Completion of Acquisition by MRC of Lucite on which Hammonds secures merger clearances, including groundbreaking clearance decision in China

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    Hammonds' competition team advised Lucite International on its acquisition by Mitsubishi Rayon Corporation (MRC), which completed on 28 May 2009. This transaction was agreed and announced on 11 November 2008 but completion was subject to all required merger control clearances.

    The Hammonds' team, led by partner Diarmuid Ryan and senior associate Nicola Clark (both based in Hammonds' Manchester office), advised on all non-US merger control issues, including in securing merger control clearances in various European countries (Germany, Portugal, Spain and Turkey), as well as in China, Korea and Taiwan. The team also comprised Nikos Dimopoulos (based in Hammonds' London office) and partner Tom Pick (based in Hammonds' Brussels office and advising on the German merger clearance). Finally, Yan Luo (counsel on Chinese affairs and dividing her time between Hammonds' Brussels and Beijing offices) assisted on the Chinese merger control review of the transaction.

    The Chinese Anti-monopoly law only came into effect in August 2008 so MOFCOM's processes and indeed substantive approach to cases raising complex anti-trust issues is being formulated by the early cases before it. This is only the second time the Chinese competition authority, MOFCOM, has approved a transaction subject to a structural remedy following an in-depth "Phase 2" review and only the first time that such remedies have been negotiated exclusively with MOFCOM and focused on the Chinese markets (rather than the China remedy mirroring remedies also agreed with regulators in the US and Europe). The transaction was cleared subject to a commitment by MRC to divest certain Lucite methacrylate production capacity in China as well as various ancillary behavioural remedies.

    Partner Diarmuid Ryan said "We are delighted to have been able to advise Lucite on a transaction which required multiple merger control clearances throughout the world. As regards China in particular, we have offices in Beijing and Hong Kong and offer a sophisticated competition law/merger control service to clients with operations in China, leveraging off Hammonds' long-established Chinese trade law practice and existing familiarity with the Chinese government, not least MOFCOM. Yan Luo, in particular, played a key role in progressing this matter in China. The March 2009 decision by MOFCOM to block Coca-Cola's proposed acquisition of Huiyuan had raised fears in certain quarters of lack of transparency and protectionism but I think this case shows that it is possible, even in the case of transactions raising complex substantive issues, to work constructively with MOFCOM to achieve a workable solution that addresses the competition concerns identified by MOFCOM while enabling the transaction to proceed."

    Nicola Clark added, "It was an invaluable experience working with MOFCOM to agree the commitments. Although we were able to leverage off our experience of handling similar cases before various European regulators (not least the European Commission and UK authorities), we have learnt a great deal about the operation of the Chinese Anti-monopoly law and MOFCOM's procedural and substantive approach as a result of acting on this case."

    Konstantinos Adamantopoulos, Head of Hammonds' EU, Competition, Trade and Regulatory practice and based in Hammonds' Brussels office said: "Hammonds has for some time focused on the growing importance of China. Our presence on the ground (via our Beijing and Hong Kong offices) and the experience of our personnel in handling client matters with the Chinese institutions, in particular MOFCOM, enables us to offer a virtually unrivalled service to our clients. This proved crucial in this deal, given the complexity and novelty of the substantive and procedural issues."

    Ian Lambert, CEO Lucite International said: "I was impressed by the very high quality and tireless support provided by the Hammonds team. Hammonds are able to combine their significant experience across diverse jurisdictions to provide the advice necessary to achieve practicable and constructive solutions. We could not have done it without them".

    Ronan Harty of Davis Polk advised Lucite in the US. Macfarlanes, Paul Weiss and NERA advised the buyer, MRC.

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    For further information contact:

    Nicola Woodmass, Head of Communications, Hammonds LLP, on 0121 222 3690 or email: nicola.woodmass@hammonds.com

    In May 2008, international law firm Hammonds became a limited liability partnership. Hammonds LLP and its affiliated undertakings has offices in Birmingham, Leeds, London and Manchester in the UK, and in Berlin, Brussels, Beijing, Hong Kong, Madrid, Munich and Paris.

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