Viewpoint | Interpretation of the new rules on the declaration standards for concentration of business operators and relevant EU regulations
Published:
2024-02-19
This paper will compare the various revisions of the declaration standards for concentration of business operators and relevant EU regulations, and discuss the provisions and procedures for the declaration of concentration of business operators, with a view to providing enterprises with legal advice on the declaration of concentration of business operators in accordance with the law and reducing the risk of anti-monopoly penalties.
On January 22, 2024, Premier Li Qiang of the State Council signed the State Council Order No. 773 to promulgate the "Regulations of the State Council on the Standards for the Declaration of Concentration of Business Operators" (revised in 2024) and will come into effect on the date of promulgation. The declaration standards for concentration of business operators have been greatly improved. This paper will compare the various revisions of the declaration standards for concentration of business operators and relevant EU regulations, and discuss the provisions and procedures for the declaration of concentration of business operators, with a view to providing enterprises with legal advice on the declaration of concentration of business operators in accordance with the law and reducing the risk of anti-monopoly penalties.
1. the Revision Process of China's Concentration Declaration Standards
The declaration standard for concentration of business operators has been revised many times since it was formulated in 2008. The author summarizes it as follows:
2. operator concentration declaration process
The author summarizes the process of declaration of concentration of business operators in China as follows:
3. EU legal provisions on concentration of business operators
The centralized control mode of operators in China is similar to that of EU. In EU law, Undertaking Concentration is a concept corresponding to concentration of business operators. According to Regulation (EC) No 139/2004 - the control of concentrations between undertakings (the Merger Regulation)| EU Regulation on the Control of Concentration of Undertakings (139/2004), a concentration of enterprises of Community size shall be reported to the Commission after concluding an agreement, announcing a public offer or obtaining a controlling interest, and before the concentration is implemented; after the relevant enterprise has demonstrated to the Committee its sincerity to enter into an agreement or has publicly announced its willingness to make a public offer, it may also report to the Committee if the proposed agreement or acquisition will result in a concentration of enterprises of a community size.
A concentration of enterprises of Community size requires that:(a) the combined worldwide turnover of all relevant enterprises exceeds € 5 billion; and (B) there are at least two relevant enterprises, each of which has a Community turnover of more than € 0.25 billion. Except for 2/3 in which the turnover of each relevant enterprise in the same Member State exceeds its total turnover within the Community. or if:(a) the combined worldwide turnover of all the relevant enterprises exceeds € 0.25 billion; (B) in at least three Member States, the combined turnover of all the relevant enterprises exceeds € 0.1 billion in each of them;(c) in each of at least three Member States listed for the purposes of subparagraph (B), the total turnover of each of the at least two related enterprises exceeds 25 million euros; and (d) the total turnover of each of the at least two related enterprises exceeds 0.1 billion euros in the Community. Except where the turnover of each relevant enterprise in the same Member State exceeds the 2/3 of its total turnover within the Community. The European Commission (European Commission) reports to the Council (Council of the European Union) on the implementation of reporting standards and may make recommendations on such limits and standards, which may be amended by a valid majority.
Summary
The "Regulations of the State Council on the Standards for Declaration of Concentration of Business Operators" (revised in 2024) refers to international experience and clarifies that law enforcement agencies will evaluate the implementation effect of the new standards based on economic development. The old standard of operator concentration declaration was implemented in 2008. With the continuous development of China's economy, the number of enterprises and annual turnover have increased significantly, resulting in a sharp increase in the number of operator concentration declaration. The requirements of the old standard are low, and some concentration of business operators that obviously do not have the effect of excluding and restricting competition are also included in the scope of declaration, which not only increases the transaction cost of mergers and acquisitions of enterprises, but also affects the supervision and law enforcement effectiveness of law enforcement agencies. Therefore, it is necessary to revise the declaration standard of concentration of business operators with the development of the times. The new standard significantly raises the threshold for the declaration of concentration of business operators, which is conducive to reducing the transaction costs of corporate investment and mergers and acquisitions, improving the efficiency of investment and mergers and acquisitions, and can actively stimulate the vitality of market entities and help the economy rebound.
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