By Michelle Price and Denny Thomas
HONG KONG, April 10 (Reuters) - Royal Dutch Shell's $70 billion bid for BG Group Plc will put to the test apledge by China's antitrust regime to be more transparent, afterit faced strong criticism last year from the United States andEurope.
China's nascent competition law has become one of thebiggest wildcards for large cross-border deals in recent years,particularly where natural resources are concerned.
In 2013, China's Ministry of Commerce (MOFCOM) said minerXstrata had to sell off a prized Peruvian copper project inorder for its $35 billion merger with Glencore toproceed, despite neither company owning any assets in China atthe time. The combined company's share of China's copper marketwas also not high enough to warrant concerns by internationalnorms.
Since then MOFCOM, along with China's two other antitrustagencies, has faced criticism from U.S. and European businesslobbies and governments which say China uses its competition lawto benefit its strategic interests and protect domesticbusinesses.
Under this increased scrutiny, lawyers say there is a wishon the part of the agencies to develop a more professionalimage, which should help Shell's case.
Last December, China said it would enforce its anti-monopolylaw fairly, with greater transparency, and would pursue remediesthat focus on the threat purely to competition, according to theU.S. Joint Commission on Commerce and Trade.
"MOFCOM is trying to improve transparency in general, andany international case where the world is watching may bringimprovements, innovations and possible convergence andcooperation with the rest of the world's antitrust community,"said Dave Anderson, an antitrust lawyer with Berwin LeightonPaisner in Brussels.
MOFCOM did not reply to Reuters request for a comment. Theyhave previously defended their actions as being transparent,fair and in line with the law.
Shell's CEO Ben van Beurden said on Wednesday the deal wouldrequire a detailed conversation with anti-trust authorities, butwas unlikely to lead to forced asset sales.
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Under China's antitrust law MOFCOM can consider whether amerger would impact the country's national industrial goals, anunusual provision that is likely to be key in this case.
As with copper in the Glencore-Xstrata deal, the watchdogwill consider the impact of a combined Shell and BG Group's holdover the liquefied natural gas (LNG) market.
Natural gas is an increasingly important resource for Chinaas it moves to cleaner energy sources. Its consumption is set tonearly double through to 2019, according to a June report by theInternational Energy Agency.
Shell and BG together would account for 13 percent ofChina's LNG imports this year rising to 28 percent by 2017,according to estimates by research firm Wood Mackenzie.
Both groups have operations in China, including Shell'sproduction sharing contract with China National PetroleumCorporation, as well as long-term deals to supply China with LNGvia other foreign productive assets. BG Group says it will bethe largest contracted LNG supplier to China by 2017.
"MOFCOM should look at this deal from a strategicperspective, as natural gas is relevant to China's nationalsecurity," said Liyong Jiang, a partner at law firm Gaopeng &Partners in Beijing, and a former MOFCOM staff-member.
Still, some lawyers believe the political environment inChina has changed over the past two years, making it less likelyShell will have to make a painful concession.
"What's changed since Glencore-Xstrata, is the context: theU.S. has put big pressure on China, and they have said they'llstick to the rule of law," said a Beijing-based antitrustlawyer.
"So now everyone is watching them. Will they go ahead and doit again? I don't think so." (Additional reporting by Michael Martina in Beijing; SonaliPaul in Melbourne; Oleg Vukmanovic in London; Editing by RachelArmstrong)
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