Chinese merger control law : an assessment of its competition-policy orientation after the first years of application / Tingting Weinreich-Zhao.
2015
KNQ1148 .W45 2015 (Map It)
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Title
Chinese merger control law : an assessment of its competition-policy orientation after the first years of application / Tingting Weinreich-Zhao.
Published
Berlin : Springer, [2015]
Copyright
©2015
Call Number
KNQ1148 .W45 2015
Former Call Number
Ch.P 615 W433 2015
ISBN
9783662438671 (hd.bd.)
3662438674 (hd.bd.)
9783662438688 (online)
3662438674 (hd.bd.)
9783662438688 (online)
Description
xix, 393 pages ; 25 cm.
System Control No.
(OCoLC)898121878
Dissertation Note
test doctoral University, Munich/2014. 2013/2014.
Bibliography, etc. Note
Includes bibliographical references.
Record Appears in
Table of Contents
1.
Introduction
1
2.
Economic Background of Competition Policy in China
3
2.1.
State of Development of Chinese Economy
3
2.1.1.
Planned Economy Until 1978
4
2.1.2.
Economic Reforms Since 1978
5
2.1.2.1.
Dual-Track System
6
2.1.2.2.
Emergence of TVEs
6
2.1.2.3.
Commencement of Foreign Direct Investment
7
2.1.2.4.
Endorsement of a Socialist Market Economy
8
2.1.3.
Establishment of a Legal Framework for the Market Economy
9
2.1.3.1.
Enactment of Basic Economic Laws
9
2.1.3.2.
Recognition of Market Integration at Constitutional Level
10
2.1.4.
Impact of WTO Accession
11
2.1.5.
Status Quo of Economic Development
11
2.2.
Reform of State-Owned Enterprises
12
2.2.1.
Privatisation of Small and Medium-Sized SOEs
13
2.2.2.
Restructuring of Retained SOEs
14
2.2.3.
Corporatisation and Regulatory Reform
15
2.2.4.
Reform of Industry Structures: Public vs Private Sector
16
2.2.4.1.
Retreatment from Nonessential Sectors
17
2.2.4.1.1.
State Council 2005 Opinions
17
2.2.4.1.2.
State Council 2010 Opinions
17
2.2.4.2.
Concentration in Strategic Sectors and Formation of National Champions
19
2.2.4.2.1.
SASAC 2006 Opinion
19
2.2.4.2.2.
Specific Industries
21
2.2.5.
Current Market Structure
22
2.3.
Policies on Foreign Direct Investments
24
2.3.1.
Regulation of FDI
24
2.3.2.
Importance of Foreign M&A in China
26
2.3.3.
Market Distortions by Foreign M&A and a Call for a Stronger Market Protection
27
2.4.
Summary
29
3.
Historical Development of Chinese Merger Control Regime
31
3.1.
Discriminatory Merger Review Framework Prior to the Adoption of the AML
31
3.1.1.
Lack of Merger Control for Purely Domestic Transactions
31
3.1.2.
Merger Control Regime Under the M&A Rules 2006 and Guidelines 2007
32
3.1.2.1.
Scope of Application
34
3.1.2.1.1.
Lack of Definition of "Acquisition"
34
3.1.2.1.2.
Different Criteria as Notification Thresholds
35
3.1.2.2.
Procedural Aspects
36
3.1.2.3.
Substantive Standard
36
3.1.2.4.
Exemptions from Antitrust Review
37
3.1.2.5.
National Security Review
37
3.1.2.6.
Merger Control Enforcement
37
3.2.
Formation of Merger Control Regime Under the AML
38
3.2.1.
Impetus for Adoption of the AML
40
3.2.2.
Policy Concerns Delaying Adoption of the AML
41
3.2.3.
Legislative Amendments
42
3.2.3.1.
Notification Thresholds
43
3.2.3.2.
Sectoral Application
44
3.2.3.3.
Provisions Coloured with Industrial Policy Considerations
44
3.3.
Summary
45
4.
Institutional Framework for Enforcement of the AML
47
4.1.
Establishment of Two-Tier Enforcement Regime
47
4.2.
Enforcement Agencies
50
4.2.1.
AMC
50
4.2.2.
MOFCOM and Anti-monopoly Bureau
51
4.2.3.
Local Authorities
53
4.3.
Summary
54
5.
Objectives and Policy Standards of Merger Control as Embodied in the AML
55
5.1.
Multitude of Competition and Non-competition Goals in Article 1 AML
56
5.1.1.
Competition Goals
57
5.1.1.1.
Fair Market Competition
57
5.1.1.2.
Economic Efficiency
59
5.1.1.3.
Consumer Welfare
61
5.1.2.
Non-competition Goals
62
5.1.2.1.
Notion of "Social Public Interest" and "Healthy Development of the Socialist Market Economy"
62
5.1.2.2.
Inclusion of Industrial Policy
63
5.1.2.2.1.
Promotion of Formation of National Champions
64
5.1.2.2.1.1.
Drafting Documents
65
5.1.2.2.1.2.
Article 5 AML
66
5.1.2.2.1.3.
Article 7 AML
66
5.1.2.2.1.4.
Merger Control Provisions
67
5.1.2.2.2.
Prevention of Foreign Takeovers of Domestic Enterprises
68
5.1.2.2.2.1.
Drafting Documents
68
5.1.2.2.2.2.
SAIC 2004 Report
69
5.1.2.2.2.3.
Merger Control Provisions
70
5.1.2.2.2.4.
National Security Review
71
5.2.
Reasons for the Consideration of Non-competition Criteria
72
5.2.1.
International Comparison
73
5.2.2.
Unique Chinese Characteristics
78
5.2.2.1.
Constitutional Constraints
78
5.2.2.1.1.
Socialist Market Economy
78
5.2.2.1.2.
Supremacy of the State Sector
79
5.2.2.2.
Historical Tradition of Government Intervention
80
5.2.2.3.
Stage of Economic Development
81
5.3.
Limits for the Consideration of Industrial Policy Goals
84
5.3.1.
Reconciliation with Other Competition Policy Goals
84
5.3.2.
Need for Competition in Home Markets
86
5.3.3.
Transparency and Legal Certainty
87
5.4.
Summary
88
6.
Overview of Published Decisions
91
6.1.
InBev/AB
91
6.2.
Coca-Cola/Huiyuan
93
6.3.
Mitsubishi Rayon/Lucite
95
6.4.
GM/Delphi
97
6.5.
Pfizer/Wyeth
99
6.6.
Panasonic/Sanyo
100
6.7.
Novartis/Alcon
104
6.8.
Uralkali/Silvinit
105
6.9.
Alpha V/Savio
108
6.10.
GE China/Shenhua
109
6.11.
Seagate/Samsung
111
6.12.
Henkel HK/Tiande
116
6.13.
Western Digital/Hitachi
117
6.14.
Google/Motorola Mobility
120
6.15.
UTC/Goodrich
124
6.16.
Wal-Mart/Yihaodian
126
6.17.
ARM/G&D/Gemalto
127
6.18.
Glencore/Xstrata
129
6.19.
Marubeni/Gavilon
140
6.20.
Baxter/Gambro
143
6.21.
MediaTek/MStar
146
6.22.
Summary
149
7.
Scope of Application of Merger Control Law
151
7.1.
Business Operators
152
7.2.
Concentration
152
7.2.1.
Acquisition of Control
153
7.2.1.1.
Definition Under Draft Notification Rules March 2008
154
7.2.1.2.
Definition Under Draft Notification Measures January 2009
155
7.2.1.3.
Possible Standards for Definition
155
7.2.1.4.
The Case of Minority Shareholdings
157
7.2.2.
Acquisition of Decisive Influence
158
7.2.3.
Joint Ventures
159
7.2.3.1.
General Qualification as Concentration
159
7.2.3.2.
Specific Requirements for Qualification
160
7.2.4.
Filing Exemption for Intra-Group Reorganisations Under Article 22 AML
161
7.3.
Notification Thresholds and Discretionary Review Power
161
7.3.1.
Turnover Thresholds Under Notification Thresholds Provisions
161
7.3.1.1.
Turnover Criteria
162
7.3.1.2.
Local Nexus by Referring to Business Activities of at Least Two Business Operators
162
7.3.1.3.
Evidence for Industrial Policy Consideration
164
7.3.2.
Calculation of Turnover
164
7.3.2.1.
Notion of Turnover
165
7.3.2.2.
Turnover of Affiliated Companies
165
7.3.2.2.1.
Group-Wide Calculation as General Rule
166
7.3.2.2.2.
Limitation to Target for Calculation of Seller Turnover
166
7.3.2.3.
Aggregation of Transactions
167
7.3.3.
Discretionary Power of MOFCOM to Review Transactions Under the Notification Thresholds
167
7.4.
Extraterritorial Application Under Article 2 AML
169
7.4.1.
Lack of Significance Test
170
7.4.2.
Outlook on Enforcement Issues in the International Context
171
7.5.
Sectoral Application
173
7.5.1.
Agricultural Sector
174
7.5.2.
State-Owned Industries
174
7.5.2.1.
Statutory Exemptions
174
7.5.2.1.1.
Article 7 AML
175
7.5.2.1.1.1.
Business Operators Covered by Article 7 AML
175
7.5.2.1.1.2.
Impact of Article 7 AML
177
7.5.2.1.1.2.1.
Exemption from AML
177
7.5.2.1.1.2.2.
Special Jurisdiction of Regulatory Agencies
180
7.5.2.1.2.
Article 22 AML
181
7.5.2.1.3.
Industry Restructuring Plans
183
7.5.2.1.4.
Stipulations Confirming AML Application
184
7.5.2.2.
De factoExemption
185
7.5.2.2.1.
China Unicom/China Netcom
185
7.5.2.2.2.
Other Cases
187
7.5.2.3.
Recent Increased Enforcement Scrutiny Vis-a-Vis SOEs
189
7.6.
Summary
191
8.
Merger Review Procedure
193
8.1.
Suspension Obligation
194
8.2.
Pre-notification Procedure
195
8.3.
Notification
196
8.3.1.
Time Limits
197
8.3.1.1.
Earliest Moment for Notification
197
8.3.1.2.
Deadline for Notification
199
8.3.2.
Notification Party
200
8.3.3.
Documents
200
8.3.3.1.
Wide-Ranging Documentation Including Non-competition-Related Information
201
8.3.3.2.
Formal Filing Requirements
203
8.3.3.3.
Protection of Confidentiality
203
8.3.4.
Acceptance of Notification and Supplementary Requests
204
8.4.
Course of Proceedings
206
8.4.1.
Review Periods
207
8.4.1.1.
High Phase II Rate
208
8.4.1.2.
Lack of "Fast Track" Procedure
210
8.4.2.
Hearings and Parties' Right of Defence
210
8.4.3.
Consultation of Third Parties
212
8.5.
Publication of Decisions
216
8.5.1.
Scope of Publication
216
8.5.2.
Types of Decisions Published
218
8.6.
Investigation of Suspicious Mergers and Investigation Powers of MOFCOM
220
8.6.1.
Report of Suspicious Mergers
221
8.6.2.
Course of Proceedings and MOFCOM's Investigation Powers
221
8.6.3.
Sanctions
223
8.6.4.
Enforcement Against SOEs
224
8.7.
Summary
226
9.
Substantive Merger Control Test
229
9.1.
Relevant Market
230
9.1.1.
Product Market
231
9.1.1.1.
Substitutability Test
231
9.1.1.2.
Hypothetical Monopolist Test
237
9.1.2.
Geographic Market
239
9.2.
Prohibition Standard in Article 28 Sentence 1 AML
242
9.2.1.
Factors to Be Considered by MOFCOM Under Article 27 AML
244
9.2.1.1.
Parties' Market Shares and Ability to Control the Markets
245
9.2.1.2.
Degree of Concentration in Relevant Market
251
9.2.1.3.
Influence on Market Access and Technological Progress
253
9.2.1.4.
Influence on Consumers and Other Business Operators
255
9.2.1.4.1.
Protection of Consumer Welfare
255
9.2.1.4.2.
Influence on Other Business Operators
255
9.2.1.5.
Influence on National Economic Development
258
9.2.1.6.
Discretionary Power of MOFCOM to Consider Additional Factors
259
9.2.1.6.1.
Impact of Branding
259
9.2.1.6.2.
Other Additional Factors
260
9.2.1.6.2.1.
Efficiency Defence
260
9.2.1.6.2.2.
Failing Firm Defence
261
9.2.2.
Lack of Requirement of "Substantial" Anticompetitive Effects Under Article 28 AML
262
9.2.3.
Theories of Harm Applied by MOFCOM
263
9.2.3.1.
Horizontal Concentrations
264
9.2.3.1.1.
Unilateral Effects
264
9.2.3.1.1.1.
Mitsubishi Rayon/Lucite
264
9.2.3.1.1.2.
Pfizer/Wyeth
265
9.2.3.1.1.3.
Panasonic/Sanyo
266
9.2.3.1.1.4.
Novartis/Alcon
266
9.2.3.1.1.5.
Uralkali/Silvinit
267
9.2.3.1.1.6.
Alpha V/Savio
268
9.2.3.1.1.7.
UTC/Goodrich
269
9.2.3.1.1.8.
Glencore/Xstrata
269
9.2.3.1.1.9.
Marubeni/Gavilon
270
9.2.3.1.1.10.
Baxter/Gambro
271
9.2.3.1.1.11.
MediaTek/MStar
271
9.2.3.1.1.12.
Evaluation
272
9.2.3.1.2.
Coordinated Effects
272
9.2.3.1.2.1.
Novartis/Alcon
273
9.2.3.1.2.2.
Uralkali/Silvinit
273
9.2.3.1.2.3.
Alpha V/Savio
274
9.2.3.1.2.4.
Seagate/Samsung
274
9.2.3.1.2.5.
Western Digital/Hitachi
275
9.2.3.1.2.6.
Baxter/Gambro
275
9.2.3.1.2.7.
Evaluation
276
9.2.3.2.
Vertical Concentrations
277
9.2.3.2.1.
Mitsubishi Rayon/Lucite
277
9.2.3.2.2.
GM/Delphi
277
9.2.3.2.3.
GE China/Shenhua
280
9.2.3.2.4.
Henkel HK/Tiande
280
9.2.3.2.5.
Google/Motorola Mobility
281
9.2.3.2.6.
ARM/G&D/Gemalto
284
9.2.3.2.7.
Glencore/Xstrata
285
9.2.3.2.8.
Marubeni/Gavilon
285
9.2.3.2.9.
Evaluation
286
9.2.3.3.
Conglomerate Concentrations
286
9.2.3.3.1.
Related Markets
287
9.2.3.3.2.
Assessment of Effects in Coca-Cola/Huiyuan
288
9.2.3.3.2.1.
General Consistency with International Precedents
288
9.2.3.3.2.1.1.
European Commission's Assessment of Conglomerate Cases
288
9.2.3.3.2.1.2.
ACCC's Assessment of CCA/Berri
291
9.2.3.3.2.2.
Likelihood of the Occurrence of Anticompetitive Effects
293
9.2.3.3.2.3.
Justification of the Prohibition
295
9.2.3.3.3.
Assessment of Effects in Wal-Mart/Yihaodian
296
9.2.3.3.4.
Evaluation
297
9.2.4.
Relation Between Competition-Based Test Under Article 28 AML and Non-competition-Related Factors Under Article 27 (5) AML
298
9.2.4.1.
Coca-Cola/Huiyuan
298
9.2.4.1.1.
Accusations of Industrial Policy Underpinning
299
9.2.4.1.2.
Arguments in Favour of a Competition-Based Approach
301
9.2.4.1.3.
Foreign Acquisitions Subsequent to Coca-Cola/Huiyuan
305
9.2.4.1.3.1.
Diageo/Quanxing (Shui Jing Fang)
305
9.2.4.1.3.2.
Nestle/Yinlu
306
9.2.4.1.3.3.
Yum!/Little Sheep
307
9.2.4.1.3.4.
Nestle/Hsu Fu Chi
308
9.2.4.2.
InBev/AB
308
9.2.4.3.
Transactions Involving Strategically Important Commodities for Chinese Market: Uralkali/Silvinit, Glencore/Xstrata, and Marubeni/Gavilon
310
9.2.4.4.
Evaluation
313
9.3.
Imposing Restrictive Conditions Under Article 29 AML
313
9.3.1.
Submission of Remedies by Merging Parties
314
9.3.2.
Standard for Imposing of Restrictive Conditions
315
9.3.3.
Types of Restrictive Conditions
316
9.3.3.1.
MOFCOM's Choice
317
9.3.3.2.
Divestiture Measures
319
9.3.3.2.1.
Mitsubishi Rayon/Lucite
321
9.3.3.2.2.
Pfizer/Wyeth
322
9.3.3.2.3.
Panasonic/Sanyo
323
9.3.3.2.4.
Alpha V/Savio
323
9.3.3.2.5.
Western Digital/Hitachi
324
9.3.3.2.6.
UTC/Goodrich
324
9.3.3.2.7.
Glencore/Xstrata
324
9.3.3.2.8.
Baxter/Gambro
325
9.3.3.2.9.
Evaluation
325
9.3.3.3.
Behavioural Remedies
325
9.3.3.3.1.
Restrictions on Future Acquisitions or Investments in China
326
9.3.3.3.1.1.
InBev/AB
326
9.3.3.3.1.2.
Mitsubishi Rayon/Lucite
328
9.3.3.3.2.
Restrictions on Future Business Scope: Wal-Mart/Yihaodian
330
9.3.3.3.3.
Nondiscrimination and Anti-retaliation Provisions
331
9.3.3.3.3.1.
GM/Delphi
331
9.3.3.3.3.2.
GE China/Shenhua
331
9.3.3.3.3.3.
Henkel HK/Tiande
331
9.3.3.3.3.4.
Google/Motorola Mobility
331
9.3.3.3.3.5.
ARM/G&D/Gemalto
332
9.3.3.3.4.
Maintenance of Status Quoof Supply to China
333
9.3.3.3.4.1.
Uralkali/Silvinit
333
9.3.3.3.4.2.
Glencore/Xstrata
334
9.3.3.3.5.
Abandonment of Business Strategies: Novartis/Alcon
334
9.3.3.3.6.
Hold-Separate Obligations
336
9.3.3.3.6.1.
Seagate/Samsung
336
9.3.3.3.6.2.
Western Digital/Hitachi
336
9.3.3.3.6.3.
Marubeni/Gavilon
337
9.3.3.3.6.4.
MediaTek/MStar
337
9.3.3.3.7.
Ancillary Remedies
338
9.3.3.3.8.
Review of Remedies
339
9.3.3.3.9.
Evaluation
340
9.4.
Exemption from Prohibition Under Article 28 Sentence 2 AML
341
9.4.1.
Positive Effects on Competition Significantly Overweigh Negative Effects
341
9.4.2.
Concentration Is in Public Interest
343
9.4.2.1.
Notion of Public Interest
343
9.4.2.2.
Impact of Provision
344
9.5.
Summary
346
10.
Outlook on Judicial Enforcement of Merger Control Law
347
10.1.
Judicial Review of Merger Control Decisions
347
10.1.1.
Administrative Reconsideration by MOFCOM
348
10.1.2.
Administrative Court Action
349
10.1.3.
Third Party Challenge
351
10.2.
Private Enforcement of Merger Control
352
10.3.
Summary
353
11.
Conclusion
355
Appendix: Table of Chinese Legal Documents
357
Bibliography
369