Study On Several Legal Issues Of Relevant Market Definintion Under Law Of Foreign Investors Merging Chinese Companies

The Rules of Merger and Acquisition by Foreign Investors of Domestic Enterprises has beenpromulgated on August 8, 2006. Among others, one main value of the Rules is to establish the anti-trust review system against mergers and acquisitions by foreign investors of Chinese companies. However, the Rules fail to provide material content regarding the definition of the relevant market, which is an important and essential precondition to valuate the affect incurredby a merger or acquisition. In the other hand, the US antitrust law and EU competition law have established a complete system with the basic doctrine of two-dimension relevant market, and specific measurements of substitutability, price elasticity and affecting factors for territory relevant market definition, which have been fully utilized and applied in numerous cases, among which, cases like Case Pont, Case Aluminum Company of America, Case United Brands, Case Continental Can and Case Brown Shoes have been adopted in most antitrust and competition law textbooks as classical and typical cases, and also guide subsequence judicial practices. Meanwhile, in order to react against newly emerging issues with the blooming of intellectual property technology market, network and information industry market and economy globalization, courts and relevant authorities of US and EU have adopted new developments based on the traditional relevant market definition doctrine, such as measurements of profit earned way, res ipsa loquitur and qualitative definition to fulfill the requirements of the new trend of the global economy, with an open and flexible attitude, which should be a lesson and experience for us. After the Rules of Merger and Acquisition by Foreign Investors of Domestic Enterprises, the Ministry of Commerce also issued the Guidelines of Antitrust Filing for Foreign Investors Merging or Acquiring Domestic Companies, which are supposed to provide instructions regarding the procedural issues of antitrust filings. Additionally, the Antitrust Law of PRC newly promulgated and to become effective also pays certain attention to the relevant market definition, without, however, specific guidelines and provisions thereof. Furthermore, immediately beforethe Antitrust Law of PRC becoming effective, the Rules of Operators Integration Filing of the State Council (for Public Input) is also issued. However, such laws and regulations still fail to tender any discussion regarding the specific methods and standards of the relevant market definition, which results in the empty of the legal basis of the relevant market definition for the antitrust review. On the basis of comparison and analysis, this paper is to provide certain proposals to the designation of antitrust filing system and specification of relevant market definition by introducing the mature relevant market definition doctrines of US and EU, and taking the new developments of the doctrines for the newly emerging markets and the conditions and characters of the national industries of China (e.g., steel industry and information technology industry). The antitrust review system for the mergers and acquisitions by foreign investors, even domestic investors should be improved and completed with all the efforts.