Fear of the Chinese or Business as Usual at the European Commission? EU Merger Regulation and the Assessment of Transactions Involving Chinese State-owned Enterprises

JuriKiran Desai, Manu Mohan, Aug 30, 2011

In the first half of 2011 the European Commission (“Commission”) published three decisions involving State-owned enterprises (“SOE”) that are Chinese. The Commission stated that it had examined both whether the decision-making power lay with the controlling entity above them and to what extent they competed with other public companies. Joaquín Almunia, European Commissioner for Competition, has stressed that this type of examination was not undertaken because the enterprises were foreign or because there was a prejudice against State control but because it was a relevant aspect to the assessment of effects on competition.

This is the first time such an assessment has been undertaken by the Commission to a concentration involving Chinese SOEs. This article examines the law relating to assessments of transactions involving SOEs.

The article also deals with issues that will have to be dealt with in the future, and raises the concern that a lack of clarity about the entities whose turnover should be taken into account for the purposes of determination of a notification could: (a) lead to a risk of non-notification of combinations involving SOEs and resultant fines; (b) raise questions about the validity of transactions involving SOEs that were not notified in the past on the assumption that the jurisdictional thresholds were not met; and (c) complicate the substantive analysis on possible coordination between the undertakings directly involved in the combination and other SOEs.