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Academic Articles Awards > Asian Antitrust

The Antitrust Paradox of China Inc.

Angela Huyue Zhang, New York University Journal of International Law and Politics (JILP), Vol. 50, 2017

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Readers’ vote will close on February 9, 2018. Readers’ vote will allow you to nominate 1 article for each of the Awards, i.e., 10 Academic articles, 10 Business articles, and the best Soft Laws. The readers’ short-list of Academic and Business Articles will be communicated to the Board together with the 20 articles nominated by the Steering Committees. The Board will decide on the award-winning articles. Results will be announced at the Awards ceremony to take place in Washington DC on the eve of the ABA Antitrust Spring Meeting on April 10, 2018.

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Common ownership by the Chinese State caused a stir in Europe recently. During its review of a joint venture involving a Chinese nuclear power company, the European Commission held that it would treat all Chinese state-owned enterprises (SOEs) in the energy sector as a single entity. This decision carries significant legal and practical implications for both businesses and the regulator. It also contradicts the previous approach that the Commission has taken in dealing with European SOEs. In this Essay, I argue that the legal framework under the EU Merger Regulation (EUMR) is unsuited to deal with the anticompetitive effects of state ownership. While the delineation of the boundary of an undertaking is a prerequisite for merger review, ownership and control are not absolute. Importantly, the extent to which the coordination by the Chinese State has lessened competition is a quantitative question, rather than a qualitative one. Consequently, a bright-line approach of defining an undertaking would lead to both over-inclusive and under-inclusive outcomes. To address the EU’s dilemma in dealing with Chinese SOEs, I propose that the Commission ought to view national security review as a complement to its merger review. The optimal regulatory response to the Chinese acquisitions hinges not only on economics, but also, perhaps more importantly, on politics.

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