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Objectives and Policy Standards of Merger Control as Embodied in the AML

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Chinese Merger Control Law

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

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Abstract

Not only has the institutional design of AML enforcement set the stage for a possible mingling of various interests, but the interference of multiple policies has also been explicitly inscribed into the wording of the AML. The following analysis will examine in depth the objectives pursued by the legislature of the AML and discuss which policy standards are embodied therein. One important and valuable source of interpretation for the goals that the legislature of the AML has pursued is a commentary on the AML edited by the legislature itself, the NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (“NPC Commentary on the AML”).

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Notes

  1. 1.

    NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007.

  2. 2.

    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, available at http://www.npc.gov.cn/npc/zt/2006-06/24/content_1382613.htm (in Chinese), last accessed 12 January 2014; NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007, pp. 13 et seq. and 185.

  3. 3.

    Bush, AML: Unanswered Questions and Challenges, 2007, http://www.abanet.org/antitrust/at-source/07/10/Oct07-Bush10-18f.pdf, last accessed 12 January 2014, p. 2.

  4. 4.

    See Sun, J., Implementation of AML, 2009, http://www.competitionlaw.cn/show.aspx?id=4951&cid=17, last accessed 12 January 2014; Yang, D., Report on Symposium on Coca-Cola/Huiyuan, 2009, http://cms40.legaldaily.com.cn:7001/servlet/PagePreviewServlet?siteid=4&nodeid=7574&articleid=1060323&type=1 (in Chinese), last accessed 12 January 2014, referring to Wang Xiaoye and Huang Yong.

  5. 5.

    NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007, p. 3.

  6. 6.

    NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007, p. 3.

  7. 7.

    See Liu, L., In Fairness We Trust, 2004, http://ssrn.com/abstract=610822, last accessed 12 January 2014, p. 3, who outlines the concepts of free competition and fair competition in general.

  8. 8.

    Liu, L., In Fairness We Trust, 2004, http://ssrn.com/abstract=610822, last accessed 12 January 2014, p. 7. See also Yang, D., Report on Symposium on Coca-Cola/Huiyuan, 2009, http://cms40.legaldaily.com.cn:7001/servlet/PagePreviewServlet?siteid=4&nodeid=7574&articleid=1060323&type=1 (in Chinese), last accessed 12 January 2014, referring to Wu Hongwei, who considers the AML to protect the competitors’ right to compete.

  9. 9.

    Zheng, AML: Part 2, 2009, http://lawprofessors.typepad.com/antitrustprof_blog/2009/10/chinas-antimonopoly-lawone-year-down-part-2-chinas-new-merger-review-regime.html, last accessed 12 January 2014. See also Bu, IIC 2010, 202, 206, who considers that the possible protection of competitors under Article 27 No. (4) AML contradicts the goal of the AML to promote competition pursuant to Article 1 AML.

  10. 10.

    See, for instance, Patterson/Shapiro, 16/1 Antitrust Magazine 18, 25 (2001), http://faculty.haas.berkeley.edu/shapiro/divergence.pdf, last accessed 12 January 2014; Schmidt/Schmidt, Europäische Wettbewerbspolitik, 2006, p. 178 et seq.

  11. 11.

    Drexl, in: Drexl/Kerber/Podszun (eds.), Competition Policy and the Economic Approach, 2011, p. 312, 326.

  12. 12.

    Drexl, in: Drexl/Kerber/Podszun (eds.), Competition Policy and the Economic Approach, 2011, p. 312, 326.

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    See Yang, D., Report on Symposium on Coca-Cola/Huiyuan, 2009, http://cms40.legaldaily.com.cn:7001/servlet/PagePreviewServlet?siteid=4&nodeid=7574&articleid=1060323&type=1 (in Chinese), last accessed 12 January 2014, referring to Wang Xiaoye.

  14. 14.

    NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007, p. 3.

  15. 15.

    See Wang, X., 75 Antitrust L. J. 133, 143 (2008–2009).

  16. 16.

    Gerber, 3 Wash. U. Global Stud. L. Rev. 315, 321 (2004).

  17. 17.

    See Dabbah, 30 World Competition 341, 355 (2007).

  18. 18.

    Schwalbe/Zimmer, Law and Economics in European Merger Control, 2009, p. 3.

  19. 19.

    Schwalbe/Zimmer, Law and Economics in European Merger Control, 2009, p. 8.

  20. 20.

    Parret, in: Zimmer (ed.), The Goals of Competition Law, 2012, p. 61, 68 et seq.

  21. 21.

    Singh, Competition and Competition Policy in Emerging Markets: International and Developmental Dimensions, 2002, http://www.cbr.cam.ac.uk/pdf/WP246.pdf, last accessed 12 January 2014, p. 12.

  22. 22.

    Wang, X., 75 Antitrust L. J. 133, 142 (2008–2009).

  23. 23.

    NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007, p. 2.

  24. 24.

    See also Drexl, in: Drexl et al. (eds.), Competition Policy and Regional Integration in Developing Countries, 2012, p. 231, 249, who argues that the concept of “consumer welfare” is generally used in developing countries to identify positive social effects more broadly.

  25. 25.

    Singh, Competition and Competition Policy in Emerging Markets: International and Developmental Dimensions, 2002, http://www.cbr.cam.ac.uk/pdf/WP246.pdf, last accessed 12 January 2014, p. 30; see also Communication from India, WTO Working Group on the Interaction between Trade and Competition Policy, WT/WGTCP/W/216, 26 September 2002, para. 7.

  26. 26.

    Lin, Capacity Building, 2010, http://www.asiancompetitionforum.org/docman/power-point-slides.html, last accessed 12 January 2014, p. 19.

  27. 27.

    Wang, X./Su, in: Zimmer (ed.), The Goals of Competition Law, 2012, p. 379, 380.

  28. 28.

    Schwalbe/Zimmer, Law and Economics in European Merger Control, 2009, p. 6.

  29. 29.

    Zhu and Sun (AMB), Interview on 27 October 2011.

  30. 30.

    Zhu and Sun (AMB), Interview on 27 October 2011.

  31. 31.

    Mao, Xiaofei (CASS), in an interview with the author on 25 October 2011 in Beijing (minutes of the meeting are available from the author). Hereinafter, this interview will be referred to as “Mao (CASS), Interview on 25 October 2011”.

  32. 32.

    Shan et al., China’s Anti-Monopoly Law: What is the Welfare Standard?, 2011, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1920885, last accessed 12 January 2014, p. 5 et seq.

  33. 33.

    Wang, X./Su, in: Zimmer (ed.), The Goals of Competition Law, 2012, p. 379, 383.

  34. 34.

    Shan et al., China’s Anti-Monopoly Law: What is the Welfare Standard?, 2011, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1920885, last accessed 12 January 2014, p. 5 et seq.

  35. 35.

    OECD (ed.), OECD Reviews of Regulatory Reform: China, 2009, p. 127.

  36. 36.

    Wang, X., 75 Antitrust L. J. 133, 142 (2008–2009).

  37. 37.

    NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007, p. 3.

  38. 38.

    Wang, X., RIW 2008, 417, 418.

  39. 39.

    White, Antitrust Policy and Industrial Policy, 2008, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1091244, last accessed 12 January 2014, p. 3 et seq.

  40. 40.

    Singh, Competition and Competition Policy in Emerging Markets: International and Developmental Dimensions, 2002, http://www.cbr.cam.ac.uk/pdf/WP246.pdf, last accessed 12 January 2014, p. 30.

  41. 41.

    Schmidt/Schmidt, Europäische Wettbewerbspolitik, 2006, p. 165.

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    Geradin/Girgenson, Industrial Policy and European Merger Control, 2011, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1937586##, last accessed 12 January 2014, p. 2 et seq.; Parret, in: Zimmer (ed.), The Goals of Competition Law, 2012, p. 61, 70.

  43. 43.

    Wang, X., Commentary on the AML (in Chinese), 2008, p. 10.

  44. 44.

    Healey, in: Drexl et al. (eds.), More Common Ground for International Competition Law?, 2011, p. 122, 128, who argues that an “orderly market system” may even exist where there are inefficiencies or a coordinated or cartel market.

  45. 45.

    NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007, pp. 1 and 14 et seq.

  46. 46.

    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, available at http://www.npc.gov.cn/npc/zt/2006-06/24/content_1382613.htm (in Chinese), last accessed 12 January 2014.

  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, available at http://www.npc.gov.cn/npc/zt/2006-06/24/content_1382613.htm (in Chinese), last accessed 12 January 2014.

  48. 48.

    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.

  49. 49.

    Huang, 75 Antitrust L. J. 117, 128 (2008–2009).

  50. 50.

    Ai/Zhou, Draft AML prevents monopolies, 2007, http://news.xinhuanet.com/legal/2007-06/24/content_6284507.htm (in Chinese), last accessed 12 January 2014; Wang, X./Su, in: Zimmer (ed.), The Goals of Competition Law, 2012, p. 379, 384.

  51. 51.

    NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007, p. 17.

  52. 52.

    Carnabuci, AML moves closer to adoption, 2007, http://www.freshfields.com/publications/pdfs/2007/sept05/19755.pdf, last accessed 22 November 2010, p. 2.

  53. 53.

    Huang, 75 Antitrust L. J. 117, 127 (2008–2009).

  54. 54.

    Mao/Glass, GRUR Int. 2008, 105, 106; Owen/Sun, S./Zheng, 75 Antitrust L. J. 231, 246 (2008–2009), http://ssrn.com/abstract=1483273, last accessed 12 January 2014.

  55. 55.

    Bachrack/Huang/Modrall, 36/4 CBR 18, 20 (2009); Pate, 75 Antitrust L. J. 195, 204 et seq. (2008–2009).

  56. 56.

    See Sprick, ZChinR 2008, 122, 125.

  57. 57.

    See Bush, 35/1 CBR 46, 49 (2008).

  58. 58.

    See Huang, 75 Antitrust L. J. 117, 123 (2008–2009).

  59. 59.

    See Pate, 75 Antitrust L. J. 195, 205 (2008–2009).

  60. 60.

    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, available at http://www.npc.gov.cn/npc/zt/2006-06/24/content_1382613.htm (in Chinese), last accessed 12 January 2014.

  61. 61.

    Bush, 32/3 CBR 30, 31 (2005); Tang, Z./Chen, J./Hua, 18/6 CLP 18, 18 (2004).

  62. 62.

    See Huang, 75 Antitrust L. J. 117, 123 (2008–2009).

  63. 63.

    Bush, 32/3 CBR 30, 31 (2005); Tang, Z./Chen, J./Hua, 18/6 CLP 18, 18 (2004).

  64. 64.

    Wang, X., 1 Wash. U. Global Stud. L. Rev. 201, 231 (2002).

  65. 65.

    Wu, Z., 75 Antitrust L. J. 73, 100 (2008–2009).

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    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.

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    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.

  68. 68.

    See, for instance, Brault/Chang, 14 Revue Lamy de la Concurrence 156, 160 (2008).

  69. 69.

    Wang, X./Su, in: Zimmer (ed.), The Goals of Competition Law, 2012, p. 379, 385 et seq.; Wu, Z., 75 Antitrust L. J. 73, 77 (2008–2009); Wu, L., 33 World Competition 477, 486 (2010); see also Lin/Li, National Security Review, 2008, http://www.asiancompetitionforum.org/docman/power-point-slides-2.html, last accessed 12 January 2014, p. 11, where reference is made to a MOFCOM statement in 2007 that national security includes “military security, economic security, and political security. It requires that key industries of the economy be controlled and operated by domestic firms and that involvement and control by foreign government or firms be prevented”; reportedly, during the second NPC review of the AML, it was declared that the Carlyle/Xugong (involving the construction machinery industry) and SEB/Supor (involving the market for cookware) cases were examples that could affect national security; see Brault/Chang, 14 Revue Lamy de la Concurrence 156, 160 (2008).

  70. 70.

    国务院办公厅关于建立外国投资者 并购境内企业安全审查制度的通知, see Chinese version at http://www.gov.cn/zwgk/2011-02/12/content_1802467.htm, last accessed 12 January 2014.

  71. 71.

    It has been observed that some of these sectors overlap with the nine “basic and pillar industries” identified in the SASAC 2006 Opinion, in which the state plays a prominent role; see Ha/Ge/O’Brien, New Review Procedures for Foreign Investment, 2011, http://www.mayerbrown.com/publications/article.asp?id=10450&nid=6, last accessed 12 January 2014, p. 2.

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    Huo, 10 Asian-Pacific Law & Policy Journal 32, 55 (2008).

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    Farmer, 18 Tulane J. of Int’l & Comp. Law 1, 13 (2009), http://ssrn.com/abstract=1411727, last accessed 12 January 2014.

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    See Drexl, 27 World Competition 419, 448 et seq. (2004).

  75. 75.

    Gal/Padilla, 76 Antitrust L. J. 899, 907 (2010), http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1645188, last accessed 12 January 2014; Paas-Mohando, 31 E.C.L.R. 466, 469 (2010); Wu, L., 33 World Competition 477, 497 (2010).

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    Wei, D., 14 J. Int. Econ. L. 807, 834 (2011).

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    Singh, Competition and Competition Policy in Emerging Markets: International and Developmental Dimensions, 2002, http://www.cbr.cam.ac.uk/pdf/WP246.pdf, last accessed 12 January 2014, p. 24.

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  80. 80.

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  82. 82.

    370 U.S. 294 (1962).

  83. 83.

    White, Antitrust Policy and Industrial Policy, 2008, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1091244, last accessed 12 January 2014, p. 3, at FN 8.

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    White, Antitrust Policy and Industrial Policy, 2008, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1091244, last accessed 12 January 2014, pp. 1 and 4.

  85. 85.

    Nonetheless, it has been argued that some aspects of the US merger control regime actually embody industrial policy considerations, for instance the failing firm defence would also constitute a mechanism to promote enterprise restructurings in support of industrial policies; see Wang, X., in: Wang, X. (ed.), Wang Xiaoye on the Antitrust Law (in Chinese), 2010, p. 326, 341.

  86. 86.

    See Fox/Davis, in: Hawk (ed.), International Antitrust Law and Policy, 2006 Fordham Competition Law Institute, 2007, pp. 151, 172 et seq., who make reference to the FTC’s statement closing the investigation of the Boeing/McDonnell Douglas merger case, where Chairman Robert Pitofsky stated that the FTC does not “have the discretion to authorize anticompetitive but “good” mergers because they may be thought to advance the United States’ trade interests”.

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    CNOOC Withdraws Unocal Bid, Xinhua News Agency, 3 August 2005, http://www.china.org.cn/english/2005/Aug/137165.htm, last accessed 12 January 2014.

  88. 88.

    See Graham, 168/7 Far Eastern Economic Review 24, 25 et seq. (2005), for a discussion of the objections to the deal.

  89. 89.

    Bu, IIC 2010, 202, 206.

  90. 90.

    Parret, in: Zimmer (ed.), The Goals of Competition Law, 2012, pp. 61, 72 et seq.

  91. 91.

    Communication from the Commission “A pro-active Competition Policy for a Competitive Europe”, 20 April 2004, COM(2004) 293 final, Introduction.

  92. 92.

    See Communication from the Commission “Fostering structural change: an industrial policy for an enlarged Europe”, 20 April 2004, Com(2004) 274 final.

  93. 93.

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    Commission, Decision of 3 July 2001, Case No COMP/M.2220, OJ L 48/1 of 18 February 2004 – General Electric/Honeywell, http://ec.europa.eu/competition/mergers/cases/decisions/m2220_en.pdf, last accessed 12 January 2014. The decision was challenged before the CFI, which, even though overruling some of Commission’s findings, ultimately upheld the prohibition decision; see CFI, Judgment of 14 December 2005, Case T-210/01, General Electric Company v Commission of the European Communities, [2005] ECR II-5575.

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    See, for instance, Patterson/Shapiro, 16/1 Antitrust Magazine 18, 25 (2001), http://faculty.haas.berkeley.edu/shapiro/divergence.pdf, last accessed 12 January 2014 and Schmidt/Schmidt, Europäische Wettbewerbspolitik, 2006, p. 182.

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    See Geradin/Girgenson, Industrial Policy and European Merger Control, 2011, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1937586##, last accessed 12 January 2014, p. 10.

  101. 101.

    It is to be noted that the two-agency merger enforcement structure in the UK has been abolished. As of 1 October 2013, the Competition and Markets Authority (“CMA”) has been established as the new single competition authority, with the aim to combine the competition functions of the OFT and the Competition Commission. The CMA is expected to become fully operational in April 2014; see press release from CMA of 1 October 2013, https://www.gov.uk/government/news/new-competition-authority-comes-into-existence, last accessed 12 January 2014.

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    See Lloyds TSB’s HBOS deal is cleared, BBC News, 31 October 2008, http://news.bbc.co.uk/2/hi/business/7702809.stm, last accessed 12 January 2014.

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    See the statistics published by Federal Ministry of Economics and Technology, http://www.bmwi.de/BMWi/Redaktion/PDF/Wettbewerbspolitik/antraege-auf-ministererlaubnis,property=pdf,bereich=bmwi2012,sprache=de,rwb=true.pdf, last accessed 12 January 2014.

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    中华人民共和国国民经济和社会发展第十二个五年规划纲要, see Chinese version at http://www.npc.gov.cn/npc/xinwen/2011-03/16/content_1647644.htm, last accessed 12 January 2014.

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    Ma, M&As of SOEs, 2005, p. 85.

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    Hamp-Lyons, 62 Vanderbilt Law Review 1577, 1612 (2009), http://ssrn.com/abstract=1507882, last accessed 12 January 2014.

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    NPC Standing Committee Legislative Affairs Commission, Office for Economic Law (ed.), Commentary on AML (in Chinese), 2007, p. 15; Wang, X./Su, in: Zimmer (ed.), The Goals of Competition Law, 2012, pp. 379, 395 et seq.

  117. 117.

    Huang, 75 Antitrust L. J. 117, 128 (2008–2009).

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  119. 119.

    See, for instance, Section 1, sentence 1, SASAC 2006 Opinion.

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    Wu, Z., 75 Antitrust L. J. 73, 98 (2008–2009).

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    Deng/Leonard, 22/2 Antitrust Magazine 73, 75 (2008), http://ssrn.com/abstract=1305627, last accessed 12 January 2014.

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    Bush/Bo, Disentangling Industrial Policy and Competition Policy, 2011, http://www.americanbar.org/content/dam/aba/migrated/2011_build/antitrust_law/feb11_bush2_23f.authcheckdam.pdf, last accessed 12 January 2014, p. 1.

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    Bu, 31 E.C.L.R. 239, 246 (2010).

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    Healey, in: Drexl et al. (eds.), More Common Ground for International Competition Law?, 2011, p. 122, 128; Nee, Competition Law in China, 2010, p. 24.

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    Tingting Weinreich-Zhao

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Weinreich-Zhao, T. (2015). Objectives and Policy Standards of Merger Control as Embodied in the AML. 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_5

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