| The Anti-monopoly Law of the People's Republic of China("AML")was put into effect on April 1,2008.It has been implemented for nearly ten years until 2018.Significant achievement has been made and the law enforcement system has been improved gradually.After years of sustained and rapid development,China's economy has been transitioning from a phase of rapid growth to a stage of high-quality development.With the intensification of the reform and opening-up,China has become one of the economies with great market potential and development vitality.In order to increase efficiency and improve economic structure,various kinds of concentrations have become common economic phenomenon with increasing extensity and intensity.In view of the anti-competitive effect of the concentration,regulation on the concentration has become the main activity of the anti-monopoly authorities.In September,2008,the Anti-monopoly Bureau was set up by the MOFCOM.It is in charge of launching anti-monopoly investigations on the concentrations of undertakings;accepting the negotiation and declaration of undertakings' concentrations;taking out hearing,investigation and examination of concentrations;investigating and penalizing the illegal practices on concentrations.In the past ten years,great achievement has been made in the field of concentration control by the Anti-monopoly Bureau:on one hand,it investigated a large number of concentration cases,some of them even being of international influence;on the other,practical experience has been accumulated through the law enforcement and relevant regulations and policies has been perfected.Although achievement and progress have been made in the concentration control as mentioned above,there still exist some problems.The decisions made by the MOFCOM arouse controversy and draw the attention of scholars and the public:are the clearances of some cases in line with the standard,such as the merger between CNR and CSR?What is the welfare standard followed by the authority during antitrust investigation,the consumer welfare standard or total welfare standard?How much do the anti-monopoly examination influenced by the industrial policy,political factors and so on?In conclusion,what is the effect of the anti-monopoly examination of concentration in China?How should we evaluate the concentration control decisions?In addition,the department concerned has launched the amendment of the AML at the time of the AML being promulgated for ten years.The MOFCOM also began the amendment of the Measures on Anti-Monopoly Examination on Concentration of Undertakings.So the law enforcement should be analyzed and evaluated to find the problems and drawbacks so as to make the amendment better.The ex-post evaluation of the antitrust law enforcement has drawn much attention in abroad;however,the related research is rare in China.The MOFCOM has reviewed some cases in the past ten years,which creates the initial conditions for the ex-post evaluation of the concentration control decisions.All in all,it is urgent and practical to take the ex-post evaluation the decision of the MOFCOM on the anti-monopoly review of concentration.Taking the above mentioned background into consideration,this dissertation makes comprehensive evaluation and case analysis on MOFCOM's concentration control decisions respectively based on the principle theories and methodologies on ex-post evaluation of merger control to make a thorough inquiry of the effect of China's concentration control policy.In particular,this dissertation makes the ex-post evaluation from three aspects:it makes an overall analysis of the cases cleared without remedies by the MOFCOM using Event Study.The welfare standard followed by the anti-monopoly authority is determined through the changes of the abnormal return of competitors' stocks.Taking two cases in the HDD market(the merger between Western Digital and Viviti Technologies and the merger between Seagate and HDD Business of Samsung)as examples;we test the effect of the related antitrust control decision on the price of the products using difference-in-differences method.Attention is paid on the price changes of the HDD before and after the announcement of the anti-monopoly examination decision of the MOFCOM so as to determine whether the decision is in line with the standard.Taking the merger between CNR and CSR as an example,we test the efficiency gains of the merger to verify whether the clearance of this merger really improve the efficiency of the CRRC so as to determine whether the decision of the MOFCOM is in line with the standard.This dissertation is organized as follows:Chapter 1 is the introduction.Chapter 2 is the literature review.Chapter 3 is the overall analysis of the enforcement of MOFCOM's anti-monopoly examination on concentration.Chapter 4 analyzes the welfare standard in China's concentration control and the influence factors.Chapter 5 makes ex-post evaluation of the concentration control decision on price taking the cases of merger between Western Digital and Viviti Technologies and the merger between Seagate and HDD Business of Samsung as examples.Chapter 6 makes ex-post evaluation of the concentration control decision on efficiency taking the case of merger between CNR and CSR as example.Chapter 7 is the conclusion and policy implications.Conclusions drawn from this dissertation include:First,total welfare standard is followed in China's anti-monopoly examination of concentrations,while great importance is attached to consumers' surplus.Based on the theoretical analysis of Motta(2004),Duso et al.(2007),and Farrell and Shapiro(1990)of the merger effect on consumer surplus and outsiders' profits,we make further analysis about the changing trend of the welfare of the consumers and competitors after the merger control decisions.On the basis of this theoretical analysis,we quantitatively analyze the average abnormal returns(AAR)and cumulative average abnormal returns(CAAR)of the competitors' stocks of 65 mergers cleared without remedies using Event Study method.The result can be used to judge the welfare standard followed by the anti-monopoly authority and verify the hypotheses put forward in the paper.The conclusion is that total welfare standard is followed by the MOFCOM in its anti-monopoly examination of concentrations,while great importance is attached to the consumers' surplus,which is in consistent with the regulations of the AML.Second,through the ex-post evaluation of the concentration control decisions,results show that the anti-monopoly authority pays great attention to the protection of competition.It is observed that the key point of the concentration anti-monopoly examination is whether the concentration has effect of eliminating or restricting competition and whether the remedies taken by the anti-monopoly authority is effective by examining the stated language,via revealed orders on the cases cleared without remedies,and the antitrust actions taken by the MOFCOM.For example,in the competitive assessment of the merger between Western Digital and Viviti Technologies and the merger between Seagate and HDD Business of Samsung,the MOFCOM comes to the conclusion that the mergers has effect of eliminating or restricting competition by means of enhancing market concentration,reducing competitive pressure and slowing the pace of innovation down after the analysis of HDD market's market concentration,purchasing pattern,buyer power,market entry and so on.So,structural and behavioral remedies are taken.The price change caused by the control decision is tested in long-term and short-term using Difference-in-Difference method.The result shows that the remedies taken by the MOFCOM is effective in long run,which prevents the anti-competitive behavior and inhibits price increase.Third,in view of the special stage of economic development and conditions in China,the efficiency gained from concentration is very important.The efficiency gain is also an important factor to assess in the anti-monopoly examination of concentration in China.Based on the classical horizontal merger model with efficiency gains,we take into consideration of the case in which the firms are multi-products firms and the products are differentiated.The results of the theoretical analysis show that horizontal merger involving enough efficiency gains is beneficial to consumers and merging firms,while decreasing outsiders' profit.Taken the CNR/CSR case which is cleared without remedies as an example,efficiency gains are important defense in the notification filing of concentration.We then use Event Study to empirically analyze the abnormal return change of the merging firms and their compotators.We also search evidence that can prove the obvious improvement of the CRRC after merger in its international competitiveness and ability of technological innovation and resource allocation.Both the empirical evidence and evidences from other indicators prove that the merger between CNR and CSR bring obvious efficiency gains.In addition,analysis on the competition of relevant market shows that the competitive strength of the international competitors is strong;the competition is intense;and the buyer power is strong in the global rolling stock market.All of these will restrict the unilateral effect after the merger.In conclusion,the merger of CNR and CSR promotes technological progress,optimizes the allocation of resources,improves the international competitiveness of CRRC,brings significant efficiency gain,and lead to the increase of total welfare.So the clearance of the merger is in with the standard.Finally,there exist some situations and problems in the concentration anti-monopoly review in China,including:(1)although the dominant role of the competition policy has been basically established,the influence of the industrial policies on the concentration control also exists.The impact of the industrial policy may make the concentration examination results deviate from the welfare of consumers and event the producers' welfare.Instead,more attention is paid to the profits of some industries and fields.As two means of government intervention in economy,the competition policy and industrial policy can exist simultaneously.However,while maintaining the foundational status of competition policy,we need to properly handle the relationship between them so that they can promote each other and cooperate with each other.(2)In the analysis of specific case,the general principles and orders are in line with the standards,but the specific analysis of each case lacks comprehensiveness,accuracy and transparency.For example,the clearance of the merger between CNR and CSR by the MOFCOM is in line with the standard.However,the reaction from the upstream manufacturers shows that the merger would increase market power which would be used by the CRRC to lower the prices of the upstream manufacturers.So the situation in the rolling stock market in China should also be analyzed besides the relevant market analysis of the global market.Remedies should be taken if necessary.Furthermore,the opening up of the domestic market should also be expanded to promote competition in it.(3)Some basic procedures and regulations need to be improved and perfected continuously.The transparency of law enforcement is lack.The information disclosure is seriously insufficient.The reviewing time is too long.The penalty on the undertakings that should have filed the notification of their concentration is too lenient.However,the experience of anti-monopoly examination has been accumulated continuously on the whole.The efficiency and procedures has been improved.Significant progress has been made in the past ten years.Contributions made in this dissertation are listed below:First,a comprehensive ex-post evaluation of the anti-monopoly review on concentration in China is carried out.Ex-post evaluation of the merger control decision has aroused widespread concern overseas,while the existing research on concentration control effect at home mainly focus on the design of the policy,examination procedures and related concepts in it,most of which are ex-ante analysis.There is very little research on ex-post analysis.Taking the concentration control decisions of the MOFCOM as research object,this dissertation makes a comprehensive ex-post evaluation of the concentration control decisions in China selecting different standards and using proper quantitative methods.Second,based on the empirical analysis of cases cleared without remedies by the MOFCOM,the welfare standard followed by the concentration control in China is determined.The regulation on the welfare standard is vague in the AML with multi-purpose coexistence and the transparency of the anti-monopoly authority's enforcement is poor,which lead to a lot of controversy on the welfare standard.The selection of the welfare standard is directly related to the policy goal and value orientation of the anti-monopoly authority.Clarifying the welfare standard can improve policy transparency and enhance the predictability of the policy.It is also in favor of the guidance of the undertakings' behavior.So it is of great political significance.Through the cases analysis,the welfare standard followed in the concentration control is clarified.Third,typical cases are select to test whether the anti-monopoly examination decision is in line with the standard and whether the remedies are effective empirically.Due to the short time of the AML enforcement and less cases,there is very little research on the ex-post effect analysis.The existing literature is mainly qualitative analysis instead of quantitative analysis.This dissertation draws lessons from the methodologies commonly used abroad and tries to test the impact of the concentration control decision on the market through the changes of the abnormal return and product price to judge whether the decision made by the MOFCOM is in line with the standard in the typical cases. |
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