Abstract

With the rapidly unfolding China’s Belt and Road Initiative (BRI ) and the ongoing reform of the State-owned enterprises (SOEs), the number of overseas acquisitions by the Chinese SOEs in various industrial and services sectors is gradually on the rise. These transactions have raised a number of questions in terms of the assessment of the economic concentrations’ potential impact on competition and challenged the traditional assessment tools employed by the merger control regimes. The paper examines the evolving experience of Chinese SOEs’ acquisitions in the European Union (EU), which are subject to ex ante assessment under both EU and national merger control regimes. The analysis of the merger assessment practice of the EU Commission culminating in the recent conditional approval of the ChemChina/Syngenta merger indicates that the traditional assessment tools, when applied to the acquisitions by Chinese SOEs, may no longer be adequate to grasp the essence of their corporate governance and decision-making. The review of the merger control practice of the national competition authorities (NCAs) also demonstrates the absence of a coherent assessment approach to the cases involving Chinese SOEs, which may lead to the inconsistent enforcement and strengthening of the foreign investment screening on grounds other than market competition.

Highlights

  • The Acquisitions of the Chinese State-Owned Enterprises under | Alexandr Svetlicinii the National Merger Control Regimes of the European Union (EU) Member States supported by the State: (1) outbound investment in infrastructure that is conducive to the Belt and Road Initiative (BRI), and connects infrastructure in surrounding regions; (2) outbound investment that drives the export of domestic superior production capacity, high-quality equipment and applicable technology; (3) investment cooperation with overseas high-tech and advanced manufacturing enterprises

  • The present paper provides an overview of the merger control enforcement involving the Chinese State-owned enterprises (SOEs) at the level of the EU Member States and their national competition authorities (NCAs)

  • Concluding remarks The following issues remain largely unresolved both in the EU and national merger control practice in relation to the concentrations involving Chinese SOEs: (1) determination of whether mergers between Chinese SOEs should be notified as concentrations; (2) calculation of the relevant turnover for the purpose of establishing the EU or national merger control jurisdiction; (3) substantive assessment of the notified concentration’s likely impact on competition

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Summary

Introduction

The Belt and Road Initiative (BRI) officially unveiled in 20131 and labelled by the commentators as “globalization with Chinese characteristics”2 provided for USD 900 billion worth of planned investments in infrastructure across Central and South Asia, the Middle East, and Central and Eastern Europe (CEE).3 The pursuit of the BRI objectives was embedded into the Constitution of the Chinese Communist Party (CCP), revised at the 19th National Congress of the CCP in October 2017.4 The Action Plan on BRI released in 2015 calls for the improvement of the investment, trade facilitation and removal of the recurrent investment and trade barriers.5The leading role in the BRI is expected to be played by the State-owned enterprises (SOEs).6 In the words of the Chinese Premier Li Keqiang, “Chinese SOE’s participation in global cooperation on production capacity, especially through the newly introduced Silk Road Economic Belt and the 21st Century Maritime Silk Road, will benefit the Chinese economy and other economies”.7 The Guiding Opinions of the State Council on outbound investment highlighted the following types of outbound investment by Chinese enterprises, which are encouraged andThe Acquisitions of the Chinese State-Owned Enterprises under | Alexandr Svetlicinii the National Merger Control Regimes of the EU Member States supported by the State: (1) outbound investment in infrastructure that is conducive to the BRI, and connects infrastructure in surrounding regions; (2) outbound investment that drives the export of domestic superior production capacity, high-quality equipment and applicable technology; (3) investment cooperation with overseas high-tech and advanced manufacturing enterprises.8 The major Chinese SOEs including China Communications Construction, China State Construction Engineering, PowerChina, Sinomach, China Railway Construction Corporation, China Railway Group, China National Petroleum Corporation, and State Grid have already participated in nearly 1,700 projects along the BRI economic corridors.9.

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