Nuking Misconceptions: Hinkley Point, Chinese SOEs and EU Merger Law

Abstract

As Chinese outbound investment and acquisitions of European and other western assets reach hitherto unseen dimensions, the European Commission and other antitrust regulators are being called upon to assess the competitive impact of acquisitions by Chinese SOEs. A critical threshold issue, with both jurisdictional and substantive implications, is whether Chinese SOEs have a power of decision independent of the Chinese state. The EU Merger Regulation provides a clear framework for examining the independence of SOEs, regardless of their nationality. But the Commission’s case law as it pertains to Chinese SOE acquirers, up until very recently, failed to come to terms with the extensive evidence of multifaceted state control exercised by Beijing over its SOEs. In its March 2016 decision in the Hinkley Point case, the Commission has begun to take the bull by the horns. It is submitted, however, that the European antitrust regulator still has some way to go: evidence of the deeply pervasive nature of Communist Party and Chinese state influence over SOEs in the Middle Kingdom is extensive and can no longer be ignored.