1、JUFE Yu Ling1Part 2Antimonopoly Law:Chinese PerspectiveJUFE Yu LingLearning Objectives(1)Differentiate Concentration of Undertakings from M&A(2)Explain How to File a Concentration Notification(3)Explain the Failing Firm Defense(4)Explain How to Calculate Market ConcentrationJUFE Yu LingContent1.Conc
2、entration of Undertakings in AML2.The Catalogues of Concentration of Undertakings in AML(merger)3.The Motives and Justifications of Concentration 4.How to concentrate legally and reasonably?5.Further Explanation of Horizontal Mergers 3JUFE Yu Ling4Chapter 5Concentration of UndertakingsJUFE Yu Ling1.
3、Concentration of Undertakings 1.Concentration of Undertakings in AMLin AML(1)Distinction between M&A in company law and AML 1)In company law,M&A emphasis on the change of the shareholders.Merger Acquisitions Consolidation5JUFE Yu LingMerger,consolidation and acquisitions“Merger”means one corporation
4、 swallows the other,but the shareholders of the swallowed company receive shares of the surviving corporation.(吸收合并)A+B=A“Consolidation means 2 companies join together to create a new corporation.(新设合并)A+B=C“Acquisition”means the obtaining of controlling interest in a company.(控股合并)It occurs when on
5、e company or corporation takes control of another one.6JUFE Yu Ling2)In AML,Concentration of Undertakings(mergers)means (i)the merger of undertakings;(ii)the acquisition control over other undertaking(s)by an undertaking by acquiring equities or assets;or (iii)the acquisition of control over,or the
6、possibility of exercising decisive influence on,other undertaking(s)by an undertaking by contract or by any other means.7JUFE Yu Ling8Interlocking Directorates(董事兼任董事兼任)Occurs when an individual serves on the board of directors of two or more competing companies simultaneously.These are prohibited i
7、f the two firms meet certain size requirements.JUFE Yu Ling2.The Catalogues of Concentration of 2.The Catalogues of Concentration of Undertakings in AML(merger)Undertakings in AML(merger)(1)Horizontal Mergers occur between firms at the same level in the production and distribution chain.(2)Vertical
8、Mergers occur between firms at different levels in the production and distribution chain.(3)Conglomerate Mergers 9JUFE Yu Ling10Conglomerate MergersConglomerate Mergers occur when a firm seeks to:Extend its product into a new market by merging with a firm in that market.Extend its product line by me
9、rging with a firm already producing that product.Diversify by acquiring a firm that deals in unrelated products.JUFE Yu Ling3.The Motives and Justifications of Concentration(1)The motives of concentrationaim to seek improved financial performance.Economy of scale;Economy of scope;Increased revenue o
10、r market share;Cross-selling;Synergy;Taxation;Geographical or other diversification Resource transfer;Vertical integration11JUFE Yu Ling3.The Motives and Justifications of Concentration(2)Justifications of Concentration Merging parties may reduce their costs by combining complementary assets,elimina
11、ting duplicate activities,or achieving scale economies.Concentrations also may lead to enhanced product quality or to increased innovation that result in lower costs and prices or in more rapid introduction of new products that benefit consumers.12JUFE Yu Ling4.How to concentrate legally and 4.How t
12、o concentrate legally and reasonably?reasonably?(1)Procedure 1 The business operators files a concentration declaration to MOFCOM.MOFCOM conducts a preliminary examination.The business operators may implement the concentration.No further examination shall be conducted or where the Anti-monopoly Law
13、Enforcement Agency fails to make a decision within the time limit.(30 days)13JUFE Yu Ling4.How to concentrate legally and 4.How to concentrate legally and reasonably?reasonably?(1)Procedure 2 The business operators files a concentration declaration to MOFCOM.MOFCOM conducts a preliminary examination
14、.MOFCOM decides to conduct further examination.It shall,within 90 days from the date of decision,complete the examination.The business operators shall refrain from implementing the concentration within the period of examination.14JUFE Yu Ling(1)Procedure 3 National Security ReviewIn case the acquisi
15、tion of domestic enterprises by foreign investors or other manners to concentrate referred to national security,besides being reviewed according to this law,shall be carried out national safety review according to related regulations.15JUFE Yu Ling（2）Review Process by MOFCOMJUFE Yu Ling(3)Review dea
16、dline(3)Review deadline第一阶段第一阶段第二阶段第二阶段延长阶段延长阶段30日第25条90日第26条60日第26条JUFE Yu LingHow to extend the time limit?Under the following circumstances,the time limit may be extended to add 60 days:(i)the undertakings concerned agree to extend the time limit;(ii)the documents or materials submitted are inacc
17、urate and need verification;(iii)other significant events occurred after notification.18JUFE Yu Ling(4)How to Decide Concentration?1)The Factors Affecting the Review (i)market share in the relevant market and their ability to control the market;(ii)concentrate degree of the relevant market;(iii)effe
18、ct on the market entry and technology improvement;(iv)effect on consumers and other undertakings;(v)effect on national economical improvement;(vi)other factors shall affect the competition,be considered by the antimonopoly execution authorities.19JUFE Yu Ling2)The Consequences of Review a)agree the
19、concentration (taken decision not to precede review)b)approval with restrictions and conditions:where a concentration will reduce the negative effect on competition.the antimonopoly execution authorities shall announce the decisions of prohibition or conditional concentration to public.c)prohibit th
20、e concentration20JUFE Yu Lingc)prohibit the concentration If a concentration has or may have effect of eliminating or restricting competition,the antimonopoly execution authorities shall take decision of prohibition.If the undertakings can prove that the concentration bring more positive effect than
21、 negative effect on competition,or the concentration pursuant to public interests,the antimonopoly execution authorities shall decide,not to prohibit the concentration.21JUFE Yu Ling(5)Thresholds for Prior Notification of Concentrations of Undertakingsthe preceding financial year the preceding finan
22、cial year Worldwide turnover=RMB 10 billion yuan=2 undertakings=RMB 400 million yuan(nationwide turnover within China)nationwide turnover within China=RMB 2 billion yuan22JUFE Yu Ling(6)Exemption of Prior Notification(i)one undertaking which is a party to the concentration has the power to exercise
23、more than half the voting rights of every other undertaking,whether of the equity or the asset;(ii)one undertaking which is not a party to the concentration has the power to exercise more than half the voting rights of every undertaking concerned,whether of the equity or the asset.23JUFE Yu Ling5.Fu
24、rther Explanation of Horizontal Mergers(1)The Potential Adverse Competitive Effects of HMs 1)Lessening of Competition Through Coordinated Interaction (As section 2.1 of the Guidelines states,coordinated interaction includes tacit or express collusion,and may or may not be lawful in and of itself.)2)
25、Lessening of Competition Through Unilateral Effects24JUFE Yu Ling2)Lessening of Competition Through Unilateral EffectsBy eliminating competition between the merging firms,a merger gives the merged firm more market power.Unilateral Effects from Merger to Monopoly Unilateral Effects Relating to Capaci
26、ty and Output for Homogeneous Products Unilateral Effects Relating to Pricing of Differentiated Products Unilateral Effects Relating to Auctions Unilateral Effects Relating to Bargaining25JUFE Yu Ling Concentration levelMarket structureCR4(%)CR8(%)OligopolyCR4 85Oligopoly75%CR485%CR8 85Oligopoly 50%
27、CR475%75%CR485%Oligopoly 35%CR450%45%CR475%Oligopoly30%CR435%40%CR445%competition CR430%CR840%26JUFE Yu LingCompliance:From“Must Do”to Profit Opportunity 27JUFE Yu LingHintsCompliance:burden or opportunity?What?Compliance means respecting the law.In the competition field,it means business proactivel
28、y respecting competition rules.Why?The stakes are high.Companies need to be aware of the risks of infringing competition rules and how to develop a compliance strategy that best suits their needs.An effective compliance strategy enables a company to minimize the risk of involvement in competition la
29、w infringements,and the costs resulting from anti-competitive behaviour.28JUFE Yu LingHintsAn ounce of prevention is worth of pound of cure carries extra authority in the field of antitrust.If all that were necessary to bring about compliance with the criminal laws were to increase penalties,the cri
30、me problem would have been solved long ago.29JUFE Yu LingExpected OutcomeYou will required to read the documents released by the authorities,such as ACCC and KFTC,and the compliance programs by different companies.You should write a compliance program,as you are the policy maker of specific company chosen by yourself.You should focuses on the industry circumstances and the market position of your company.30
