A Study Of Divestiture Under Merger Control

Since 1990's, merger transaction, especially cross-border mergers have been developing rapidly. China is involving in the merger trend as well. In the recent two years, big mergers increasingly take place in China, which is causing the public competition concerns. The author, therefore, consider creating a mechanism whereby we can fulfill the merger as well as clear the competition concerns about big merger transaction. That is the real purpose of this paper.To protect the market competition and consumers' benefits, antitrust law commonly controls the merger that would or may effect the market competition. In the Chapter One, the author presents the control measures includes merger prohibition, divestiture and behavior control, in which the divestiture is one of the most popular and important measure. For the purpose of eliminating the anti-competition effect, the antitrust agency approves the merger transaction, provided that the merging parties promise to divest part of their assets to non-related third party who will run the divested assets so as to recover the market competition. Divestiture can not only recover the market structure, which is enough to eliminate the anti-competition verse effect, but also can promote mergers for its less rigid as merger prohibition. Based on that, in the Chapter Two, the author identifies divestiture is just the mechanism this paper is looking for. In the Chapter Three, the author further discusses the key factors in devising and implementing divestiture and points out maintenance of the viability of the divested assets is the core of divestiture.Divestiture measure plays an important role while China is in the process of industry upgrading and strategically economic restructuring. Last year, China promulgated the PRC Antitrust Law providing for the conditional merger system, which provides the divestiture with the legal basis. Therefore, following the presentation about the meaning of divestiture in China,the author further analyzes the conditions and problems regarding the implementation of divesture in China. Based on the research, lastly, the author proposes some related ancillary systems helpful to promote the application of divestiture in China, hoping such application would provide a good competition environment for the economy development.