentration on market competition, and decided that it might have an adverse impact of eliminating or restricting competition.

The products involved are ethyl cyanoacetate, cyanoacrylate monomer and cyanoacrylate adhesives, which are in the upstream, midstream and downstream in the industrial chain. Based on usage characteristics, alternatives in production and use as well as the situation of import and export, MOFCOM decided that ethyl cyanoacetate, cyanoacrylate monomer and cyanoacrylate adhesives each constituted a separate market, and the regional market of each product is the global market. Considering the characteristics of the market for the products, MOFCOM also investigated into the impact of this concentration on the competition in the Chinese market.

MOFCOM reviewed the market share, market concentration, market control power and market access of relevant products, focusing on the affiliated competitive relations of the ethyl cyanoacetate and cyanoacrylate monomer markets, as well as the possible impact of excluding or restricting competition.

3. Negotiations on additional restrictive conditions

MOFCOM and the notifying party conducted several rounds of negotiations to solve the competition issue above. The two parties of the transaction submitted on January 13, 2012 a final solution. MOFCOM, after assessment, decided that the solution could reduce the adverse effect of the concentration on competition.

4. Decision of the review

Considering Henkel Hong Kong and Tiande Chemical establishing a joint venture company may produce effects of precluding and restricting competition in the cyanoacrylate monomer market, MOFCOM decided to approve this concentration with additional restrictive conditions and required both parties to fulfill the following obligations:

(A). Tiande Chemical should supply ethyl cyanoacetate to all downstream customers based on the principles of fairness, rationality and non-discrimination, including not selling products at unreasonably high prices, not giving more favorable supply conditions to Weifang Degao, and not communicating competitive information with Henkel Holding and Weifang Degao.

(B) The two parties of the transaction should report annually to or at the request of MOFCOM on fulfilling of the said obligations as of the effective date of the decision of the review in a timely manner.

(C) The two parties of the transaction should entrust an independent commissioned party to supervise the fulfilling of the said obligations by the two parties of the transaction in accordance with relevant regulations of MOFCOM.

The two parties of the transaction should submit to MOFCOM a detailed implementing plan for fulfilling the said obligations immediately after determining the commissioned party, and should execute the plan after approval by MOFCOM.

This announcement shall be effective as of February 9, 2012.

Ministry of Commerce of the People’s Republic of China
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　
February 9, 2012

(All information published in this website is authentic in Chinese. English is provided for reference only. )