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Merger Control in China: Procedural Rights

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Procedural Rights in Competition Law in the EU and China

Part of the book series: China-EU Law Series ((CELS,volume 3))

Abstract

The Anti-Monopoly Law (AML) has been in force for over 7 years. The 5-year anniversary in August 2013 has been described as a turning point in the history of Chinese antitrust enforcement, with the focus of public attention arguably shifting from merger control to the enforcement against anti-competitive agreements and abuse of dominance. Many observers find the reason for this development to be that China’s merger control policy and enforcement practice have reached a stage of maturity.

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Notes

  1. 1.

    Wang (2012), pp. 3–4.

  2. 2.

    Coca-Cola/Huiyuan, [2009] MOFCOM Announcement No. 22, 18 March 2009; and Maersk/MSC/CMA CGM, [2014] MOFCOM Announcement No. 46, 17 June 2014.

  3. 3.

    Schoneveld and Fu (2012), p. 14; Han and Zhou (2012), p. 5; and Harris Jr. (2014), p. 4.

  4. 4.

    See Harris Jr. (2014) for an alternative explanation for these procedural issues.

  5. 5.

    Provisional Regulation on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, [2003] Ministry of Foreign Trade and Economic Cooperation, State Administration of Taxation, State Administration for Industry and Commerce, China Securities Regulatory Commission and State Administration of Foreign Exchange Order No. 3, 7 March 2003 and Regulation on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, [2006] Ministry of Commerce; State-owned Assets Supervision and Administration Commission of the State Council; State Administration of Taxation; State Administration of Industry and Commerce; China Securities Regulatory Commission; State Administration of Foreign Exchange Order No. 10, 8 August 2006.

  6. 6.

    Antitrust Source, Interview with Shang Ming Director-General of the Anti-Monopoly Bureau under the Ministry of Commerce of the People’s Republic of China, February 2009, available at http://www.americanbar.org/content/dam/aba/publishing/antitrust_source/Feb09_ShangIntrvw2_26f.authcheckdam.pdf.

  7. 7.

    See Ministry of Commerce, Important functions, 13 June 2011, available at http://fldj.mofcom.gov.cn/article/gywm/200809/20080905756026.shtml.

  8. 8.

    The AML itself does not state which bodies are responsible for enforcing the law but makes a general reference to the “anti-monopoly enforcement authority(ies)”. Chapter 4 on merger control speaks of the “anti-monopoly enforcement authority under the State Council”. The other chapters do not have the addition “under the State Council”, which implies that authorities at lower levels of governance—for example, at the provincial or municipal level—may also assume enforcement powers.

  9. 9.

    See Ministry of Commerce, Internal structure, 13 March 2010, available at http://fldj.mofcom.gov.cn/article/gywm/200811/20081105868495.shtml.

  10. 10.

    Ministry of Commerce, Guiding Opinions on the Notification of Concentrations between Business Operators, 6 June 2014, available at http://fldj.mofcom.gov.cn/article/xgxz/201406/20140600614679.shtml.

  11. 11.

    Interim Regulation on the Standards Applicable to Simple Cases of Concentrations between Business Operators, [2014] MOFCOM Announcement No. 12, 11 February 2014; and Ministry of Commerce, Guiding Opinions on the Notification of Simple Cases involving Concentrations between Business Operators (Trial), 18 April 2014, available at http://fldj.mofcom.gov.cn/article/xgxz/201404/20140400555353.shtml.

  12. 12.

    MOFCOM publishes all clearance decisions on a quarterly basis on the AMB’s website. See http://fldj.mofcom.gov.cn/.

  13. 13.

    Ministry of Commerce, Guiding Opinions on the Notification of Simple Cases involving Concentrations between Business Operators (Trial), 18 April 2014, Art. 8, available at http://fldj.mofcom.gov.cn/article/xgxz/201404/20140400555353.shtml. Also see Ministry of Commerce, Section for Notifications of Simple Cases involving Concentrations between Business Operators, available at http://fldj.mofcom.gov.cn/article/jyzjzjyajgs/.

  14. 14.

    Measures on the Notification of Concentrations between Business Operators, [2009] MOFCOM Order No. 11, 1 January 2010, Art. 16.

  15. 15.

    Ibid.

  16. 16.

    State Council Regulation on the Notification Thresholds for Concentrations between Business Operators, [2008] State Council Order No. 529, 3 August 2008.

  17. 17.

    Provisional Measures on the Investigation and Handling of Concentrations between Business Operators Not Notified In Accordance with the Law, [2011] MOFCOM Order No. 6, 30 December 2011.

  18. 18.

    See Ministry of Commerce, Antitrust enforcement of MOFCOM has made new progress, 2 August 2013, available at http://www.mofcom.gov.cn/article/ae/ai/201308/20130800226124.shtml.

  19. 19.

    See People News, Penalty decisions for undeclared concentrations between business operators are released, 21 March 2014, available at http://politics.people.com.cn/n/2014/0321/c70731-24702959.html.

  20. 20.

    See PaRR news, available at http://app.parr-global.com/intelligence/view/1121701.

  21. 21.

    Measures on the Review of Concentrations between Business Operators, [2009] MOFCOM Order No. 11, 24 November 2009.

  22. 22.

    See further infra, contribution by Dong, Sect. 3.2.

  23. 23.

    Regulation on Sanctions Against Public Servants of the Administrative Organs, [2007] Order of the State Council No. 495, 1 June 2007.

  24. 24.

    Issues on the Specific Application of Law for Handling Criminal Cases of Infringement upon Intellectual Property Rights [2004] Judicial Interpretation Fa Shi No. 19, 22 December 2004, Art. 7.

  25. 25.

    Criminal Law of the People’s Republic of China, [1997] Presidential Order No. 83, 14 March 1997.

  26. 26.

    Issues on the Specific Application of Law for Handling Criminal Cases of Infringement upon Intellectual Property Rights, [2004] Judicial Interpretation Fa Shi No. 19, 22 December 2004, Art. 7.

  27. 27.

    Provisions on Disclosure of Government Information, [2008] State Council Order No. 492, 1 May 2008.

  28. 28.

    Ibid., Art. 2.

  29. 29.

    Art. 25(1).Anti-Monopoly Law of the People’s Republic of China, [2007] Presidential Order No. 68, 30 August 2007.

  30. 30.

    Ibid., Art. 26(1).

  31. 31.

    Ibid., Arts. 25(1) and 26(1).

  32. 32.

    Ibid., Art. 26(1).

  33. 33.

    Ministry of Commerce, Provisional Regulation on the Imposition of Restrictive Conditions on Concentrations between Undertakings, [2014] MOFCOM Order No. 6, 4 December 2014.

  34. 34.

    Ibid., Art. 5.

  35. 35.

    Ibid., Art. 7.

  36. 36.

    Administrative Licensing Law of the People’s Republic of China, [2003] Presidential Order No. 7, 27 August 2003.

  37. 37.

    There appears to be some debate, even within MOFCOM, about whether the merger control procedure can be viewed as a type of “administrative licensing” procedure. That said, at one place, the AMB’s website itself mentions that the merger control decision is an administrative licensing decision. See Ministry of Commerce, Guiding Opinions on Anti-Monopoly Review Process Involving Concentrations between Business Operators, 11 March 2010, available at http://fldj.mofcom.gov.cn/article/xgxz/200902/20090206034057.shtml.

  38. 38.

    Beyond the specific review procedure, the lack of written communication from the MOFCOM side can lead to uncertainty as to the meaning and scope of remedies at the time of their implementation.

  39. 39.

    See Report on Competition Law and Policy of China 80–81 (2012).

  40. 40.

    Article 43 AML entitles any party in a case of suspected monopolistic conduct to make statements to the authority. See infra, contribution by Dong, Sect. 2. It is unclear whether this provision applies directly to the standard merger control procedure or only applies to investigations for suspected breaches of the AML’s monopoly agreement and abuse of dominance provisions (and the failure to comply with merger control rules).

  41. 41.

    Art. 36 Administrative Licensing Law of the People’s Republic of China, [2003] Presidential Order No. 7, 27 August 2003.

  42. 42.

    For an exploration of the right to have access to file in the EU, see infra, contribution by Muheme et al., Sect. 3.

  43. 43.

    See Pan (2010).

  44. 44.

    Art. 5 Ministry of Commerce, Provisional Regulation on the Imposition of Restrictive Conditions on Concentrations between Undertakings.

  45. 45.

    Art. 29 Anti-Monopoly Law of the People’s Republic of China, [2007] Presidential Order No. 68, 30 August 2007.

  46. 46.

    Art. 5 Ministry of Commerce, Provisional Regulation on the Imposition of Restrictive Conditions on Concentrations between Undertakings.

  47. 47.

    Ibid., Art. 6(3).

  48. 48.

    Ibid., Art. 7.

  49. 49.

    See Han (2013), 76–77.

  50. 50.

    Renard (2012).

  51. 51.

    Renard and Edward (2013).

  52. 52.

    Han and Zhou (2012), pp. 4 et seq.

  53. 53.

    Feng and Sun (2013).

  54. 54.

    Mitsubishi Rayon/Lucite International, [2009] MOFCOM Announcement No. 28, 24 April 2009.

  55. 55.

    Walmart/Newheight, [2012] MOFCOM Announcement No. 49, 13 August 2012.

  56. 56.

    See Report on Competition Law and Policy of China 153 (2010).

  57. 57.

    Inbev/Anheuser-Busch, [2008] MOFCOM Announcement No. 95, 18 November 2008.

  58. 58.

    Coca-Cola/Huiyuan, [2009] MOFCOM Announcement No. 22, 18 March 2009.

  59. 59.

    General Motors/Delphi, [2009] MOFCOM Announcement No. 76, 28 September 2009.

  60. 60.

    Merck KGaA/AZ Electronic Materials, [2014] MOFCOM Announcement No. 30, 30 April 2014.

  61. 61.

    See Report on Competition Law and Policy of China 83 (2012).

  62. 62.

    Provisional Measures on the Investigation and Handling of Concentrations between Business Operators Not Notified In Accordance with the Law, [2011] MOFCOM Order No. 6, 30 December 2011.

  63. 63.

    For further detail on these powers, see infra, contribution by Dong, Sect. 3.

  64. 64.

    Art. 5 Provisional Measures on the Investigation and Handling of Concentrations between Business Operators Not Notified In Accordance with the Law, [2011] MOFCOM Order No. 6, 30 December 2011.

  65. 65.

    Ibid., Art. 7.

  66. 66.

    Ibid., Art. 14.

  67. 67.

    Administrative Reconsideration Law of the People’s Republic of China, [1999] Presidential Order No. 16, 29 April 1999.

  68. 68.

    Administrative Litigation Law of the People’s Republic of China, [1989] Presidential Order No. 16, 4 April 1989, amended on 1 November 2014.

  69. 69.

    State Compensation Law of the People’s Republic of China, [1994] Presidential Order No. 23, 1 January 1995.

  70. 70.

    Xuexian (2009), p. 16.

  71. 71.

    Implementation Measures for Administrative Reconsideration of MOFCOM, [2004] MOFCOM Order No. 7, 1 June 2004.

  72. 72.

    Art. 14 Administrative Reconsideration Law of the People’s Republic of China, [1999] Presidential Order No. 16, 29 April 1999.

  73. 73.

    Art. 2 Implementation Measures for Administrative Reconsideration of MOFCOM, [2004] MOFCOM Order No. 7, 1 June 2004.

  74. 74.

    Art. 9 Administrative Reconsideration Law of the People’s Republic of China, [1999] Presidential Order No. 16, 29 April 1999.

  75. 75.

    Ibid., Art. 14.

  76. 76.

    Ibid., Art. 14.

  77. 77.

    Art. 15 Administrative Litigation Law of the People’s Republic of China, [1989] Presidential Order No. 16, 4 April 1989, as amended.

  78. 78.

    Ibid., Arts. 81 and 88.

  79. 79.

    Arts. 23 and 28 Administrative Reconsideration Law of the People’s Republic of China, [1999] Presidential Order No. 16, 29 April 1999; Art. 34 Administrative Litigation Law of the People’s Republic of China, [1989] Presidential Order No. 16, 4 April 1989, as amended.

  80. 80.

    Art. 27(1) Several Issues concerning the Implementation of the Administrative Litigation Law of the People’s Republic of China, [2000] Judicial Interpretation Fa Shi No. 8, 8 March 2000; Art. 19 Regulation on the Implementation of the Administrative Reconsideration Law of the People’s Republic of China [2007] State Council Order No. 499, 29 May 2007.

  81. 81.

    Art. 21(2) Regulation on the Implementation of the Administrative Reconsideration Law of the People’s Republic of China, [2007] State Council Order No. 499, 29 May 2007; Art. 27(3) Several Issues concerning the Implementation of the Administrative Litigation Law of the People’s Republic of China, [2000] Judicial Interpretation Fa Shi No. 8, 8 March 2000.

  82. 82.

    Art. 28 Administrative Reconsideration Law of the People’s Republic of China, [1999] Presidential Order No. 16, 29 April 1999.

  83. 83.

    Art. 70 Administrative Litigation Law of the People’s Republic of China, [1989] Presidential Order No. 16, 4 April 1989, as amended.

  84. 84.

    Before the law was amended, the courts were not entitled to review the appropriateness of an administrative decision except one that imposes penalties. Some scholars also believe the “abuse of the administrative power” in factor (d) should include abuse of discretionary power.

  85. 85.

    Art. 4 State Compensation Law of the People’s Republic of China, [1994] Presidential Order No. 23, 1 January 1995.

  86. 86.

    See the Decision on Administrative Reconsideration by MOFCOM, [2006] MOFCOM Shang Fa Han No. 67, 5 September 2006, available at http://www.mofcom.gov.cn/aarticle/b/g/200610/20061003434156.html.

  87. 87.

    In some cases, the parties are willing to actively submit new evidence to support their claims against the administrative decisions. In administrative appeals, there is no restriction on such new evidence. In contrast, in judicial cases, in a strict way, such new evidence should not be considered, because they are not the basis of the administrative decision. However, at least in administrative litigation involving intellectual property rights, to protect the interests of the parties and to ensure the judgment is based on objective facts, the courts may accept new evidence submitted by the parties. See Wang (2014).

  88. 88.

    Art. 6 Measures on the Review of Concentrations between Business Operators, [2009] MOFCOM Order No. 11, 24 November 2009.

  89. 89.

    Ibid., Art. 7.

  90. 90.

    Art. 2 Administrative Litigation Law of the People’s Republic of China, [1989] Presidential Order No. 16, 4 April 1989, as amended.

  91. 91.

    Art. Issues concerning the Implementation of the Administrative Litigation Law of the People’s Republic of China, [2000] Judicial Interpretation Fa Shi No. 8, 8 March 2000.

  92. 92.

    Ibid., Art. 13.

  93. 93.

    Jiangsu High People’s Court, Ji Deren et al v City government of Yancheng, [2003] Su Xing Zhong Zi No. 25. See also Emch (2009).

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Acknowledgements

The authors would like to thank Minna LI, Tara RUDRA, Sonny SUN and Xiong ZENG for their invaluable research. The views expressed in this chapter are the authors’ own and do not reflect the view of the organisations or institutions they are associated with.

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Authors and Affiliations

  1. Hogan Lovells, Beijing, China

    Adrian Emch

  2. University of Chinese Academy of Sciences, Beijing, China

    Wei Han

  3. Linklaters, Hong Kong, China

    Clara Ingen-Housz

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  1. Faculty of Law, Maastricht University, Maastricht, The Netherlands

    Caroline Cauffman

  2. China University of Political Science an, School of Rule of Law and Government, BEIJING, China

    Qian Hao

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Emch, A., Han, W., Ingen-Housz, C. (2016). Merger Control in China: Procedural Rights. In: Cauffman, C., Hao, Q. (eds) Procedural Rights in Competition Law in the EU and China. China-EU Law Series, vol 3. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-48735-8_5

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