Clifford Chance

EU Merger Control and Chinese SOEs

26 October 2011

The European Commission (the Commission) has reviewed a number of concentrations involving Chinese State-owned enterprises (SOEs) this year, including DSM/Sinochem/JV, China National Bluestar/Elkem, Huaneng/OTPPB/Intergen, and PetroChina/Ineos/JV. With China having risen to be the world's fifth largest outbound investor, more such cases can be expected.

In this briefing, we discuss the DSM/Sinochem/JV decision and consider what lessons can be learnt for future transactions involving China's SOEs. We also consider other recent decisions by the European Commission involving Chinese SOEs. Two central questions lie at the core of the treatment of SOEs under EU merger control. First, is the SOE operated in a manner independent of the State i.e., does the State have the power to influence that SOE's commercial strategy? Second, are there risks of coordination between that SOE and other State undertakings active in the relevant market in which the SOE operates i.e., does the State actually coordinate the commercial conduct of the particular SOEs concerned or facilitate such conduct?

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