| During the last decades, in order to integrate resources and sharpen the competitive edge, what comes first to many undertakings from both home and abroad is to merge others. Together, monopoly agreement, abuse of market dominance and merger constitute main branches of traditional competition law. Competition authorities take a relatively passive attitude towards merger compared with that of monopoly agreement and abuse of market dominance. Undertakings concerned bear the responsibility to notify to competition authorities when the merger/concentration they will be involved in would have an effect on market structure on lasting basis and turnover of relevant undertakings meets the threshold. Generally speaking, “turnover” refers to amounts derived by the undertakings concerned in the preceding financial year from the sale of products or the provision of services falling within the undertakings’ ordinary activities.From 2011 to 2015, the EU Commission has examined at least 14 cases about Chinese State-Owned Enterprises(“SOEs”) merging undertakings from EU, among which Case China National Bluestar/Elkem is a classic one. Generally speaking, the Commission only adds turnover and market share of “relevant undertakings” having certain relationship, such as parent company and subsidiary, when reviewing a merger. However, through analyzing relevant decisions published officially, we could find that the Commission tends to take into consideration of the worst situation. It regards all the Chinese undertakings from the same industry under control of the State-owned Assets Supervision and Administration Commission(“SASAC”) as a “single economic entity”, which put Chinese SOEs in a seriously disadvantageous position. If that’s the case, the Commission would include market share and turnover of all the other SOEs from the same sector into the one who notifies to the Commission directly. Then, “undertaking concerned” would be more powerful, and the possibility for a merger to be recognized as would bring competition concerns to the market and finally to be prohibited will also increase, even if that is not true. Besides, undertakings concerned may also face more serious fines when being found in breach of substantive or procedural competition rules. Generally speaking, the exact amount of fine equals a particular percent(1%- 10%) of turnover obtained by “undertaking concerned” in the last financial year. What’s worse, competition authorities from other countries would also follow the Commission’s approach in the future.The object of this thesis is to find out legal questions and solve them, so as to give some useful advice to Chinese SOEs for their future concentration with EU undertakings. The thesis combines competition laws and regulations in EU and analysis of Case China National Bluestar/Elkem. The structure is as followed.Chapter One, “Definition of SOE”. What comes first for almost every legal issue is to make clear what subject of a legal relationship is. So it is for concentrations between Chinese SOEs and undertakings from EU. Starting with definition of SOE both in the Chinese and EU legal systems, Chapter One makes a comparison between the two above. In the Case China National Bluestar/Elkem, China National Bluestar is not a SOE itself, while its absolute majority shareholder-- Chemchina is a central SOE. In 2015, the Chinese central authority published several official circulars as regards revolution of Chinese SOE. If Chinese SOE follows this direction, then competition concerns from the Commission, such as whether the Chinese party enjoys independent decision-making power, would be easily resolved. That’s the reason why last sector of this chapter introduces the latest development of Chinese SOE.Chapter Two, “Constitution of Concentration/Merger”. One of the key issues of the decision of the Commission is whether the Chinese SOE notifying to the Commission should be perceived as a “single economic entity” together with other Chinese SOEs from the same sector. Strictly speaking, “single economic entity” is an EU concept. Firstly, this chapter defines what “single economic entity” is. After a thorough introduction of how to define concentration/merger and how to judge whether the turnover threshold is met on the basis of Commission Consolidated Jurisdictional Notice under Council Regulation(EC) No. 139/2004 on the control of concentrations between undertakings and Council Regulation(EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings through a combination of words, graphs and examples, this chapter presents two pre-conditions for the Commission’s reviewing of a concentration, which are “concentration notified constitute a merger under the merger control regulation” and “turnover of relevant undertakings around the world and EU meets required threshold”.Chapter Three, “Decisions relating to Chinese SOEs merging undertakings from EU made by the Commission from 2011 to 2015”. Beginning with a trend for the world to put forward a thorough policy of transparency, Chapter Three analyzes Case China National Bluestar/Elkem from all perspective. Together with other 13 cases, this chapter summarizes how the Commission deals with mergers between Chinese SOE and EU undertakings. Firstly, to make it clear whether EU Merger Control Regulation applies. Secondly, to analyze whether the Chinese SOE notifying enjoys independent decisionmaking power. Thirdly, in-depth investigation of whether the merger would eliminate or restrict competition in relevant product market and relevant geographic market. Lastly, to decide whether to clear the notification or not.Chapter Four, “Advice to Chinese SOEs and the competition authorities”. Firstly, due to its unique structure as a confederation in the world, a better understanding of EU’s political, economic and cultural background is a pre-condition. Secondly, proper application of EU competition laws and regulations is a must for undertakings concerned to avoid potential legal risks. Thirdly, Chinese SOE should learn a lesson from China National Bluestar. For example, when submitting materials to the Commission, Chinese SOE could try its best to provide all the market information as regards other SOE from the same sector so as to prove that the merger notified would not bring any harm to the competition within EEA even if they were recognized as a “single economic entity” together. Last but not least, Chinese SOE should try its best to show its independence, even if the Commission may not agree with it. As for the Chinese competition authorities, they could respond effectively from perspective both home and abroad.Conclusion. The reason why the Commission’s decision triggers so much controversy is that Chinese SOE and the Commission handle the same legal issue from different perspectives. For the Commission, it is a good example of equal treatment to private undertaking and SOE in competition area, according to relevant articles of TFEU, 2004 EU Merger Control Regulation and Jurisdiction Notice. Or put it in another way, the Commission treats all Chinese SOEs from the same industry as “subsidiaries” of SASAC. However, Chinese SOE is of the opinion that it enjoys independent decision-making power in accordance with laws and regulations of Chinese SASAC and state-owned assets, and should not be treated as a “single economic entity” together with other SOEs from the same industry. We could predict that the Commission would continue its serious review of notified concentration relevant to Chinese SOE in the near future. When submitting materials, Chinese SOE should keep it in mind and prepare for the worst situation. We could also say that turnover or market share recognized by the Commission would be much higher than what relevant Chinese SOE really enjoys. With development of revolution of Chinese SOE, we have good reason to believe that the Commission would treat the notifying Chinese SOE itself as a “single economic entity” so as to achieve the goal of fair competition sooner or later. |
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