1Part2AntimonopolyLaw:

ChinesePerspective1Part2LearningObjectives(1)DifferentiateConcentrationofUndertakingsfromM&A(2)ExplainHowtoFileaConcentrationNotification(3)ExplaintheFailingFirmDefense(4)ExplainHowtoCalculateMarketConcentrationLearningObjectives(1)DiffereContent1.ConcentrationofUndertakings

inAML2.TheCataloguesofConcentrationofUndertakingsinAML(merger)3.TheMotivesandJustificationsofConcentration4.Howtoconcentratelegallyandreasonably?5.FurtherExplanationofHorizontalMergers3Content1.ConcentrationofUnd4Chapter5ConcentrationofUndertakings4Chapter51.ConcentrationofUndertakings

inAML(1)DistinctionbetweenM&AincompanylawandAML1)Incompanylaw,M&Aemphasisonthechangeoftheshareholders.MergerAcquisitionsConsolidation51.ConcentrationofUndertakinMerger,consolidationandacquisitions

“Merger”meansonecorporation"swallows"theother,buttheshareholdersoftheswallowedcompanyreceivesharesofthesurvivingcorporation.(吸收合并)A+B=A

“Consolidation"

means2companiesjointogethertocreateanewcorporation.(新設(shè)合并)A+B=C“Acquisition”meanstheobtainingofcontrollinginterestinacompany.(控股合并)Itoccurswhenonecompanyorcorporationtakescontrolofanotherone.6Merger,consolidationandacqu2)InAML,ConcentrationofUndertakings(mergers)means(i)themergerofundertakings;(ii)theacquisitioncontroloverotherundertaking(s)byanundertakingbyacquiringequitiesorassets;or(iii)theacquisitionofcontrolover,orthepossibilityofexercisingdecisiveinfluenceon,otherundertaking(s)byanundertakingbycontractorbyanyothermeans.72)InAML,ConcentrationofUn8InterlockingDirectorates

(董事兼任)Occurswhenanindividualservesontheboardofdirectorsoftwoormorecompetingcompaniessimultaneously.Theseareprohibitedifthetwofirmsmeetcertainsizerequirements.8InterlockingDirectorates

(董事2.TheCataloguesofConcentrationofUndertakingsinAML(merger)(1)HorizontalMergersoccurbetweenfirmsatthesamelevelintheproductionanddistributionchain.(2)VerticalMergersoccurbetweenfirmsatdifferentlevelsintheproductionanddistributionchain.(3)ConglomerateMergers92.TheCataloguesofConcentra10ConglomerateMergersConglomerateMergersoccurwhenafirmseeksto:Extenditsproductintoanewmarketbymergingwithafirminthatmarket.Extenditsproductlinebymergingwithafirmalreadyproducingthatproduct.Diversifybyacquiringafirmthatdealsinunrelatedproducts.10ConglomerateMergersConglome3.TheMotivesandJustificationsofConcentration(1)Themotivesofconcentration——aimtoseekimprovedfinancialperformance.Economyofscale;Economyofscope;Increasedrevenueormarketshare;Cross-selling;Synergy;Taxation;GeographicalorotherdiversificationResourcetransfer;Verticalintegration113.TheMotivesandJustificati3.TheMotivesandJustifications

ofConcentration(2)JustificationsofConcentrationMergingpartiesmayreducetheircostsbycombiningcomplementaryassets,eliminatingduplicateactivities,orachievingscaleeconomies.Concentrationsalsomayleadtoenhancedproductqualityortoincreasedinnovationthatresultinlowercostsandpricesorinmorerapidintroductionofnewproductsthatbenefitconsumers.123.TheMotivesandJustificati4.Howtoconcentratelegallyandreasonably?(1)Procedure1

ThebusinessoperatorsfilesaconcentrationdeclarationtoMOFCOM.MOFCOMconductsapreliminaryexamination.Thebusinessoperatorsmayimplementtheconcentration.NofurtherexaminationshallbeconductedorwheretheAnti-monopolyLawEnforcementAgencyfailstomakeadecisionwithinthetimelimit.(30days)134.Howtoconcentratelegally4.Howtoconcentratelegallyandreasonably?(1)Procedure2

ThebusinessoperatorsfilesaconcentrationdeclarationtoMOFCOM.MOFCOMconductsapreliminaryexamination.MOFCOMdecidestoconductfurtherexamination.Itshall,within90daysfromthedateofdecision,completetheexamination.Thebusinessoperatorsshallrefrainfromimplementingtheconcentrationwithintheperiodofexamination.144.Howtoconcentratelegally(1)Procedure3

NationalSecurityReviewIncasetheacquisitionofdomesticenterprisesbyforeigninvestorsorothermannerstoconcentratereferredtonationalsecurity,besidesbeingreviewedaccordingtothislaw,shallbecarriedoutnationalsafetyreviewaccordingtorelatedregulations.15(1)Procedure3

NationalSecu（2）ReviewProcessbyMOFCOM（2）ReviewProcessbyMOFCOM(3)Reviewdeadline第一階段第二階段延長(zhǎng)階段30日第25條90日第26條60日第26條(3)Reviewdeadline第一階段第二階段延長(zhǎng)階Howtoextendthetimelimit?Underthefollowingcircumstances,thetimelimitmaybeextendedtoadd60days:(i)theundertakingsconcernedagreetoextendthetimelimit;(ii)thedocumentsormaterialssubmittedareinaccurateandneedverification;(iii)othersignificanteventsoccurredafternotification.18Howtoextendthetimelimit?U(4)HowtoDecideConcentration?1)TheFactorsAffectingtheReview(i)marketshareintherelevantmarketandtheirabilitytocontrolthemarket;(ii)concentratedegreeoftherelevantmarket;(iii)effectonthemarketentryandtechnologyimprovement;(iv)effectonconsumersandotherundertakings;(v)effectonnationaleconomicalimprovement;(vi)otherfactorsshallaffectthecompetition,beconsideredbytheantimonopolyexecutionauthorities.19(4)HowtoDecideConcentratio2)TheConsequencesofReviewa)agreetheconcentration(takendecisionnottoprecedereview)b)approvalwithrestrictionsandconditions:whereaconcentrationwillreducethenegativeeffectoncompetition.theantimonopolyexecutionauthoritiesshallannouncethedecisionsofprohibitionorconditionalconcentrationtopublic.c)prohibittheconcentration202)TheConsequencesofReviewc)prohibittheconcentrationIfaconcentrationhasormayhaveeffectofeliminatingorrestrictingcompetition,theantimonopolyexecutionauthoritiesshalltakedecisionofprohibition.Iftheundertakingscanprovethattheconcentrationbringmorepositiveeffectthannegativeeffectoncompetition,ortheconcentrationpursuanttopublicinterests,theantimonopolyexecutionauthoritiesshalldecide,nottoprohibittheconcentration.21c)prohibittheconcentrationI(5)ThresholdsforPriorNotificationofConcentrationsofUndertakingstheprecedingfinancialyeartheprecedingfinancialyearWorldwideturnover>=RMB10billionyuan>=2undertakings>=RMB400millionyuan(nationwideturnoverwithinChina)nationwideturnoverwithinChina>=RMB2billionyuan22(5)ThresholdsforPriorNotif(6)ExemptionofPriorNotification(i)oneundertakingwhichisapartytotheconcentrationhasthepowertoexercisemorethanhalfthevotingrightsofeveryotherundertaking,whetheroftheequityortheasset;(ii)oneundertakingwhichisnotapartytotheconcentrationhasthepowertoexercisemorethanhalfthevotingrightsofeveryundertakingconcerned,whetheroftheequityortheasset.23(6)ExemptionofPriorNotific5.FurtherExplanationof

HorizontalMergers(1)ThePotentialAdverseCompetitiveEffectsofHMs1)LesseningofCompetitionThroughCoordinatedInteraction(Assection2.1oftheGuidelinesstates,coordinatedinteraction"includestacitorexpresscollusion,andmayormaynotbelawfulinandofitself.")2)LesseningofCompetitionThroughUnilateralEffects245.FurtherExplanationof

Hor2)LesseningofCompetitionThroughUnilateralEffectsByeliminatingcompetitionbetweenthemergingfirms,amergergivesthemergedfirmmoremarketpower.UnilateralEffectsfromMergertoMonopolyUnilateralEffectsRelatingtoCapacityandOutputforHomogeneousProductsUnilateralEffectsRelatingtoPricingofDifferentiatedProductsUnilateralEffectsRelatingtoAuctionsUnilateralEffectsRelatingtoBargaining252)LesseningofCompetitionTh

ConcentrationlevelMarketstructureCR4(%)CR8(%)OligopolyⅠCR4≥85OligopolyⅡ75%≤CR4＜85%CR8≥85OligopolyⅢ50%≤CR4＜75%75%≤CR4＜85%OligopolyⅣ35%≤CR4＜50%45%≤CR4＜75%OligopolyⅤ30%≤CR4＜35%40%≤CR4＜45%competitionCR4＜30%CR8＜40%26ConcentrationlevelCR4(%)CR8(Compliance:From“MustDo”toPro?tOpportunity27Compliance:From“MustDo”toHintsCompliance:burdenoropportunity?What?Compliancemeansrespectingthelaw.Inthecompetitionfield,itmeansbusinessproactivelyrespectingcompetitionrules.Why?Thestakesarehigh.Companiesneedtobeawareoftherisksofinfringingcompetitionrulesandhowtodevelopacompliancestrategythatbestsuitstheirneeds.Aneffectivecompliancestrategyenablesacompanytominimizetheriskofinvolvementincompetitionlawinfringements,andthecostsresultingfromanti-competitivebehaviour.28HintsCompliance:burdenoroppHintsAnounceofpreventionisworthofpoundofcurecarriesextraauthorityinthefieldofantitrust.Ifallthatwerenecessarytobringaboutcompliancewiththecriminallawsweretoincreasepenalties,thecrimeproblemwouldhavebeensolvedlongago.29HintsAnounceofpreventionisExpectedOutcomeYouwillrequiredtoreadthedocumentsreleasedbytheauthorities,suchasACCCandKFTC,andthecomplianceprogramsbydifferentcompanies.Youshouldwriteacomplianceprogram,asyouarethepolicymakerofspecificcompanychosenbyyourself.Youshouldfocusesontheindustrycircumstancesandthemarketpositionofyourcompany.30ExpectedOutcomeYouwillrequi31Part2AntimonopolyLaw:

ChinesePerspective1Part2LearningObjectives(1)DifferentiateConcentrationofUndertakingsfromM&A(2)ExplainHowtoFileaConcentrationNotification(3)ExplaintheFailingFirmDefense(4)ExplainHowtoCalculateMarketConcentrationLearningObjectives(1)DiffereContent1.ConcentrationofUndertakings

inAML2.TheCataloguesofConcentrationofUndertakingsinAML(merger)3.TheMotivesandJustificationsofConcentration4.Howtoconcentratelegallyandreasonably?5.FurtherExplanationofHorizontalMergers33Content1.ConcentrationofUnd34Chapter5ConcentrationofUndertakings4Chapter51.ConcentrationofUndertakings

inAML(1)DistinctionbetweenM&AincompanylawandAML1)Incompanylaw,M&Aemphasisonthechangeoftheshareholders.MergerAcquisitionsConsolidation351.ConcentrationofUndertakinMerger,consolidationandacquisitions

“Merger”meansonecorporation"swallows"theother,buttheshareholdersoftheswallowedcompanyreceivesharesofthesurvivingcorporation.(吸收合并)A+B=A

“Consolidation"

means2companiesjointogethertocreateanewcorporation.(新設(shè)合并)A+B=C“Acquisition”meanstheobtainingofcontrollinginterestinacompany.(控股合并)Itoccurswhenonecompanyorcorporationtakescontrolofanotherone.36Merger,consolidationandacqu2)InAML,ConcentrationofUndertakings(mergers)means(i)themergerofundertakings;(ii)theacquisitioncontroloverotherundertaking(s)byanundertakingbyacquiringequitiesorassets;or(iii)theacquisitionofcontrolover,orthepossibilityofexercisingdecisiveinfluenceon,otherundertaking(s)byanundertakingbycontractorbyanyothermeans.372)InAML,ConcentrationofUn38InterlockingDirectorates

(董事兼任)Occurswhenanindividualservesontheboardofdirectorsoftwoormorecompetingcompaniessimultaneously.Theseareprohibitedifthetwofirmsmeetcertainsizerequirements.8InterlockingDirectorates

(董事2.TheCataloguesofConcentrationofUndertakingsinAML(merger)(1)HorizontalMergersoccurbetweenfirmsatthesamelevelintheproductionanddistributionchain.(2)VerticalMergersoccurbetweenfirmsatdifferentlevelsintheproductionanddistributionchain.(3)ConglomerateMergers392.TheCataloguesofConcentra40ConglomerateMergersConglomerateMergersoccurwhenafirmseeksto:Extenditsproductintoanewmarketbymergingwithafirminthatmarket.Extenditsproductlinebymergingwithafirmalreadyproducingthatproduct.Diversifybyacquiringafirmthatdealsinunrelatedproducts.10ConglomerateMergersConglome3.TheMotivesandJustificationsofConcentration(1)Themotivesofconcentration——aimtoseekimprovedfinancialperformance.Economyofscale;Economyofscope;Increasedrevenueormarketshare;Cross-selling;Synergy;Taxation;GeographicalorotherdiversificationResourcetransfer;Verticalintegration413.TheMotivesandJustificati3.TheMotivesandJustifications

ofConcentration(2)JustificationsofConcentrationMergingpartiesmayreducetheircostsbycombiningcomplementaryassets,eliminatingduplicateactivities,orachievingscaleeconomies.Concentrationsalsomayleadtoenhancedproductqualityortoincreasedinnovationthatresultinlowercostsandpricesorinmorerapidintroductionofnewproductsthatbenefitconsumers.423.TheMotivesandJustificati4.Howtoconcentratelegallyandreasonably?(1)Procedure1

ThebusinessoperatorsfilesaconcentrationdeclarationtoMOFCOM.MOFCOMconductsapreliminaryexamination.Thebusinessoperatorsmayimplementtheconcentration.NofurtherexaminationshallbeconductedorwheretheAnti-monopolyLawEnforcementAgencyfailstomakeadecisionwithinthetimelimit.(30days)434.Howtoconcentratelegally4.Howtoconcentratelegallyandreasonably?(1)Procedure2

ThebusinessoperatorsfilesaconcentrationdeclarationtoMOFCOM.MOFCOMconductsapreliminaryexamination.MOFCOMdecidestoconductfurtherexamination.Itshall,within90daysfromthedateofdecision,completetheexamination.Thebusinessoperatorsshallrefrainfromimplementingtheconcentrationwithintheperiodofexamination.444.Howtoconcentratelegally(1)Procedure3

NationalSecurityReviewIncasetheacquisitionofdomesticenterprisesbyforeigninvestorsorothermannerstoconcentratereferredtonationalsecurity,besidesbeingreviewedaccordingtothislaw,shallbecarriedoutnationalsafetyreviewaccordingtorelatedregulations.45(1)Procedure3

NationalSecu（2）ReviewProcessbyMOFCOM（2）ReviewProcessbyMOFCOM(3)Reviewdeadline第一階段第二階段延長(zhǎng)階段30日第25條90日第26條60日第26條(3)Reviewdeadline第一階段第二階段延長(zhǎng)階Howtoextendthetimelimit?Underthefollowingcircumstances,thetimelimitmaybeextendedtoadd60days:(i)theundertakingsconcernedagreetoextendthetimelimit;(ii)thedocumentsormaterialssubmittedareinaccurateandneedverification;(iii)othersignificanteventsoccurredafternotification.48Howtoextendthetimelimit?U(4)HowtoDecideConcentration?1)TheFactorsAffectingtheReview(i)marketshareintherelevantmarketandtheirabilitytocontrolthemarket;(ii)concentratedegreeoftherelevantmarket;(iii)effectonthemarketentryandtechnologyimprovement;(iv)effectonconsumersandotherundertakings;(v)effectonnationaleconomicalimprovement;(vi)otherfactorsshallaffectthecompetition,beconsideredbytheantimonopolyexecutionauthorities.49(4)HowtoDecideConcentratio2)TheConsequencesofReviewa)agreetheconcentration(takendecisionnottoprecedereview)b)approvalwithrestrictionsandconditions:whereaconcentrationwillreducethenegativeeffectoncompetition.theantimonopolyexecutionauthoritiesshallannouncethedecisionsofprohibitionorconditionalconcentrationtopublic.c)prohibittheconcentration502)TheConsequencesofReviewc)prohibittheconcentrationIfaconcentrationhasormayhaveeffectofeliminatingorrestrictingcompetition,theantimonopolyexecutionauthoritiesshalltakedecisionofprohibition.Iftheundertakingscanprovethattheconcentrationbringmorepositiveeffectthannegativeeffectoncompetition,ortheconcentrationpursuanttopublicinterests,theantimonopolyexecutionauthoritiesshalldecide,nottoprohibittheconcentration.51c)prohibittheconcentrationI(5)ThresholdsforPriorNotificationofConcentrationsofUndertakingstheprecedingfinancialyeartheprecedingfinancialyearWorldwideturnover>=RMB10billionyuan>=2undertakings>=RMB400millionyuan(nationwideturnoverwithinChina)nationwideturnoverwithinChina>=RMB2billionyuan52(5)ThresholdsforPriorNotif(6)ExemptionofPriorNotification(i)oneundertakingwhichisapartytotheconcentrationhasthepowertoexercisemorethanhalfthevotingrightsofeveryotherundertaking,whetheroftheequityortheasset;(ii)oneundertakingwhichisnotapartytotheconcentrationhasthepowertoexercisemorethanhalfthevotingrightsofeveryundertakingconcerned,whetheroftheequityortheasset.53(6)ExemptionofPriorNotific5.FurtherExplanationof

HorizontalMergers(1)ThePotentialAdverseCompetitiveEffectsofHMs1)LesseningofCompetitionThroughCoordinatedInteraction(Assection2.1oftheGuidelinesstates,coordinatedinteraction"includestacitorexpresscollusion,andmayormaynotbelawfulinandofitself.")2)LesseningofCompetitionThroughUnilateralEffects545.FurtherExplanationof

Hor2)LesseningofCompetitionThroughUnilateralEffectsByeliminatingcompetitionbetweenthemergingfirms,amergergivesthemerged