With already more than 3 years of practice experience concerning antitrust review to concentrations, the Ministry of Commerce of the People’s Republic of China in recent publicly announced its first set of guideline thereof on August 29, 2011, namely, “Provisional Regulation on the Assessment on the Competitive Effects of Concentration of Undertakings ( it would be abbreviated as “the Regulation” hereinafter)

It should be recognized that the Regulation reflects great significance in many facets without doubt. For one thing, the substantive process of reviewing and assessing concentrations by the Ministry of Commerce is tranparentized in a large degree. As a result, relevant competitors, consumers and other stakeholders of interest could obtain much more convenience for the purpose of supervising antitrust enforcement.

In the second place, the Ministry took this opportunity to standardize in the Regulation, which factors that they will take the most account into in principle, which interests they will consider principally when balancing the pro-competitive and anti-competitive effects of concentration concerned. In this connection, the Regulation would possess the function of conducting, standardizing as well as facilitating the work of antitrust control to concentrations of the Ministry.

For another, as the role of “Guidelines on the Assessment of Horizontal Mergers” of EU, the Regulation is also anticipated to take the responsibility of directing enterprises themselves to pre-assess competitive effects of their concentrations before notification in a proper way, therefore, is meant to lower the cost of concentration as much as possible, both for enterprises and for the Ministry (administrative costs). In any sense, consequently, we have to say that this Regulation fresh out of the oven on August, 29, 2011 is good news, meanwhile, enhances the enforcement of China’s control of concentration to a new phase.

Taking a closer sight on its content, throughout the Regulation, no other articles occupy more importance than Article 3 and Article 4, which are the soul and core of this guideline. Article 3 sets out the main factors specifically, by which the Ministry assesses the competitive effects of concentrations.

In Article 4 the Ministry highlights the most commonly occurring example of a significant impediment to effective competition, that is, the creation or strengthening of ability, incentive and possibility to prevent and restrict competition. What worth noting is that Article 4 paragraph 2 clarifies that, for oligopolistic market, it is sufficient for a refusal to clear a concentration if the above-mentioned ability, incentive and possibility to prevent and restrict competition are collectively possessed by two or undertakings. In other words, the creation or strengthening of a collective dominant position is also the target of Chinese control of concentration.

Except for Article 3 and Article 4, Article 5 to Article 10 are mainly detailed and unfolded explanation of Article 3. Article 5 is the elaboration of Article 3 (1); it indicates the significance of identifying market share and market power as well as the elements that determination of market power would rely on, such as the substitutability of products or services between undertakings of concentration. Similarly, Article 6 gives more details to Article 3 (2), regarding what is the concept of market concentration degree and two instruments (HHI and CRn index) that usually could be employed to conduct a quantitative analysis of market concentration degree.

In addition, another feature in the Regulation is well-marked, namely, consumer welfare is paid much attention, in line with the revolutionary tendency of antitrust law in a lot of jurisdictions. In recent decades, more and more countries have started to add consumer welfare into the objectives of their antitrust law, even the number one objective in some jurisdictions. Both Article 8, 9 and 10 mentioned that concentrations of undertakings will promote the interests of consumers from different aspects, for example, consumers could benefit from upgraded technologies, higher quality, lower price resulted from concentration of undertakings, and so forth. On the contrary, the Ministry may also take the damage of consumer welfare as the reason not to clear a concentration.

Whether antitrust law should only perform its economic regulatory function, or should also help realize some social goals, like guarantee of employment? This issue is still very controversial in many countries. In Europe, some scholars take the view that antitrust law should not take more load than it is supposed to take, that is, economic aims. However, Article 12 of the Regulation specifically makes clear that public interest is also one factor to assess the competitive effects of concentrations in China. This point should in any means draw the attention of foreign investors. In case that one enterprise is facing bankruptcy, then the acquisition of such an enterprise may solve the potential problem of unemployment, hence is beneficial to public interest. In this case, even concerned concentration would give rise to some anticompetitive effects, clearance is not impossible absolutely.

Last but not least, Article 13 provides that in case the concentration has effect of preventing and restricting competition on relevant market, the Ministry of Commerce shall not be cleared, unless undertakings are able to prove the adverse effects are weighed out by beneficial effects or concerning concentrations are in accordance with public interest.

All in all, this freshly baked regulation set out standards to direct the Ministry’s work in terms of assessing the competitive effects of concentration in Chinese market, which is beneficial both for promoting the enforcement quality and for conducting undertakings’ notification process.