The Belt and Road Initiative and state-owned enterprises: Is it time for reform of the EU merger control?

Abstract

State-owned enterprises (SOEs) are one of the pillars of “socialism with Chinese characteristics” and have become a leading economic actor in the Belt and Road Initiative (BRI), which combined with other national industrial policies, has led to the rise of overseas investments by the Chinese SOEs in the European Union (EU). A number of SOE acquisitions reached the “community dimension” and were assessed by the European Commission under the EU merger control rules. With their primary focus on market competition, consumer welfare and competitive neutrality, the EU merger control rules did not take into account political control and state support of SOEs, including their engagement in the implementation of industrial policies such as BRI. This regulatory gap has prompted several EU Member States and other stakeholders to call for reform of the EU merger control rules in order to make them more suitable for economic protectionism and political guidance. The present chapter examines the challenges caused by the Chinese SOEs in applying the EU merger control rules. It also examines the range of reform proposals with the aim to highlight the possible paths for future regulatory developments in the field of EU competition law and policy that will have significant implications for the Chinese SOEs’ investments in the EU.