Anti-Monopoly Regulation On M&A In Open Economy

World economy has seen the biggest merger and acquisition (M&A) wave in the history since the mid of 1990's. M&A can not only enlarge the scale and boost the profitability of the enterprises, but also restructure the industrial division system to expand business and service, so to get the leadership and monopoly position in the industry. In this process, how to improve antitrust policy to develop the utmost effectiveness of M&A and diminish its unfavorable effects to market competition at the same time has become a very important topic facing the governments. Therefore studying M&A anti-monopoly regulation is not only a hot problem in the reality, but also an important theoretical topic.Along with the advancement of trade liberalization, the tariff barriers between countries have been eliminated gradually, the trade volume is growing rapidly and the domestic markets are changing into a unified international market. Domestic enterprises are facing more and more competition from domestic counterparts and foreign enterprises with strong competition advantages. The integration of the market mechanism caused by the economic globalization makes the traditional economic environment in which the anti-monopoly regulation exists move from domestic to international scope. This change brings opportunity for global economic cooperation, nevertheless puts forward new challenges to anti-monopoly regulation.Firstly this article starts from the microeconomic analysis on the relationship between import, market power and antitrust regulation. The result shows that the impact of imports on domestic price-cost margins can be separate into three components: the direct effect of imports in depressing domestic prices, the further impact on prices caused by the reactions of domestic producers, and the associated changes in costs. It was shown that overall imports can have a positive or negative impact on domestic price cost margins depending on the sign and the strength of each of these elements. A positive effect is theoretically consistent with weak economies of scale and low elasticities of demand. Imports can have a negative impact on price cost margins, especially in markets characterized by strong economies of scale and high elasticities of demand. This result shows that import will influence anti-monopoly regulation indirectly by disciplining market power. Based on this result this article further examines those foreign competition factors in antitrust investigation in open economy. The existence of import exists does not necessarily equal to the existence of foreign competition. Many aspects, such as import restrictions, product differentiation, transport cost, the connection between domestic and foreign market prices, exchange rate and foreign production which influence foreign supply elasticity, should be taken into account to determine if and how import have effects on relevant market. Besides, a measurement framework is given to solve the dilemma in M&A anti-monopoly investigation, which is how to measure potential foreign competition.It is followed then by the analysis on the trend of M&A anti-monopoly regulation from the viewpoint of policy-making. Compared with the M&A anti-monopoly regulation in closed economy, the foundation is more complicated in open economy. The government should consider those factors including domestic market characteristics, trade characteristics, the ability of domestic enterprises to develop international market and foreign competition policy. The result shows that in open economy when M&A have an obvious scale economy effect, the discipline of import on market power plays a similar role as anti-monopoly regulation, therefore trade liberalization can play a substitution effect to it for import-orientation industries in some extent. But for export-orientation industries, the government also has the motive to relax anti-monopoly regulation to enhance domestic competitiveness.Then turning from domestic to international scope, this article examines the international coordination issues caused by M&A anti-monopoly regulation in open economy. International society has made various efforts to coordinate the international competition rules, but it is very hard to move forward. The potential interest conflicts under different jurisdiction systems are compared in the model to prospect the international competition coordination. Conclusions are as follows: the objective of the anti-monopoly policy is to increase consumer welfare by controlling enterprises' monopolistic behaviors. However due to the uneven distribution of the producers and consumers governments can't get equal benefits accordingly. It demonstrates that antitrust policies chosen by national governments will generally lead to sub-optimal outcome from an international perspective and how the direction of the deviation from the optimal policy depends on trade patterns and the extent to which national competition laws are applied extraterritorially. An international competition agreement is more likely among countries with similar trade patterns. When the trade patterns of countries differ significantly, agreement will only be possible if the nations that gain from the agreement compensate the countries that lose. Therefore prospected from present economic and trade development level, it is very difficult to achieve an international antitrust agreement in global scope.Finally, based on China's M&A status and anti-monopoly regulation practice, some proposals and suggestions are put forward to improve M&A anti-monopoly regulation in new situation.