Introduction to Chinese merger regulations

Tekst gościnny
Dodane przez Tekst gościnny Listopad 25, 2011 12:46

Introduction to Chinese merger regulations

Dzisiaj przedstawiamy tekst gościnny pani Karoliny Sapińskiej, absolwentki studiów LLM z zakresu prawa spółek i prawa finansowego na Uniwersytecie w Glasgow zainteresowanej problematyką międzynarodowej kontroli koncentracji przedsiębiorstw.

Chinese economy and its bilateral economic relations with other big trading partners as US and EU have expanded over the years. Consequently, China has become a third world’s economy and an important market for foreign export. Its economic growth attracted foreign investors, what led to the significant increase in a number of cross-border mergers affecting Chinese market and creating a potential threat to its domestic interests. That resulted in a debate over the need of adopting an effective competition regulations in China, particularly with respect to mergers. The argument of passing competition regulations was further strengthened in 2001 after China’s accession to the World Trade Organization (WTO). Upon accession, Chinese government committed itself to maintaining a transparent economic laws and procedures, as well as a competitive market environment.

The anti-monopoly law (AML) in force was enacted in 2007 and entered into force in August 2008. It is now the most significant merger control tool in China. Prior to its enactment, mergers with a foreign element had fallen into scope of the Interim Provisions on Mergers and Acquisitions of a Domestic Enterprise by Foreign Investors adopted in 2003 and subsequently replaced by the AML.

AML is broad in scope, as it not only relates to concentrations of undertakings, but it also covers monopoly agreements and abuse of a dominant market position. Its main purpose according to Article 1 is:

“This Law is enacted for the purpose of preventing and restraining monopolistic conducts, protecting fair competition in the market, enhancing economic efficiency, safeguarding the interests of consumers and social public interest, promoting the healthy development of the socialist market economy.”

AML’s geographical reach is very broad, as the law does not only apply to monopolistic practices which occur within Chinese borders, but also to foreign conducts provided that they “eliminate or have restrictive effect on competition” on Chinese market. The extraterritorial reach of the Chinese competition law allows Chinese authorities to intervene in a wide range of distorting practices, not only in these at the domestic level.

AML defines monopolistic conduct with respect to mergers and according to Article 3 of the act that includes any “concentration of business operators that eliminates or restricts competition or might be eliminating or restricting competition”. The act further explains when concentration arises and that occurs in three different situations: when business operators merge, when business operator acquires control over another business operator by means of acquiring its equities or assets and when business operator acquires control over another business operator or exercises decisive influence on the other business operator by virtue of contact.

Accordingly, Chinese anti-monopoly law is applicable to both, domestic and foreign mergers and grants Chinese competition authorities wide jurisdictional powers.

Further details on substantive test, procedure and case law will be provided in next articles.

Tekst gościnny
Dodane przez Tekst gościnny Listopad 25, 2011 12:46
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