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7 Chinese Merger Control Notes

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7 - Chinese Merger Control Mind Map Abbreviation SC- State Council U- Undertaking AML -Anti-Monopoly law HHI - Herfindahl-Hirschman Index NDRC - National Development and Reform Commission MOFCOM - Ministry of Commerce People's Republic of China SAIC - State Administration for Industry & Commerce of the People's Republic of China

Chinese Anti-Monopoly Law

1. China - AML - August 2008

2. Consistent with its regulation of the importance of maintaining effective competition (aim of national economic development + growing trend for developing economist to adopt a modern competition law).

3. Some: use competition law as a weapon to control and curb the economic influence of foreign multinationals

4. Art 1 of AML - for purpose of preventing and restricting monopolistic conducts, protecting fair competition in the market, enhancing economic efficiency, safeguarding the interest of consumers and social public interest, promoting healthy development of socialist market economy

5. AML covers - monopolist agreement, abuse of dominance, merger control, abuse of administrative power (it is modelled on EU law)

6. 3 Anti-Monopoly Enforcement Authorities: NDRC, MOFCOM, SAIC
 MOFCOM - no delegate authority
 NDRC and SAIC - have delegate authority

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State Council

Anti-Monopoly Commission

MOFCOM

NDRC Price Supervision and Antimonopoly Bureau (PSAMB):
- Investigating and handling of major price monopoly conducts and cases:
 Price monopoly agreements;
 Price monopoly conduct that abuses dominant market position;
 Abusing administrative power to eliminate or restrict competition in relation to price
- Undertaking tasks assigned by the NDRC

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Anti-Monopoly Bureau (AMB) Investing suspicious concentration of business operators and penalizing illegal monopoly acts; Investing monopoly conduct in foreign trade, and taking the steps necessary to eliminate the harm that this conduct causes; Drafting regulations regarding concentration of business operators; Reviewing the concentration of business operators; Providing consultation and handling notifications of concentration of business operators; Undertaking tasks that assigned by the MOFCOM.

SAIC Anti-monopoly and Anti-Unfair Competition Enforcement Bureau (AMAUCEB)
- Formulating specific anti-monopoly and anti-unfair competition measures;
- Implementing anti-monopoly enforcement (except for price monopoly) against :
 Monopoly agreements;
 Abusing dominant market position;
 Abusing administrative power to eliminate or restrict competition;
- Investigating unfair competition practices, commercial bribery, cases violating economic laws etc.
- Undertaking tasks assigned by SAIC

(2) 2

Anti-Monopoly Commission
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Prior to the introduction of AML: Article 14 - Prohibited cartel conduct, discriminatory, predatory pricing, exorbitant profits, other types of pricing conduct Anti-Unfair Competition law - prohibit unfair competitive activities : tying, trademark infringement, commercial bribery, unfair advertising Interim Regulations concerning M&A of Domestic Enterprises by Foreign Investors. M&A includes foreign investors - need to notify to MOFCOM

Structure of Chinese Merger Control
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Chapter 4 -follow structure of EU Merger Control Phase 1 - 30 days; Phase 2 - 90 days; Phase 3 - 60 days General structure includes 4 substantive sections: (1) prohibition of certain types of agreements except they fall within specified exemptions; (2) prohibition of certain behaviour classified as abuse of dominant market position (establish a framework for determining when dominance exists); (3) establishment of a broad merger review scheme; and (4) Prohibition of abuse of government administrative powers restraining competition. Article 28 - Where a concentration has/may have effect of eliminating/restricting competition, State Council (SC) may make a decision to prohibit the concentration. Article 29 - Where the concentration is not prohibited, the Anti-monopoly Authority under the SC may decide to attach restrictive conditions for reducing the negative impact of such concentration on competition.

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