Skip to main content
SpringerLink
Log in

Historical Development of Chinese Merger Control Regime

  • Chapter
  • First Online:
Chinese Merger Control Law

Part of the book series: Munich Studies on Innovation and Competition ((MSIC,volume 2))

  • 765 Accesses

Abstract

The legislature of the AML did not start from scratch when installing the merger control regime in China as China already had a preexisting, albeit less developed, merger review regime prior to the adoption of the AML, which had only been targeted at foreign M&A. The following will highlight some characteristics of this previous merger control regime and trace back the difficulties and challenges the legislature had to overcome when it adopted the AML after more than 13 years of drafting.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    See Wang, X., 1 Wash. U. Global Stud. L. Rev. 201, 218 (2002).

  2. 2.

    The State Planning Commission was the predecessor of today’s NDRC.

  3. 3.

    See Wang, X., 1 Wash. U. Global Stud. L. Rev. 201, 219 (2002).

  4. 4.

    Ma, M&As of SOEs, 2005, p. 87.

  5. 5.

    Sprick, ZChinR 2008, 122, 123.

  6. 6.

    Sprick, ZChinR 2008, 122, 123.

  7. 7.

    Tang, F., China’s Top 10 Mergers and Acquisitions, 2007, http://www.china.org.cn/english/BAT/195761.htm, last accessed 12 January 2014.

  8. 8.

    See Chen, Z., Probleme der europäischen Fusionskontrolle, 2008, p. 348, in an outlook on Chinese competition law.

  9. 9.

    For instance, the “FIE Merger and Division Rules”, issued by the Ministry of Foreign Trade and Economic Cooperation and SAIC on 23 September 1999, set forth that the approval period for a merger may be extended if such merger “could lead to industry monopolisation or market control and obstruct fair competition”; see Kuzmik/Blayney, New FIE Merger and Demerger Rules Issued, 2000, http://hkjo.lib.hku.hk/archive/files/c56e5dd084b312cb8f2416e377b2a16f.pdf, last accessed 12 January 2014. Also, the “Circular on Issues Related to Transferring State-Owned Shares and Institutional Shares of Listed Corporations to Foreign Investors“, promulgated jointly by the China Securities Regulatory Commission, Ministry of Finance, and State Economy and Trade Commission on 1 November 2002, required all share transfers to foreign investors to “promote fair competition”; see Dabbah, 30 World Competition 341, 348 (2007).

  10. 10.

    MOFTEC was the predecessor of today’s MOFCOM.

  11. 11.

    外国投资者并购境内企业暂行规定, see Chinese version at http://www.mofcom.gov.cn/aarticle/b/c/200403/20040300193497.html, last accessed 12 January 2014, English translation at 17/3 CLP 27-39 (2003).

  12. 12.

    关于外国投资者并购境内企业的规定, see Chinese version at http://www.mofcom.gov.cn/aarticle/b/f/200608/20060802839585.html, last accessed 12 January 2014, English translation at 20/8 CLP 69-90 (2006).

  13. 13.

    关于外国投资者并购境内企业反垄断申报指南, see Chinese version at http://vip.chinalawinfo.com/newlaw2002/slc/slc.asp?db=chl&gid=95739, last accessed 12 January 2014, English translation at 21/3 CLP 35-40 (2007).

  14. 14.

    The new version of M&A Rules 2006 is available at http://english.mofcom.gov.cn/aarticle/subject/cv/updates/201003/20100306819133.html, last accessed 12 January 2014; English translation at http://english.mofcom.gov.cn/aarticle/policyrelease/announcement/201003/20100306819130.html, last accessed 12 January 2014. Other general provisions on foreign M&A such as rules regarding compliance with industry policy and national security review remain valid and unchanged.

  15. 15.

    Law, 22/6 CLP 10, 12 et seq. (2008); Wang, X., Report: Anti-monopoly law vital, China Daily, 22 August 2004, http://www.chinadaily.com.cn/english/doc/2004-08/22/content_367692.htm, last accessed 12 January 2014.

  16. 16.

    See, for instance, Lorenz, 10/10 GCR 1, 2 (2007).

  17. 17.

    The joint venture would not constitute a “domestic enterprise” since it would be foreign invested.

  18. 18.

    Any party’s yearly turnover in Chinese market exceeds RMB 1.5 billion, Articles 51(1) No. (1) and 53 No. (2) M&A Rules 2006.

  19. 19.

    Any party already controls over 20 percent of the Chinese market, or the transaction will cause the market share of any of the parties to reach 25 percent, Articles 51(1) Nos. (3), (4), and 53 No. (3), (4) M&A Rules 2006.

  20. 20.

    The foreign investor acquired more than 10 enterprises in related industries in China in one year, Article 51(1) No. (2) M&A Rules 2006. In an offshore merger, the threshold is triggered if the merger will cause the number of FIEs in related industries in China in which one of the parties has a direct or indirect equity interest to exceed 15 (irrespective of the time frame in which the acquisitions of FIEs have taken place), Article 53 No. (5) M&A Rules 2006.

  21. 21.

    Any party has assets in China of over RMB 3 billion, Article 53 No. (1) M&A Rules 2006. This threshold only applied to offshore mergers.

  22. 22.

    Ma, M&As of SOEs, 2005, p. 77.

  23. 23.

    Lorenz, 10/10 GCR 1, 2 (2007).

  24. 24.

    Wang, X., in: Wang, X. (ed.), Wang Xiaoye on the Antitrust Law (in Chinese), 2010, p. 326, 330.

  25. 25.

    In practice, merging parties usually filed their transactions in order to build up a good compliance record with the Chinese competition authorities; see Han/Tao, 21/3 CLP 32, 33 (2007). MOFCOM did not report any enforcement cases against unnotified concentrations from 2003 to July 2008; see Wang, P./Zhang, Y., in: GCR (ed.), The Asia-Pacific Antitrust Review 2010, http://www.globalcompetitionreview.com/reviews/25/sections/90/chapters/943/china-merger-control, last accessed 12 January 2014.

  26. 26.

    However, the enforcement agencies were reportedly willing to expedite the review process in unproblematic cases by giving an oral indication that the transaction would be cleared before formal expiry of the review period; see Fosh et al., in: Johnston (ed.), Competition Law in China and Hong Kong, 2009, p. 97, 107.

  27. 27.

    See Chen, Z., Probleme der europäischen Fusionskontrolle, 2008, p. 354 in an outlook on Chinese competition law.

  28. 28.

    Yan, Ministry sets up anti-monopoly office, China Daily, 17 September 2004, http://www.chinadaily.com.cn/english/doc/2004-09/17/content_375331.htm, last accessed 12 January 2014.

  29. 29.

    Fosh et al., in: Johnston (ed.), Competition Law in China and Hong Kong, 2009, p. 97, 105; Sprick, ZChinR 2008, 122, 137.

  30. 30.

    See Interview with the Director General of the AMB (Shang Ming), The Antitrust Source, February 2009, http://www.americanbar.org/content/dam/aba/publishing/antitrust_source/Feb09_ShangIntrvw2_26f.authcheckdam.pdf, last accessed 12 January 2014, p. 3.

  31. 31.

    Fosh et al., in: Johnston (ed.), Competition Law in China and Hong Kong, 2009, p. 97, 111 et seq., indicate that some mergers were prohibited but that, however, it remained unclear whether the decisions had been rendered on competition or national security grounds. In contrast, Farmer, 18 Tulane J. of Int’l & Comp. Law 1, 22 (2009), http://ssrn.com/abstract=1411727, last accessed 12 January 2014, and Zhang, X./Zhang, V./Chang, H., The InBev and Anheuser-Busch Merger, 2008, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1322526, last accessed 12 January 2014, p. 9, argue that no proposed acquisition was ever rejected under the M&A Rules 2006.

  32. 32.

    Sprick, ZChinR 2008, 122, 134.

  33. 33.

    SEB was given green light to acquire majority stake in China’s Supor, Xinhua News Agency, 13 April 2007, http://english.MOFCOM.gov.cn/column/print.shtml?/newsrelease/commonnews/200704/20070404563916, last accessed 12 January 2014.

  34. 34.

    Wu, L., 33 World Competition 477, 487 et seq. (2010). Bu, IIC 2010, 202, 208, has argued that MOFCOM intended to protect a famous domestic brand from foreign acquisition.

  35. 35.

    Dabbah, 30 World Competition 341, 345 (2007); Wang, X., 1 Wash. U. Global Stud. L. Rev. 201, 225 (2002).

  36. 36.

    Wang, X., 3 Wash. U. Global Stud. L. Rev. 285, 292 (2004).

  37. 37.

    Mao/Glass, GRUR Int. 2008, 105, 105.

  38. 38.

    Huo, 10 Asian-Pacific Law & Policy Journal 32, 35 et seq. (2008).

  39. 39.

    The SETC was integrated into MOFCOM in 2003.

  40. 40.

    Wang, X., 3 Wash. U. Global Stud. L. Rev. 285, 285 (2004).

  41. 41.

    Wang, X., 3 Wash. U. Global Stud. L. Rev. 285, 285 (2004).

  42. 42.

    See the State Council Draft AML at http://www.jingshilawyer.com/d/cn/showarticle.asp?articleid=229 (in Chinese), last accessed 12 January 2014.

  43. 43.

    中华人民共和国反垄断法, see Chinese version at http://www.npc.gov.cn/npc/zt/2007-08/30/content_1382617.htm, last accessed 12 January 2014, English translation provided by MOFCOM (Invest in China Service) at http://www.china.org.cn/government/laws/2009-02/10/content_17254169.htm, last accessed 12 January 2014. Citations in this thesis are based on this English translation provided by MOFCOM.

  44. 44.

    See Huo, 10 Asian-Pacific Law & Policy Journal 32, 37 (2008); Lin, Interaction of Competition Policy and Development Policy, 2009, http://apps.americanbar.org/dch/comadd.cfm?com=IC722000&pg=2, last accessed 12 January 2014.

  45. 45.

    Wang, X., 3 Wash. U. Global Stud. L. Rev. 285, 293 (2004).

  46. 46.

    Kovacic, 77 Chi.-Kent L. Rev. 265, 297 (2001–2002).

  47. 47.

    See Explanation of the Draft AML, submitted by the Director of the Legislative Affairs Office of the State Council (Cao Kangtai) to the 22th Meeting of the Standing Committee of the 10th NPC on 24 June 2006, http://www.npc.gov.cn/npc/zt/2006-06/24/content_1382613.htm (in Chinese), last accessed 12 January 2014.

  48. 48.

    The accession documents, and in particular the Protocol on the Accession of the PRC, available at http://www.wto.org/english/thewto_e/acc_e/completeacc_e.htm, last accessed 12 January 2014, did not explicitly require the adoption of a competition law.

  49. 49.

    Report of the Working Party on the Accession of China, available at http://www.wto.org/english/thewto_e/acc_e/completeacc_e.htm, last accessed 12 January 2014.

  50. 50.

    However, para. 65 of the Report of the Working Party on the Accession of China, which contains the reference to fair competition, does not constitute an integral part of the WTO Agreement (as amended from time to time). This provision was not included in the list of accession commitments set forth in para. 342 of the Report of the Working Party on the Accession of China, and, according to Article 1(2) Protocol on the Accession of the PRC, only commitments referred to in para. 342 of the Working Party Report on the Accession of China shall be an integral part of the WTO Agreement.

  51. 51.

    Furse, 30 World Competition 323, 324 (2007).

  52. 52.

    See Trade Policy Review of the PRC, WTO Secretariat Report, 28 February 2006, available at http://www.wto.org/english/tratop_e/tpr_e/tp262_e.htm, last accessed 12 January 2014, Chapter III (Trade Policies and Practices by Measure), para. 243 et seq.

  53. 53.

    Dabbah, 30 World Competition 341, 352 (2007).

  54. 54.

    See Chen, Z., Probleme der europäischen Fusionskontrolle, 2008, p. 358, in an outlook on Chinese competition law; Huo, 10 Asian-Pacific Law & Policy Journal 32, 36 (2008); Ko, 3 Wash. U. Global Stud. L. Rev. 267, 274 (2004); Ma, M&As of SOEs, 2005, p. 87; Owen/Sun, S./Zheng, 75 Antitrust L. J. 231, 244 (2008–2009), http://ssrn.com/abstract=1483273, last accessed 12 January 2014.

  55. 55.

    Huang, 75 Antitrust L. J. 117, 125 (2008-2009); Huo, 10 Asian-Pacific Law & Policy Journal 32, 38 et seq. (2008).

  56. 56.

    See Sprick, ZChinR 2008, 122, 127, and Wu, Z., 75 Antitrust L. J. 73, 77 (2008–2009).

  57. 57.

    Wang, X., 1 Wash. U. Global Stud. L. Rev. 201, 229 (2002).

  58. 58.

    Jian, Edgy sword of anti-monopoly law thrust out, China Economic News, 24 September 2007.

  59. 59.

    See Bush, 32/3 CBR 30, 32 (2005).

  60. 60.

    See Report on the Amendments to the Draft AML, submitted by the NPC Law Committee to the 28th Meeting of the Standing Committee of the 10th NPC on 24 June 2007, available at http://www.npc.gov.cn/npc/zt/2006-06/24/content_1382614.htm (in Chinese), last accessed 12 January 2014; Wu, Z., 75 Antitrust L. J. 73, 89 (2008–2009).

  61. 61.

    See Chen, Z., Probleme der europäischen Fusionskontrolle, 2008, p. 368, in an outlook on Chinese competition law.

  62. 62.

    Brault/Chang, 14 Revue Lamy de la Concurrence 156, 159 (2008); Mao/Glass, GRUR Int. 2008, 105, 110.

  63. 63.

    See Wang, X., 1 Wash. U. Global Stud. L. Rev. 201, 224 et seq. (2002).

  64. 64.

    Carnabuci, AML moves closer to adoption, 2007, http://www.freshfields.com/publications/pdfs/2007/sept05/19755.pdf, last accessed 22 November 2010, p. 1.

  65. 65.

    See Report on the Amendments to the Draft AML, submitted by the NPC Law Committee to the 28th Meeting of the Standing Committee of the 10th NPC on 24 June 2007, available at http://www.npc.gov.cn/npc/zt/2006-06/24/content_1382614.htm (in Chinese), last accessed 12 January 2014.

Author information

Authors and Affiliations

  1. Munich, Germany

    Tingting Weinreich-Zhao

Authors
  1. Tingting Weinreich-Zhao
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

Copyright information

© 2015 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Weinreich-Zhao, T. (2015). Historical Development of Chinese Merger Control Regime. In: Chinese Merger Control Law. Munich Studies on Innovation and Competition, vol 2. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-43868-8_3

Download citation

Publish with us

Policies and ethics

Search

Navigation