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Research On The Influence Of Cross-Border Mergers And Acquistions In China And Anti-trust Law Regulation

Posted on:2011-10-05Degree:MasterType:Thesis
Country:ChinaCandidate:N ZhangFull Text:PDF
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As the process of global economy integration accelerates consistently, the MNC (Multinational Corporations) whose activities cause globally great effects and influences in a significant way have played an increasingly important role in the world economy. The MNC possess powerful economical strength which can be used to occupy the entire market and gain high profits in a world scale. Being considered one critical way in international direct investment, cross-border Mergers& Acquisitions has become a crucial element on the layout of MNC (Multinational Corporations) whole globalization strategy. However, the cross-border M&A (Mergers& Acquisitions) must lead to some MNC monopoly some market, and then damage the market competition environment. For the cross-border M&A led to the monopoly problem, all countries will make the appropriate legislation to regulate.This article from the following four parts to analyse the cross-border M&A's impact on our country and the legal regulation that we adopted.The first part to analysis the basic nature of cross-border M&A. The essence of the cross-border M&A lies on an international investment tactic of obtaining the ownership of enterprises in the host country by some means in order to implement M&A requirements. First, within the course of cross-border Mergers& Acquisitions, value is not created but transferred through reallocation the international capital and then large amount of business profits can be acquired by the MNC from the host countries. Additionally, since 1990s, the extent of cross-border Mergers &Acquisitions has expanded as well as the volume of cost value involving every M&A deal reaches as high level as GDP in some small and medium countries with increasing continuously. Finally, cross-border M&A occurs within a wide range of fields including energy, automobile, financial, IT, food, etc. In a sense, it can be said that cross-border M&A impacts on almost every industry. The type of cross-border M&A have different categories by different standards. The most important category is divided according to industry are Horizaontal M&A, Conglomerate M&A and Conglomerate M&A.1. Horizaontal M&A means between the two companyies who have the competitive relationship and the same operating field and producing the same or similar products industry M&A.2.Conglomerate M&A means the two sides or multi sides of M&A companyies have no direct link about there business.3. Conglomerate M&A means the continuity of production and marketing stages of mutual relations between buyers and sellers of M&A.The second part to analyze the development process and the impact of the M&A in our country. As an emerging economy around the world, China has been granted one of four nations named "BRICs" (Brazil, Russia, India and China) and made economic accomplishments attracting worldwide attention since reform and open-up policy. Meanwhile, China has been one of major countries where the MNC participate in M&A scheme which experiencing a gradual evolution process specifying four stages:infancy, slow development, fluctuation development and finally sustained and stable development. In 2002, China got the 1st rank on the absorption and utilizing foreign capital among nations and M&A flourished so progressively that the year of 2002 was called "the first year of Chinese M&A". M&A does not only bring us a large number of capital and technology but also advanced management skills and business ideas. The investment of lots of foreign capital, however, has made Chinese home companies suffer great strike. As a result, some domestic brands such as Zhonghua toothpaste and Nanfu battery well known to folks belong to us no more. Although M&A of foreign capital runs with a rapid and intensive trend, Chinese home enterprises carry out vigorously global-oriented management strategy instead of acceptance passively. Several cases like Lenovo purchasing the personal computer business of IBM, Alibaba acquisition Yahoo China as well as Gelly automobile buying Volvo Car Corporation shows clearly that Chinese enterprises are very competitive in the world. The M&A expanding overseas market positively helps home brands establish good image in abroad.The third part to analyze the United States and Europe's legislation and judicial practice about the cross-border M&A. A favorable environment in competition is required while foreign capital M&A Chinese companies or our home firms go abroad to M&A foreign entities. Apart from prompting Chinese economic development, cross-border M&A also inevitably brings about monopoly. On one hand, monopolists may be able to make full advantage of dominant position in the market to exclude their rival; on the other hand, they are capable enough of manipulating the actual price of products much more than their marginal costs in the market so as to gain loss to the interest of consumers. From this view, there is no state or nation willing to turn a deaf ear to status of its national corporation's monopoly and all different nations take measures of restriction by legislation to monopolistic M&A. "Anti-trust law" in U.S. prohibits clearly the occurrence of M&A causing acquirers to engender or intensify market dominant situation; The act of foreign capital endeavoring to monopoly the domestic market in Germany gets even more inspection at each level and fortification in different stages and according to "Roman law" requirement, all M&A behaviors incompatible with fair competition in the European Community market will be banned despite it does not explicitly take legislation to regulate monopolistic M&A. As can be seen, foreign countries usually take action to regulate the entry of international capital through anti-trust law or special legislation. The fourth part to analyze how our country to respond the cross-border M&A Law Regulation issues. Chinese anti-trust law system form later and the stipulation concerned is scattered in various regulations and policies with lacking systematic power and existing low level effectiveness, "Anti-monopoly Law of the People's Republic of China" (formerly referred to as "anti-monopoly law") has been promulgated and implemented since August 1st,2008 which makes up lack of anti-monopoly legislation in our nation and the cross-border M&A Law regulation also upgrades to a higher level. There are three features in Chinese "anti-monopoly law". First of all, not monopolistic status but monopolistic behavior gets regulation and restriction after reference of common practice in national regulation cases on anti-trust law in other nations is consulted. From a global perspective, the nation of regulating the anti-monopoly status exists rare for the reason that the acquisition of monopoly status is generally the consequences of legitimate competition. And then, "anti-monopoly law" defines unambiguously the specific scope of monopolistic behavior to be made governance. It mainly comprises 4 parts, namely monopoly agreements, abuse of dominant position in market, concentration of business operators and action of eliminating or restricting competition such as abuse administrative power. Among them, concentration of business operators should be focused on and received regulation because it is a direct result of cross-border M&A. Once the business entities move forward to emerge as monopolistic power, they are likely to abuse the monopolistic superiority and undermine market competition to capture high profits. In the end, necessary circumscription is also set on the regulation of monopolistic doings, the specific extent of which is demonstrated after using the method of making list. By this mean, it does not only clarify the detailed scope of monopolistic behavior to be regulated, but to some extent limit the discretion right of antitrust agencies.While the scale of multinational corporations'M&A goes on enlarging, sometimes bunch of countries are affected by a M&A incident. Therefore, it is difficult to cope with antitrust cross-border M&A by unilateral regulation and there comes of great important attachment to bilateral and multilateral cooperation. Within this field, experience of advanced countries including US and European nations are enlightening to us. The US government has signed bilateral treaties of anti-trust cross-border M&A with others such as Germany, Australia and Canada. The deployment of multilateral cooperation of anti-trust cross-border M&A seems sort of uneasy, comparing to the bilateral one as there are different anti-trust legislative procedure in different countries and yet the commencement of bilateral cooperation on anti-trust issues among member countries of various economic organizations seems relatively easier accompanied by the development of regional economic integration. From some points, the notion that trying to achieve a framework of multilateral cooperation agreement in anti-trust legal system of cross-border M&A regulation accepted by all member countries on a basis of WTO-the global economic cooperation organization need a long time to become reality.To the end, the influence of cross-border M&A in Chinese economy is still gradually deepened so that Chinese market competition situation has been profoundly affected and changed, whereas relevant legislation for cross-border mergers and acquisitions in China is not sound enough and many details in specific issues are expected to get refined and receive further improvement.
Keywords/Search Tags:Cross-border Mergers & Acquisitions, Anti-trust, International Comparison of Cross-border M&A Regulations
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