On December 20, the General Administration of Market Supervision issued a circular on the Guidelines for the Examination of Horizontal Concentration of Operators.
business operators meets the declaration standards prescribed by the State Council (hereinafter referred to as the declaration standards), the business operators shall declare to the anti-monopoly law enforcement agencies in advance, and shall not implement the concentration without declaration or approval after declaration. Where the concentration of
business operators fails to meet the criteria for declaration, but there is evidence to prove that the concentration of business operators has or may have the effect of eliminating or restricting competition, the Anti-monopoly Law Enforcement Agency may require the business operators to declare and notify them in writing. Where the concentration has not been implemented, the business operators shall not implement the concentration without declaration or approval after declaration; where the concentration has been implemented, the business operators shall declare within 120 days from the date of receipt of the written notice, and take necessary measures such as suspending the implementation of the concentration to reduce the adverse effects of the concentration on competition. A concentration of
business operators may not be reported to the anti-monopoly law enforcement authority under any of the following circumstances: (1) one of the business operators involved in the concentration owns more than 50% of the voting shares or assets of each of the other business operators; (2) More than 50% of the voting shares or assets of each operator participating in the concentration are owned by the same operator not participating in the concentration. Article
3 The Anti-monopoly Law Enforcement Agency shall support the concentration of business operators in accordance with the law. The concentration of undertakings that do not have the effect of eliminating or restricting competition will be approved by the anti-monopoly law enforcement agencies in accordance with the law. For the concentration of business operators that has or may have the effect of eliminating or restricting competition, the anti-monopoly law enforcement agencies will prohibit or approve it with restrictive conditions according to law. The term "concentration of undertakings" as mentioned in the
preceding paragraph has or may have the effect of eliminating or restricting competition refers to the competition problems brought about by the concentration. Article
4 The term "horizontal concentration of undertakings" as mentioned in these Guidelines refers to the concentration of undertakings in which the undertakings participating in the concentration have a horizontal relationship, that is, the undertakings participating in the concentration are actual or potential competitors in the same relevant market.
To judge whether the operators participating in the concentration are in the same relevant market, the relevant commodity or service (hereinafter referred to as commodity) market and the relevant regional market shall be considered at the same time.
For a concentration, the operators involved in the concentration may participate in competition in multiple relevant markets, and there are horizontal relationships (direct competition) in some relevant markets, while there are non-horizontal relationships in some relevant markets. The anti-monopoly law enforcement agencies will evaluate the horizontal and non-horizontal relationships of the parties involved in the concentration one by one. These Guidelines only provide the analysis ideas on the horizontal relationship of the concentration of undertakings. Article
5 The anti-monopoly law enforcement agency shall mainly consider the following factors when assessing whether the horizontal concentration of undertakings has or may have the effect of eliminating or restricting competition:
(1) the purpose of the concentration;
(2) The market share of the undertakings participating in the concentration in the relevant market and their control over the market;
(3) The market concentration of the relevant market;
(4) The impact of the concentration of undertakings on market access and technological progress;
(5) The impact of the concentration of business operators on consumers and other relevant business operators;
(6) The impact of the concentration of business operators on the development of the national economy; and
(7) Other factors that should be taken into account to affect market competition. By analyzing the above factors,
the anti-monopoly law enforcement agencies can judge whether the horizontal concentration of operators will produce unilateral effect or coordination effect, and then judge whether the concentration has or may have the effect of excluding or restricting competition.
For a horizontal concentration, the unilateral effect and the coordination effect may exist separately or simultaneously. For the concentration of undertakings involving multiple horizontal overlapping related markets, the anti-monopoly law enforcement agencies will evaluate the possible unilateral effects and coordination effects in each related market separately. Article
6 The anti-monopoly law enforcement agency shall assess whether the concentration has or may have the effect of eliminating or restricting competition, and may compare the possible competition in the relevant market under the assumption that the concentration does not occur, and analyze whether the concentration will significantly reduce the competition in the relevant market.
It is assumed that the situation in which the concentration does not occur may be either the competition situation in the relevant market before the concentration or the competition situation that can be foreseen or may occur in the relevant market in the future if the concentration does not occur. Chapter
II Evidentiary Materials
Article 7 The term "evidentiary materials" as mentioned in these Guidelines refers to the relevant documents and materials that the anti-monopoly law enforcement agencies need to obtain in order to assess the impact of concentrated competition, including the declaration documents and materials submitted by the declarers, as well as other documents and materials. Article
8 The Anti-monopoly Law Enforcement Agency may obtain relevant evidentiary materials from the operators, upstream suppliers, downstream customers or end consumers, relevant government departments, trade associations, competitors and other channels involved in the concentration, and may employ experts and scholars who have no interest in the concentration and third-party advisory bodies to provide reference opinions on the evaluation of the concentration. The ways to
obtain evidence materials include, but are not limited to, requiring the operators involved in the concentration to provide materials, inviting relevant units or individuals to assist in the investigation, soliciting opinions in writing, questionnaires, symposiums, demonstration meetings, entrusting consultation, field research, etc.
Anti-monopoly law enforcement agencies will analyze whether the relevant evidence materials belong to the factors that should be considered in the examination of concentration of business operators, and judge whether they should be included in the scope of examination and how to consider them. Article
9 The evidentiary materials related to the examination of the concentration of business operators mainly include:
(1) the business documents and records prepared by the business operators for carrying out the business related to the concentration;
(2) Binding transaction documents related to the concentration, such as transaction agreements, memorandums of understanding, share transfer documents, etc.;
(3) Relevant documents stating the purpose of the transaction or the efficiency that may be generated by the concentration;
(4) Relevant materials explaining the market competition situation and future development trend, such as market situation reports or relevant research, forecast and consumer research reports issued by the operators or independent third parties involved in the concentration;
(5) Information on how all parties and other stakeholders view competitors, such as internal documents evaluating or describing competitors, regular reports on business performance (including but not limited to monthly sales reports and other documents that can explain their business performance);
(6) Information reflecting customers and their preferences and behaviors, such as bidding records, the actual situation of customers'conversion between suppliers and relevant customer survey reports, etc;
(7) Strategic documents and financial information related to centralization, such as R & D plans, investment proposals, business feasibility analysis, financial reports, etc.;
(8) To explain the relevant information on the pricing strategies of all parties involved in the centralization, such as price lists, sales forecasts and analysis, discount or rebate policies, past price fluctuations and their influencing factors, etc;
(9) Other documents and materials that are helpful for the anti-monopoly law enforcement agencies to understand the market competition situation, the purpose of the transaction or the impact of competition.
According to the needs of the examination of specific cases, the anti-monopoly law enforcement agencies may require the relevant operators to provide one or more of the above-mentioned evidentiary materials other than declaration documents and materials. Article
10 The Anti-monopoly Law Enforcement Agency shall comprehensively evaluate all relevant evidentiary materials and then determine the authenticity, relevance and probative force of individual evidentiary materials. The role of evidentiary materials may vary according to their type, source, and method of collection, as well as according to the elements of competition analysis and the competition issues arising from concentration.
Generally speaking, the internal documents, business models, business decisions and other evidence materials formed by the centralized parties in the course of operation are more probative than documents and materials specially produced for the centralized declaration. The documents formed by
upstream suppliers, downstream customers and centralized parties in business contacts, the reactions of upstream and downstream operators to the concentration and their judgments on the competitive impact of the concentration can provide important reference for the competition analysis of anti-monopoly law enforcement agencies. Relatively speaking, the reaction of downstream customers to concentration and their judgment on the competitive impact of concentration are more important.
Antitrust enforcers do not assess the competitive impact of a concentration based solely on an individual operator's broad view of the transaction.If the objective information provided by the aforementioned operators is helpful to explain the operation and competition of the relevant market, the anti-monopoly law enforcement agencies will refer to it carefully. Article
11 If there is evidence showing that the main purpose of the concentration is to eliminate or restrict competition, the anti-monopoly law enforcement authorities tend to believe that the concentration has or may have the effect of eliminating or restricting competition, unless the business operators can prove that the concentration does not have the effect of eliminating or restricting competition.
[Case 1] Company A intends to acquire Company B. B operates a product B which has been on the market recently but whose sales are growing rapidly, and there is a competitive relationship with the product A sold by A. "Through this acquisition, we can eliminate the competitive threat from B's product B and gradually withdraw B from the market after delivery, thus consolidating A's control over the market," according to an internal document assessing the acquisition. Other internal documents also show that the main purpose of the acquisition is to eliminate the competitive pressure from B products. Anti-monopoly law enforcement agencies tend to believe that the concentration has or may have the effect of eliminating or restricting competition. Article
12 The anti-monopoly law enforcement authorities shall encourage the undertakings, competitors and downstream customers participating in the concentration to provide qualitative and quantitative evidence materials reflecting the impact of the concentration competition. The relevant party providing the evidentiary materials shall be responsible for the authenticity and integrity of the evidentiary materials. Chapter
III Relevant Markets
Article 13 Relevant markets refer to the scope of commodities and geographical areas in which operators compete for specific commodities within a certain period of time. A
scientific and reasonable definition of the relevant market is helpful to judge the source of competition constraints faced by all parties involved in the concentration, to provide an analytical basis for evaluating the possible impact of competition brought about by the concentration, and to provide a reasonable range for calculating market share and analyzing market concentration. Article
14 According to the Guidelines of the Anti-monopoly Committee of the State Council on the Definition of the Relevant Market, the definition of the relevant market usually requires the definition of the relevant commodity market and the relevant regional market, and the timeliness shall also be taken into account under specific circumstances. In the cases of concentration of operators involving intellectual property rights, such as technology trade and licensing agreements, it may also be necessary to define the relevant technology market and consider the impact of intellectual property rights, innovation and other factors. The method of
defining the relevant market is not unique. When defining the relevant market, we can use objective and real data according to the specific circumstances of the case, and make alternative analysis from both demand and supply based on the characteristics, uses, prices, transportation costs and other factors of commodities. When the scope of the market for operators to compete is not clear or difficult to determine, anti-monopoly law enforcement agencies encourage operators to define the relevant market according to economic analysis ideas or methods such as "hypothetical monopolist test". To
define the relevant market of concentration of operators in the field of Internet platform, we should consider the characteristics of platform economy, refer to the Anti-monopoly Guidelines of the Anti-monopoly Committee of the State Council on the Field of Platform Economy, and make a concrete analysis in combination with individual cases. Article
15 When examining the concentration of business operators, the anti-monopoly law enforcement authorities shall, in principle, define all relevant markets that may be affected by the concentration. In the case of merger of
operators, the relevant markets with horizontal, vertical, adjacent and complementary relationships among the operators participating in the concentration should be defined.
[Case 2] Company a intends to merge with Company B. Both Company A and Company B are engaged in the production of products A and B. In addition, Company B is also engaged in the production of products C and D. If A and B have horizontal overlap in A and B businesses, vertical correlation in C and A and B businesses, and adjacent or complementary relationship in A, B and D businesses, all relevant commodity markets with horizontal, vertical and adjacent or complementary relationship shall be defined.
Operators who acquire control rights through acquisition of equity or assets, or who acquire control rights through contracts or other means, or who can exert decisive influence, should usually proceed from the business of the target operator or the target assets. The focus is to define the relevant market around the business that has horizontal, vertical, adjacent and complementary relationship with the operators who have obtained control rights or can exert decisive influence to participate in the concentration. The concentration of undertakings of a
newly established joint venture shall, under normal circumstances, proceed from the business that the joint venture intends to engage in, and focus on defining the relevant market for the business that has a horizontal, vertical, adjacent and complementary relationship between the joint venture and the undertakings participating in the concentration.
[Case 3] Company A and Company B intend to establish a new joint venture C. A produces product A, B produces products B and C, and C intends to produce product A, where A is the raw material of B, and C has nothing to do with A and B. In this transaction, the relevant market shall be defined based on the product A that the joint venture C intends to engage in, the product B that has upstream and downstream relations with it shall be defined, and the product C that does not have horizontal, vertical, adjacent and complementary relations may not be defined. The
target operator or the newly established joint venture shall only provide commodities to the operators participating in the concentration during its existence, and if the business it is engaged in or intends to engage in has an independent relevant commodity market in practice, the aforementioned principles shall still apply; If there is no independent relevant commodity market in the practice of the business it is engaged in or intends to engage in, the relevant market may not be defined separately for the business, but the relevant market shall still be defined for the business related to the business and affected by the concentration. Whether there is an independent relevant commodity market can be judged according to market practice, such as whether there are other operators engaged in relevant business and sales to third parties to obtain income.
[Case 4] Company A and Company B intend to establish a new joint venture C. Upon examination, both A and B are engaged in business in the product market, and A is engaged in business in the upstream B product market of A product. In this case, the C product to be produced by C is the key intermediate in the process of producing A with B as raw material, and its only use is to produce A. At the same time, C produced by C is only provided to A and B to produce A, not sold to the outside world, and there is no other operator selling C to a third party in the market. Therefore, in view of the fact that C product is an intermediate and there is no independent production and sales market, the relevant market for C product is not defined separately in this case. Considering that the transaction will have a direct impact on the downstream A product market and the upstream raw material B product market competition, the relevant commodity markets in the case are defined as A and B product markets. Article
16 For differentiated products, it may be difficult for the relevant market definition to clearly and clearly delineate the scope of the sources of competitive constraints faced by the centralized parties according to the differences in characteristics or quality between products. According to the specific circumstances of the case,
the anti-monopoly law enforcement agencies may define a relevant market to cover multiple differentiated products, or may define each differentiated product as a separate relevant market. If the former approach is adopted, antitrust enforcement agencies may focus on other factors in competition analysis, such as whether the centralized parties are close competitors, and the operators with close competitive relationship in the market.
[Case 5] Company A intends to acquire Company B. Both A and B produce product A and product B, and A and B must be used together. Products B can be divided into original products and third party imitations. Original products refer to products B that are specially used for a brand A product and all components are produced and sold by the brand manufacturer. Third party imitations refer to products B that are compatible with a brand A product but not produced by the brand manufacturer. Although there are differences in price and quality between original products and third-party imitations, market research shows that most consumers believe that the substitution relationship between original products and third-party imitations is obvious, and there is competition between them. Therefore, product B is defined as the relevant commodity market, and the products produced by the original factory and the third-party imitations constitute the differentiated products in the same relevant commodity market.
Although the products produced by the original factory and the third-party imitations are defined as the same relevant commodity market, when evaluating the impact of centralized competition, the differences between the third-party imitations and the products produced by the original factory in price, quality, after-sales maintenance and other aspects, and the choice preferences of downstream customers are analyzed. The impact of changes in the market of A products on the market of original products and third-party imitations. Article
17 When the concentration of business operators may have the effect of eliminating or restricting competition for a specific customer group, the anti-monopoly law enforcement agency may consider defining the relevant market around a specific commodity for a specific customer group. Whether a specific commodity for a specific customer group constitutes a separate relevant market and whether the supplier can price differently for different customer groups is a more important consideration. The possibility of differential pricing has an impact on market definition, market share calculation and the assessment of competitive impact. Restricted
by laws, policies, administrative measures and other reasons, when some customers are unable to purchase certain commodities, or when the actual geographical distribution of purchasing of customers in a region changes or is restricted, the anti-monopoly law enforcement agencies will consider whether it is necessary to adjust the boundaries of the relevant commodity market or the relevant regional market according to the availability of commodities. Or consider the impact in market share calculations and competitive analysis. Article
18 When there are multiple possibilities for the definition of the relevant market in a concentration, the anti-monopoly law enforcement agency may consider the situation under different relevant market definitions in combination with the concentration situation and the need for competition analysis, and treat the relevant market definitions as open ones.
For the above cases, the anti-monopoly law enforcement agency will conduct a competition analysis for each potential relevant market, so as to determine that the accuracy of the competition analysis will not be affected even if no definite conclusion is made for the relevant market. Article
19 The relevant market definition of historical cases of concentration of business operators can be used for reference. However, the definition of the relevant market is not immutable, and there may be individual differences according to the business relationship of the centralized parties and the development and changes of the industry. Chapter
IV Market Share and Market Concentration
Article 20 Market share, also known as market share, refers to the proportion of the scale of an operator in a relevant market to the total scale of the relevant market.Article
21 Market share is an important indicator of whether the preliminary screening concentration has or may have the effect of excluding or restricting competition. Generally speaking, market share can reflect the operator's control over the market to a certain extent, the larger the market share, the more likely the operator has the control over the market.
For horizontal concentration of undertakings, it is generally assumed that the market share of the entity in the relevant market after the concentration is the sum of the market shares of the undertakings participating in the concentration before the concentration. In the case of newly established joint ventures and concentration of potential competitors, the market share that may be gained within a certain period of time (for example, three years) after its future operation will also be taken into account. Article
22 For a horizontal concentration of undertakings in which the aggregate market share of the parties to the concentration is more than 50%, the anti-monopoly law enforcement authorities generally presume that the concentration has or may have the effect of eliminating or restricting competition in the relevant market, unless the undertakings can prove that the concentration will not adversely affect competition. Anti-monopoly law enforcement agencies will focus on horizontal concentration of operators with a
total market share of 25% to 50%. Among them, for the horizontal concentration of operators with a total market share of 35% to 50%, the anti-monopoly law enforcement agencies tend to believe that the concentration has or may have the effect of excluding or restricting competition in the relevant market. In general, the anti-monopoly law enforcement agencies will not consider that the concentration has or may have the effect of excluding or restricting competition in the relevant market for the horizontal concentration of undertakings with a
total market share of 15% to 25%, but based on the market competition situation of the case, it is necessary to analyze whether the concentration has unilateral or coordinated effects.
For horizontal concentration of operators whose total market share is less than 15%, after determining the rationality of the definition of the relevant market and the accuracy of the market share, the anti-monopoly law enforcement agencies usually presume that the concentration does not have the effect of excluding or restricting competition in the relevant market, unless there is evidence that the concentration may have adverse effects on competition. Otherwise, there is no need to further analyze the unilateral effect or coordination effect. Article
23 When calculating the market share, an operator shall choose the index that best describes its competitiveness, and in general, the sales amount shall be taken as the calculation index. According to the market operation characteristics of the industry, the market share can also be calculated by sales volume, output, capacity, ownership, proven reserves, etc. The market share of operators in the field of Internet platforms can also take into account the amount of transactions, the number of transactions, the number of active users, the number of clicks, the length of use or other indicators.
For homogeneous products, operators can use sales volume or output and production capacity as indicators. For the relevant market with capacity as an important competitive factor, the share of each operator's capacity in the total capacity of the relevant market (representing the operator's production capacity or reserve capacity) can better reflect the operator's future influence on competition. Article
24 The anti-monopoly law enforcement agencies shall focus on the market shares of the undertakings participating in the concentration, and shall also assess the market shares of other market participants to reflect the impact of the concentration on competition. Under
normal circumstances, an operator shall provide the anti-monopoly law enforcement agency with the market share data of the top five operators in the relevant market in the previous year at the time of declaration, and the anti-monopoly law enforcement agency may require it to provide the market share data of the top ten operators according to its needs. The market share of
each undertaking shall be calculated by accurately calculating its size in the relevant market, taking into account all operations in the relevant market of all undertakings with which it has direct or indirect control, but excluding transactions between undertakings with which it has control.
[Case 6] In market A, the market share of Company A is 5%, the market share of its parent company B is 6%, the market share of its subsidiary C controlled by its parent company is 7%, and the market share of its subsidiary D controlled by Company A is 8%. After verification, when Company A calculates the above market share, it does not deduct the transactions between the above companies. The transactions between A, B, C and D account for 5% of the market share. Therefore, the market share of A in the market should be 26% of the sum of A, B, C and D, minus 5% of the transactions between A, B, C and D, which is 21%. Article
25 According to the needs of the examination work, when examining the concentration of some undertakings, the anti-monopoly law enforcement agencies need the market share data of the undertakings for a longer period of time. When the frequency of transactions in the relevant market is not fixed and fluctuates greatly, the market share based on annual data may not be representative, and antitrust enforcement agencies need to estimate the market share with reference to transactions over a longer period of time (such as three or five years).
[Case 7] There are five major competitors in a relevant market, namely, Company a, Company B, Company C, Company D and Company E, and the transaction is mainly conducted through tendering and bidding. In 2020, there were three projects with roughly the same purchase amount and equipment quantity in the market, which were won by C, D and E companies respectively. In 2021, there was only one project in the market, which was won by Ding Company. In 2022, there were two projects with roughly the same purchase amount and equipment quantity in the market, and Company A and Company B each won one bid. If we only look at the market share in 2022, the share of a and B companies is about 50%, and the share of C, D and E companies is zero, but this does not reflect the reality of the market. At this time, the antitrust enforcement agency will evaluate the market share of the five competitors by referring to the winning bids over a longer period of time (such as three or five years). Article
26 An operator shall provide the anti-monopoly law enforcement agency with the market share data issued by a third party recognized by the industry. The higher the degree of industry recognition of third-party data, the greater the possibility of anti-monopoly law enforcement agencies to accept. If
an operator is unable to provide the third party market share data, it may estimate the market share data by itself and provide the estimation basis and method. The estimation basis shall be based on reliable information, and the estimation method shall be objective, reasonable and scientific. Anti-monopoly law enforcement agencies will verify the aforementioned market share data.
For the inadmissible data, the anti-monopoly law enforcement agencies will explain the specific reasons for the inadmissible data and require the operators to correct them. When the operator is unable to provide objective and credible data, the anti-monopoly law enforcement agency may use the best third-party data obtained from other sources. Article
27 Market concentration is a description of the competition structure of the relevant market, reflecting the degree of concentration of operators in the relevant market. Market concentration and its changes are an important factor for antitrust law enforcement agencies to consider in their competition analysis.
Market concentration and its changes can intuitively reflect the competition structure and situation of the relevant market before and after concentration, and reflect the changes of the relevant market structure before and after concentration. Calculating the changes in market concentration before and after concentration helps to assess the extent to which concentration has an impact on competition in the relevant market. Usually
, the higher the concentration of the relevant market and the greater the increment of market concentration caused by concentration, the greater the possibility that concentration has the effect of eliminating and restricting competition. At the same time, a highly concentrated market is more likely to lead to coordination among competitors. Article
28 Anti-monopoly law enforcement agencies usually use the following two indicators to measure market concentration: one is the Herfindahl-Hirschman Index (HHI Index), which is the sum of the square of the market share of each operator in the relevant market multiplied by 100; The second is the total market share of the top n operators in the industry (CRn index), that is, the sum of the market share of the top n operators in the relevant market.
It is generally believed that the HHI index gives more weight to operators with higher market share than CRn index, which can more accurately reflect the market competition structure, so it is more frequently and widely used in the review practice. In adopting the HHI index, antitrust enforcers consider both the level of the HHI index after concentration and the increase in the HHI index due to concentration (ΔHHI). The level of HHI index can indicate the competitive pressure faced by operators in the relevant market, and ΔHHI can effectively measure the change of market concentration and the degree of influence brought about by concentration. Under the condition that the
operator cannot accurately obtain the market shares of all operators in the relevant market, the upper and lower limits of the HHI index can be calculated by combining the ranking of the market shares of the operators in the relevant market from large to small, and the ΔHHI can be calculated according to the market shares of all parties in the concentration.
[Case 8] In a relevant market, the market shares of the top five companies A, B, C, D and E are 30%, 20%, 13%, 11% and 10% respectively. Company a intends to acquire all the shares of Company E. At this time, the total market share of the top five companies is 84%, and the total market share of other companies in the market is 16%. The market share of the entity after concentration is 40% of the sum of the market shares of A and E.
Without knowing the number of other companies in the market and their respective market shares, the lower limit of the HHI of the relevant market after concentration can be assumed that the remaining 16% of the market share is divided equally among other companies. That is, when they are all close to 0, it is calculated
that after concentration, HHI > [ (30% + 10%) × 100] 2 + (20% × 100) 2 + ( 13%×100)2+(11%×100)2=2290； The upper limit of HHI after
concentration can be assumed that the market share of the company ranked sixth is 10%, the market share of the company ranked seventh is 6%, Calculated when the other is 0:
HHI after concentration < [ (30% + 10%) × 100] 2 + (20% × 100) 20 HTML0U NK17+(13%×100)0HTML0UNK1820HTML0UNK19+(11%×100)0HTML0UNK2020HTML0UNK21+(10%×100)0HTML0UNK2220HTML0UNK23+(6%×100)0HTML0UN K2 420HTML0 UNK2 5 = 2426; 0HTML0 UNK2 6 ΔHHI caused by concentration is the difference between HHI after concentration and HHI before concentration. In this case, it is impossible to accurately calculate the specific values of HHI before and after concentration. ΔHHI can be calculated by subtracting the sum of the squares of the market shares of A and E multiplied by 100 from the square of the market share of the entity after concentration: 0 HTML0 UNK2 7 ΔHHI = [ (30% + 10%) × 100] 0 HTML0 UNK2 8 20HTML0 UNK2 9 – [ (30% × 100 )0HTML0UNK3020HTML0UNK31+(10%×100)0HTML0UNK3220HTML0UNK33]=600。 0 HTML0 UNK3 4 Article 29 Antimonopoly law enforcement agencies generally classify markets into the following three types: 0 HTML0 UNK3 5 (1) Low concentration market: HHI index is less than 1000; 0 HTML0 UNK3 6 (2) Medium concentration market: HHI index is between 1000 and 1800; 0 HTML0 UNK3 7 (III) Highly concentrated market: HHI above 1800. 0 HTML0 UNK3 8 Anti-monopoly law enforcement agencies usually use the following criteria to examine the possible impact of concentration on competition: 0 HTML0 UNK3 9 (1) If the HHI index after concentration is less than 1000, or ΔHHI is less than 100, the anti-monopoly law enforcement agencies generally do not consider that the concentration has or may have the effect of eliminating or restricting competition; 0 HTML0 UNK4 0 (2) After concentration, the HHI index is between 1000 and 1800, and ΔHHI is higher than 100. Anti-monopoly law enforcement agencies tend to believe that concentration has or may have the effect of eliminating or restricting competition, which requires comprehensive review; 0 HTML0 UNK4 1 (3) After concentration, the HHI index is higher than 1800, and ΔHHI is between 100 and 200. Anti-monopoly law enforcement agencies are more inclined to believe that concentration has or may have the effect of eliminating or restricting competition, which requires a comprehensive review. If the HHI index after concentration is higher than 1800 and ΔHHI is higher than 200, the anti-monopoly law enforcement agency usually presumes that the concentration has or may have the effect of eliminating or restricting competition, unless the operator can prove that the concentration will not adversely affect competition. 0 HTML0 UNK4 2 Article 30 The standards stipulated in Article 22 and Article 29 of these Guidelines are only the basis for the initial judgment of the Anti-monopoly Law Enforcement Agency. When there is a difference in the judgment of a concentration of undertakings based on the market share standard and the HHI index standard, the anti-monopoly law enforcement agency will consider other factors to make a judgment. 0 HTML 0 UNK4 3 Chapter V Unilateral Effect 0 HTML 0 UNK4 4 Article 31 The term "unilateral effect" as mentioned in these Guidelines refers to the elimination of actual or potential competitors by business operators through concentration, which significantly enhances the market power of entities after concentration and reduces the competitive constraints of other business operators in the relevant market. It has the ability and motivation to unilaterally implement such acts as directly or indirectly raising the price of related commodities, reducing the quality or quantity of commodities, and weakening innovation, which may increase the possibility of harming fair competition in the market and the interests of consumers. 0 HTML0 UNK4 5 Article 32 The competitive constraints eliminated by horizontal concentration of undertakings may be existing or potential competitive constraints. Antimonopoly law enforcement agencies use different analytical frameworks when assessing the elimination of existing and potential competition constraints by horizontal concentration of undertakings. This chapter and Chapter 6 will focus on the impact of concentration on existing competitive constraints, while Chapter 7 will focus on potential competitive constraints. 0HTML0 UNK4 6 Article 33 The following factors shall be taken into account in evaluating the unilateral effects that may arise from the elimination of existing competitive constraints in a horizontal concentration of undertakings: 0HTML0 UNK4 7 (1) Before and after the concentration, the number and changes of competitors in the relevant market, the market share and changes of the undertakings involved in the concentration, and the concentration of the relevant market; 0 HTML0 UNK4 8 (2) Whether there is a close competitive relationship between the operators involved in the concentration; 0 HTML0 UNK4 9 (3) Whether other competitors in the relevant market can constitute an effective competitive constraint on the entity after the concentration; 0 HTML0 UNK5 0 (4) Market entry, buyer power and other factors. 0 HTML0 UNK5 1 Article 34 The number and changes of competitors in the relevant market, the market share and changes of the operators involved in the concentration, and the concentration and changes of the relevant market are important indicators for evaluating the unilateral effect. The fewer the number of competitors in the relevant market, the higher the market share of the operators participating in the concentration, the greater the gap between the market share of the entity and the competitors after the concentration, the higher the concentration of the relevant market and its changes after the concentration, the stronger the control of the entity over the market after the concentration, and the greater the possibility of the unilateral effect caused by the concentration. 0 HTML0 UNK5 2 [Case 9] Company A intends to acquire Company B, and the two parties compete in the relevant market A. The total share of A and B in the market is 55% -60%; after concentration, the number of major competitors in the relevant market has decreased from 5 to 4, and the HHI index has increased from 3296 to 4019, with an increment of 723. According to the presumption standard of market share in Article 22 and the presumption standard of market concentration in Article 29 of these Guidelines, the concentration is likely to lead to unilateral effects. 0 HTML0 UNK5 3 Article 35 Whether there is a close competitive relationship between the operators participating in the concentration is an important consideration in judging the unilateral effect. The closer the competitive relationship between the parties involved in concentration, the greater the degree to which concentration will reduce the competitive constraints faced by the entities after concentration, and the greater the possibility that concentration will lead to unilateral effects. 0 HTML0 UNK5 4 [Case 10] Company A obtains the control of Company B through contract or other means or can exert decisive influence on Company B, and both parties carry out business in the market of product A. A and B have always been the top two competitors in the market of product A. Both sides adopt similar production technology and have the same customer base. They compete fiercely in the market of product A and restrict each other. Concentration will eliminate the competitive constraints between the two leading close competitors in the market of product A, so that company A after concentration has the ability and motivation to exercise exclusive and restrictive competitive behavior in the market of product A. 0 HTML0 UNK5 5 Article 36 To evaluate whether there is a close competitive relationship among the operators participating in the concentration, factors such as the degree of substitution of commodities, the overlap of customer groups, the similarity of sales strategies, the intensity of price competition, the closeness of production costs and market shares may be taken into account. 0 HTML0 UNK5 6 [Case 11] Company A intends to acquire Company B. Both Company A and Company B compete in Market A. Both sides of the transaction have the same transportation transit site, similar customer groups, similar transportation route network and sales strategy in A market. At the same time, the two sides of the transaction have the closest share in the market, which is much higher than other competitors. Therefore, it can be judged that Company a and Company B have a close competitive relationship. This concentration will eliminate the close competitive relationship between the two companies, which may lead to unilateral effects. 0 HTML 0 UNK5 7 When assessing the degree of substitutability of goods, the anti-monopoly law enforcement agency shall consider the following factors: 0 HTML 0 UNK5 8 (1) the degree of similarity in the attributes, quality, reliability, etc. Of goods and the degree of customization of goods; 0 HTML 0 UNK5 9 (2) Cross-elasticity of demand for commodities, transfer ratio, etc., that is, the proportion of lost sales transferred to other products after the price of a commodity rises; 0 HTML 0 UNK60 (3) The direction and extent of historical changes in the price level and market share of commodities; 0 HTML 0 UNK6 1 (4) The number and frequency of competition for the same bid section in the tendering and bidding market, as well as the situation of other competitors participating in the bidding; 0 HTML 0 UNK6 2 (5) The historical data of downstream customers switching suppliers when entering and exiting the market; 0 HTML 0 UNK6 3 (6) Other factors. 0 HTML0UNK64 [Case 12] Company A intends to acquire Company B. A and B compete in the market of product A.A and B rank first and second in the market respectively, and the products are high-end products in terms of performance and quality; A and B appear at the same time with the highest frequency in the bidding. When B participates in the bidding, the proportion of a's participation at the same time reaches 79. According to the analysis of the bidding data, the transfer proportion from Company B to Company a based on sales volume reaches 42.7%, and the transfer proportion based on sales volume reaches 41. Therefore, the products between a and B have strong substitutability. It is the closest competitor. This concentration will eliminate the competitive constraints between A and B, which may lead to unilateral effects. Article
37 Close competitive relationship is a relative concept. Even if there is a certain degree of differentiation between the goods of the operators participating in the concentration, if the degree of differentiation of the goods of other competitors in the relevant market is higher, or the number of other competitors is very small, then the operators participating in the concentration may still be close competitors.
In the differentiated product market, market share can not effectively represent the operator's control over the market, and may not be an effective tool to distinguish close competitors from non-close competitors, so we should focus on evaluating the degree of commodity substitution. Article
38 When assessing whether the horizontal concentration of undertakings has unilateral effects, the competitive constraints of other competitors in the relevant market on the entities after the concentration shall also be taken into account. If other competitors in the relevant market can not form effective competition constraints on the centralized entity, then the possibility of unilateral effect caused by concentration is greater.
[Case 13] Company A intends to acquire Company B, and the two sides of the transaction compete in the market of product A. In the market of product A, the market shares of Company A and Company B are 40% -45% and 15% -20% respectively, ranking first and second, and the market share of the third competitor in the market is less than 5%, which can not form an effective competitive constraint on the centralized entity. Therefore, concentration may lead to unilateral effects. Article
39 The following factors shall be taken into account in the evaluation of whether other competitors can provide effective competitive constraints:
(1) the degree of substitution of the commodities of other competitors for the commodities of the operators participating in the concentration;
(2) the ability of other competitors to increase production capacity;
(3) The ability and possibility of downstream customers to switch to other competitors;
(4) Other factors that indicate the willingness and ability of other competitors to compete. Article
40 The weaker the convenience and feasibility of downstream customers turning to other competitors and the higher the cost, the smaller the competitive constraints of other competitors and the greater the possibility of unilateral effect caused by concentration. When assessing the switching capability of downstream customers, the anti-monopoly law enforcement agency shall consider the following factors:
(1) the number of other competitors and their market power;
(2) whether the performance of the goods and related services of other competitors are in line with the requirements of downstream customers;
(3) Whether the change of downstream customers to other competitors will change their customers' confidence in the quality of their goods;
(4) Whether the downstream customers have changed to other competitors in the past;
(5) The reaction of the downstream customers to the past price increase behavior of the operators participating in the concentration;
(6) Other factors.
[Case 14] Company A intends to acquire Company B. A and B are the main competitors in the market of product A. Downstream customers of product A have strict requirements on the reliability and stability of the supplier's supply. They usually sign a contract with the supplier for 3 to 5 years, or even up to 10 years. Generally, they will not easily change the supplier. Therefore, the ability and possibility of downstream customers to turn to other competitors are smaller, and the possibility of unilateral effect caused by concentration is greater. Article
41 In the market of homogeneous products, when evaluating the competitive constraints of competitors, we should focus on the possible reactions of other competitors if the entity raises prices or reduces sales after concentration and whether the entity is profitable after concentration. The more the market is in short supply, the more the capacity of other competitors is limited or constrained, or the higher the marginal cost of increasing production, the less the competitive constraints on the centralized entity, the more profitable the price increase of the centralized entity, and the greater the possibility of the unilateral effect caused by the concentration. On the contrary, although the market share of some competitors is relatively small, after the concentration, these competitors can relatively quickly improve production capacity and expand sales, which can bring important competitive constraints to the entities after the concentration, and the price increase of the entities after the concentration will be unprofitable.
[Case 15] Company A obtains the control of Company B through contract or other means or can exert decisive influence on Company B, and a and B compete in the market of product A. A is a homogeneous product, and the competitive analysis of this case can take into account the capacity of competitors. The production capacity of A and B accounts for 35% -40% and 10% -15% of the total production capacity of product A respectively, and the total share is 45% -50%. The capacity utilization rate and product sales rate of product A in the industry are relatively high, that is, other competitors in the relevant market can not quickly increase production and sales, if the entity price rises after concentration, it is difficult for downstream customers to turn to other competitors to obtain adequate supply, and other competitors can not provide effective competitive constraints. Therefore, this concentration is more likely to lead to unilateral effects. Article
42 Anti-monopoly law enforcement agencies shall also pay attention to the negative impact of concentration on dynamic competition such as technological progress and innovation, for example, the entity may reduce its investment and innovation efforts after concentration. The types of investment or innovation efforts made by
operators include developing new products, improving existing products, introducing more efficient or disruptive business models, introducing new functions to benefit customers and increase customer stickiness, etc.
[Case 16] Company A intends to acquire Company B, and the two parties compete in the market of product A. Before concentration, A and B are important competitors in the research and development of A product upgrading technology. After concentration, due to the decrease in the number of R & D competitors and the further decline in competitive power, the entity after concentration may reduce innovation investment and delay the speed of new product launch, thus adversely affecting the technological progress of product A. Article
43 According to the specific characteristics of the case, the anti-monopoly law enforcement agencies will also consider other factors comprehensively when assessing whether the horizontal concentration of undertakings has unilateral effects. For example, for the concentration of operators involving bilateral or multilateral platforms, the bilateral or multilateral business of the platform should be considered, and the direct and indirect network effects should be assessed. For the concentration of operators involved in the market on a given side of the platform, it is necessary to consider the impact of concentration on the other side of the platform or the multilateral market, as well as the impact on the competition between platforms. Article
44 If a business operator has a dominant market position before the concentration, and if the concentration consolidates the dominant market position of the business operator by eliminating existing or potential competitors, the anti-monopoly law enforcement agency will tend to believe that the concentration has a unilateral effect. Article
45 When evaluating the unilateral effect of horizontal concentration of undertakings, quantitative methods such as price rise pressure test (UPP), comprehensive price rise pressure index (GUPPI) and merger and acquisition simulation may be used.
[Case 17] Company A intends to acquire Company B. Company A and Company B compete in a relevant market, ranking first and second in market share respectively. The calculation shows that the concentration will lead to GUPPI reaching 21. The main idea of GUPPI is to calculate how much profit lost by operators after price increase can be returned through concentration. In general, if GUPPI is less than 5%, concentration is unlikely to cause unilateral effects; if GUPPI is more than 10%, concentration may cause unilateral effects. GUPPI calculates the pressure of price increase, and does not indicate the extent of the entity price increase after concentration.
[Case 18] Company A intends to acquire Company B, and a and B compete in a relevant market. Using the M & a simulation method, it is estimated that the price increase of the entity in the relevant market after concentration may reach more than 10%, so the concentration may lead to unilateral effect. Merger and acquisition simulation is a quantitative method to predict the price change of products after concentration. Firstly, it needs to statistically analyze and estimate the demand of products (set the demand function and estimate the relevant parameters). On this basis, it predicts the new equilibrium price level of products in the relevant market after concentration, and obtains the impact of concentration on the market price level by comparing with the price when concentration does not occur. Chapter
VI Coordination Effect
Article 46 The term "coordination effect" as mentioned in these Guidelines refers to the elimination of actual or potential competitors by concentration, which significantly changes the market structure and is more conducive to the explicit or implicit coordination between the entity and other market participants after concentration. It has the ability and motivation to directly or indirectly implement such acts as raising commodity prices, lowering commodity quality or weakening innovation, which may increase the possibility of harming fair competition in the market and the interests of consumers.
[Case 19] Companies A, B and C compete in the market of product A, with market shares of 3%, 19% and 26% respectively. Company a intends to acquire Company B. Before the concentration, the product of Company A was manufactured by Company C. After the concentration, Company A will have the existing production capacity and sales network of Company B, and become the two main competitors in the market together with Company C. After the concentration, the total market share of the entity and Company C will reach 48%. The OEM agreement signed by Company a and Company C contains competitive information such as production cost and production quantity. The existence of the OEM relationship between the two companies facilitates the coordination between the two parties and restricts market competition. Concentration increases the possibility of coordination and restriction of competition among enterprises in the market. Article
47 Concentration is more likely to produce a coordination effect under the following circumstances:
(1) a consensus can be reached among operators to weaken competition.This consensus can be a direct price increase, a restriction on production, a restriction on new capacity put into the market, a division of the market or an allocation of contracts in the bidding market, and operators can ease their competitive behavior according to the competitive standards in the consensus. If there are direct common interests among operators, they are more likely to reach consensus.
(2) The operator who has reached a consensus can maintain the consensus. Operators can pay attention to whether other operators participating in the coordination behavior have always complied with the consensus in a timely manner. If one operator violates the consensus (deviant behavior), other operators can effectively punish the deviant behavior.
(3) Operators other than coordinated behavior can not pose a threat to the stability of coordinated behavior. That is to say, the reactions of competitors, new market entrants or customers who do not participate in the coordination behavior will not have a substantial impact on the coordination behavior. Article
48 To judge whether the concentration will produce coordination effect, it mainly evaluates whether the concentration is conducive to promoting coordination behavior, that is, whether it is conducive to enhancing the ability, motivation and possibility of the entity and other competitors to jointly exclude and restrict competition after the concentration.
[Case 20] Company A intends to acquire the target business of Company B, and the target business of Company A and Company B overlaps horizontally in the market of product A. After the completion of the transaction, the number of major competitors in the product market decreased from 4 to 3. A product market technology is mature, the price is relatively transparent, and customers mainly purchase through bidding. When the number of major competitors decreases, the cost of communication and coordination between competitors through explicit or implicit means decreases, and it is easier for operators to infer the pricing strategies of other competitors through the bidding results. At the same time, there is more room for profit in the coordinated price behavior of product A market. Therefore, this concentration further improves the ability and motivation of operators to coordinate prices in the A-product market. Article
49 If the concentration leads to any of the following circumstances, the anti-monopoly law enforcement agency will tend to consider that the concentration may produce a coordination effect:
(1) After the concentration, the total market share of the entity and another operator in the relevant market reaches two-thirds, and each market share exceeds one-tenth;
(2) After the concentration, the total market share of the entity and the other two operators in the relevant market reaches three quarters, and the respective market share exceeds one tenth;
(3) The concentration eliminates an operator that may hinder market coordination or substantially eliminates the motivation of the operator to hinder market coordination. The term "operators who may hinder market coordination" as mentioned in the
preceding paragraph usually refers to competitors who have refused to coordinate or competitors who have made profits by deviating from it. To judge whether the concentration has eliminated an operator who may hinder market coordination, it is necessary to make a comprehensive judgment in combination with other factors in the relevant market (such as whether there has been large-scale coordination or attempted coordination before the concentration).
[Case 21] There may be operators (also known as misfits) in the market that hinder market coordination. Misfits have different business ideas from other enterprises, or have different views on the future direction and trend of industrial development, or have different behaviors from other enterprises due to special reasons. The economic differences between enterprises may also lead to the existence of misfits. For example, an enterprise with highly competitive unique products, or very advanced technology, or control of a key production input factor, is likely to show its own uniqueness and unsociability in production and operation, and may have little interest in cooperating with other enterprises. The existence of unsociable people increases the difficulty of coordinating behavior, and the centralized behavior of unsociable people may produce coordination effect. Article
50 assesses whether the concentration is conducive to facilitating coordinated behavior, and the anti-monopoly law enforcement agencies mainly consider the impact of the concentration on market stability, transparency and symmetry. Article
51 When the market environment is relatively stable, the possibility of coordinated behavior increases. When the trading conditions in the relevant market are significantly different due to different customers or commodities, the possibility of coordinated behavior is low. The lower the price elasticity of demand in the market, the more profitable the coordination is generally.
[Case 22] Company A intends to acquire Company B, and a and B compete in the market of product A. A products are raw materials with rigid demand and single type, low price elasticity of demand, large profit margin after price coordination, and the behavior of deviating from coordination is easier to be found and constrained. The incentive and ability to coordinate prices among competitors is further enhanced in the case of concentration that results in a reduction in the number of major competitors from five to four. Article
52 In a fully transparent market, coordination is more likely to occur. Market concentration, the degree of commodity differentiation, the degree of customer dispersion, cross-shareholding among competitors, the exchange of directors, the same shareholders or directors, supervisors and other behaviors will affect market transparency. When the number of competitors is small, the market concentration is high, and the trading conditions are relatively transparent, the coordination behavior is more likely to occur.
[Case 23] Company A intends to acquire Company B, and a and B compete in the market of product A. A product market transparency is high, the number of manufacturers and customers is small, product homogeneity is obvious, competitors have a better understanding of each other's technology, cost, production and sales situation. A product manufacturer can determine the product price or price range of competitors based on relevant facts and experience. At the same time, the manufacturer of product A often shares the same distributor, so it is easy to understand the information of other brand A products through the distribution channel, and the manufacturer of product A has the ability to predict the behavior of other competitors. After the completion of the concentration, the number of producers of product A will be reduced from 5 to 4, which will further increase the possibility of market competitors engaging in exclusion and restriction of competition through coordination. Article
53 When the operators in the relevant market are highly symmetrical, that is, the market share, production cost, production capacity and efficiency are similar, and the degree of commodity differentiation, commodity quality and vertical integration are comparable, the possibility of coordinated behavior among operators is greater. The lower the symmetry between operators, the more difficult it is to produce coordinated behavior.
[Case 24] Companies A, B and C have horizontal overlap in the market of product A, accounting for more than 95% of the total market share. Two competitors with smaller market shares, a and B (with market shares of 30% -35% and 10% -15% respectively), propose to merge, and the market share after the merger is basically the same as that of C. After concentration, the symmetry of market power between the entity and company C will motivate them to coordinate with each other and avoid fierce price competition in the long run. Article
54 When assessing whether there is a possibility of coordinated behavior in the relevant market, if there has been coordinated behavior in the relevant market, the anti-monopoly law enforcement agency will consider that the market conditions are conducive to the coordination of operators without significant changes in the market competition conditions. If the important characteristics of other markets where coordinated behavior has occurred are similar to those of the relevant markets, anti-monopoly law enforcement agencies will attach great importance to them. Article
55 According to the specific characteristics of the case, the anti-monopoly law enforcement agencies will also consider other factors comprehensively when assessing whether the horizontal concentration of undertakings has a coordinating effect. For example, for the concentration of operators involved in the field of platform economy, we also need to consider whether technical means, platform rules, data, algorithms and other factors are conducive to promoting coordinated behavior. Chapter
VII Potential Competition
Article 56 The term "potential competition" as mentioned in these Guidelines refers to the potential competitors of the other parties that have not yet entered the relevant market, but have the ability and motivation to enter the relevant market in a short period of time, and can form certain competitive constraints on the existing competitors. Article
57 When assessing whether the horizontal concentration of undertakings will produce unilateral effects or coordination effects, the anti-monopoly law enforcement agencies will consider potential competition. If a concentration eliminates potential competitors and the operator has a dominant market position in the relevant market before the concentration, it is very likely that the concentration has the effect of eliminating and restricting competition. Article
58 To assess whether the horizontal concentration of business operators will eliminate potential competition constraints, the first consideration is whether the party of concentration is a potential competitor, that is, whether the business operator will enter the relevant market if the concentration does not occur, and then analyze the impact of eliminating potential competition constraints. Article
59 When judging whether a company is a potential competitor, the company shall mainly consider its market entry motivation, required cost, time, relevant market entry barriers and other factors, such as its ownership of relevant production equipment, intellectual property rights, raw materials, etc., and its preparation for relevant investment. Antitrust enforcers will focus on the following two factors:
(1) potential competitors can enter the relevant market without spending a lot of sunk costs;
(2) potential competitors are very likely or even have plans to make relevant investments (including sunk costs) and will enter the relevant market in the short term. Article
60 For the competition analysis of the concentration of business operators that eliminates potential competition constraints, the anti-monopoly law enforcement agencies will assess the expected market competition situation after the potential competitors enter the market.
For a concentration that meets the following conditions at the same time, the anti-monopoly law enforcement agency considers that it has or may have the effect of eliminating or restricting competition:
(1) potential competitors have or will impose significant competitive constraints on the operators participating in the concentration who conduct business in the relevant market;
(2) Other existing competitors and potential entrants pose insufficient competitive pressure on the operators participating in the concentration.
[Case 25] Company A intends to acquire Company B. Company A produces product A and has a high market share. Company B does not produce product A at present, but is developing product A.Compared with the existing product A in the market, the product A being developed by B has better performance, obvious technological progress characteristics, lower price, faster product production and market cycle, and once it enters the market, it will constitute a significant competitive constraint on A. Therefore, the concentration will eliminate the potential competitive constraints of Company A in the market for Product A. Article
61 When assessing the concentration of undertakings involving the elimination of potential competition constraints, attention shall also be paid to whether the parties to the concentration are important innovators in the relevant market and the strength of the innovation capability of the potential competitors. If the centralized parties are important innovative forces in the relevant market, the competitive power of the centralized entities will decrease due to the reduction of the number of R & D competitors, thus reducing the investment in innovation and delaying the speed of new products on the market. If the potential operator has strong innovation ability and long-term development potential, and will form a competitive force to compete with the other party in the future, the other party may reduce R & D investment and delay the speed of new product launch due to the elimination of this potential competitor.
[Case 26] The market of product A is highly concentrated, and the main competitors are only Company B and Company C. Company A does not produce the product at present, but it is developing related products, and Company A intends to acquire the related business of Company B. Compared with the existing products in the market, the products of Company a have significant innovative features, which are expected to constitute significant competitive constraints on Company B. After the concentration, Company A will obtain the target business A product of Company B, which may reduce the R & D investment and commercialization motivation of Company A for the innovative similar products being developed by Company A, delay the speed of new products coming into the market, and may adversely affect the market competition and technological progress. Article
62 If the target operator is a start-up enterprise, especially when the relevant market concentration is high and the number of competitors is small, it is necessary to focus on assessing whether the concentration may stifle competition and hinder innovation from the aspects of transaction purpose, potential competition and innovation ability. Including the impact on the innovation activities of the target operator and the impact on the original innovation activities of the acquirer. Chapter
VIII Market Entry
Article 63 The term "market entry" as mentioned in these Guidelines generally includes the entry of new operators into the relevant market to participate in competition, as well as the business expansion of existing competitors in the relevant market, such as the increase of production capacity. Article
64 Market entry is one of the offsetting factors in the competition analysis of concentration of undertakings. When the market entry is easy enough, the entity after the concentration and the existing competitors in the relevant market can not individually or jointly implement more profitable price increases than in the absence of the concentration, or can not reduce the level of market competition in the absence of the concentration, the concentration is unlikely to have the effect of excluding or restricting competition. In
practice, when the anti-monopoly law enforcement agencies believe that concentration has or may have the effect of eliminating or restricting competition, the operators provide evidence to prove to what extent market entry can offset the possible adverse effects of concentration on competition. Only when market entry is possible, timely and sufficient, can it effectively prevent or offset the possible adverse effects of concentration on competition.
[Case 27] When Company A and Company B merge, the two parties have horizontal overlap in market A, with a total market share of more than 50%, and the anti-monopoly law enforcement agency presumes that the concentration has or may have the effect of excluding or restricting competition. A and B prove that the entry threshold of market A is very low, even if they abuse market power, new operators will soon enter, and constitute a full and effective competitive constraint on the centralized entity. After comprehensive research and judgment, the anti-monopoly law enforcement agency considers that the concentration will not have the effect of excluding or restricting competition, and gives unconditional approval. Article
65 The possibility of market entry refers to the possibility that operators can enter the relevant market and successfully restrict the competition of the entities after concentration. When assessing the possibility of market entry, factors such as market entry barriers, market operation and market development expectations should be taken into account.
Market entry barriers depend on the characteristics of the relevant market, which are reflected in the competitive advantages of existing competitors over non-entrants. The higher the barriers to entry, the lower the likelihood of entry. Factors that constitute barriers to entry include: legal or policy restrictions; key facilities; natural resources; research and development capabilities; intellectual property rights; economies of scale and scope of production; reliance on a strong customer and distribution network; cost advantages of incumbent operators, brand and reputation advantages, spare capacity, and contractual arrangements with counterparties; Downstream customer switching costs, sunk costs of entry, and other forms of exit barriers. The
market operation status mainly includes: whether the market capacity can accommodate new firms; whether the new entrants can achieve the minimum efficient scale, that is, the minimum output level required when the average cost of the new entrants reaches the minimum value; whether the market competition status and price level after entry are sufficient to support the new entrants to effectively participate in market competition.
To evaluate the development expectation of the market, we should comprehensively evaluate the development stage and prospect of the market in the light of product life cycle, technology renewal expectation and market scale change. In general, markets that are expected to enter a high-growth phase are more likely to be entered than those that are already mature or are expected to enter a recession. Article
66 The timeliness of market entry means that market entry can occur and be sustained within a sufficiently short period of time after concentration. Market entry must be sufficiently rapid to prevent possible anticompetitive effects. The time criterion for
judging the timeliness of market entry depends on the characteristics and dynamics of the market, as well as the specific capacity of potential entrants. Under normal circumstances, anti-monopoly law enforcement agencies believe that market entry can be completed within two years, which constitutes timely market entry. For some special industries, the timeliness of market entry can be judged according to the specific situation of the industry. Article
67 The adequacy of market entry means that the entrant can form sufficient and effective competitive constraints on the entity after concentration. When assessing the adequacy of market entry, we should take into account the size of the entrant, business scope, commodity substitutability and other factors. The adequacy of
market entry and the requirement of entry scale depend on market characteristics. Usually, only when the entrant reaches a certain scale can it form an effective competitive constraint on the centralized entity. Smaller entrants at this stage, without significant competitive disadvantages, may also constitute an effective competitive constraint on the post-concentration entity.
In the case of high substitutability between the products provided by the entrant and the products provided by the post-concentration entity, the entrant may constitute an effective competitive constraint on the post-concentration entity. In the differentiated product industry, the products provided by the entrant may not be enough to closely replace the products provided by the centralized entity, and the market entry may not be sufficient, so it can not provide effective competitive constraints to the centralized entity. Article
68 When judging whether market entry is possible, timely and sufficient, the anti-monopoly law enforcement agency may generally collect information and evidentiary materials on market entry from the following aspects:
(1) Past cases of market entry and exit in relevant or similar markets; Including the cost of entry, entry barriers, time, the scale required for successful entry, the changes in market competition caused by entry, etc.;
(2) The plans of other operators to enter the relevant market, as well as the expansion plans of existing competitors; Information about potential market entrants with relevant necessary assets or motivation to enter the relevant market, such as competitors in adjacent markets, large customers, etc.;
(3) Direct statistical data or other information on market entry barriers, such as the scale of funds entered, R & D input and output, etc.;
(4) If there is a scale effect in the production of related commodities, it is necessary to consider whether the new entrants can reach a sufficient scale in time to form an effective competitive constraint on the centralized entities, as well as the cost disadvantage when they fail to reach the scale required by the scale effect;
(5) The time required to recover the input cost after entering the market;
(6) The cost of withdrawing from the market;
(7) The impact of technological progress on market entry;
(8) The signing of long-term contracts between existing competitors and downstream customers in the market;
(9) Whether the downstream customers have the ability and willingness to assist in entering the new market;
(10) Possible substitution of imported products or supplies;
(11) If the relevant geographical market is the domestic market of China, the possibility of suppliers outside China entering the domestic market of China shall be considered. Article
69 Anti-monopoly law enforcement agencies will also consider whether concentration will have a negative impact on market entry in their competition analysis. For example, concentration may lead to a larger market size of the entity after concentration, which is more capable of maintaining its market position, thus raising the entry threshold. Chapter
IX Buyer's Power
Article 70 The term "buyer's power" as mentioned in these Guidelines refers to the bargaining or negotiating power of the buyer in commercial negotiations. Article
71 Buyer power is one of the offsetting factors in the competition analysis of concentration of undertakings. In practice, when the anti-monopoly law enforcement agency considers that the concentration has or may have the effect of excluding or restricting competition, the operator provides evidence to prove to what extent the buyer's power can offset the possible adverse effects of the concentration on competition, such as the possibility of restricting the price increase of the entity after the concentration.
[Case 28] Company A acquires Company B. There is horizontal overlap between Company A and Company B in the market of product A, and the total market share ranks first. When analyzing the buyer's power in the market of product A, Party A and Party B prove that the demand for product A is concentrated in a small number of downstream customers, the customers purchase through bidding, the purchase amount is large, the purchase time is uncertain, the suppliers must compete for a customer in an all-round way, and the buyer's bargaining power is very strong. Therefore, although concentration will enhance the market power of company a, considering the buyer's power comprehensively, the anti-monopoly law enforcement agencies believe that concentration will not produce the effect of excluding and restricting competition. Article
72 The evaluation of the buyer's strength can be considered mainly from the following two aspects:
(1) The concentration of the buyer. It usually refers to the proportion of the relevant commodities sold to downstream customers by the entity after centralization to its total sales volume. If the purchase volume of a few customers accounts for a large proportion, it indicates that the buyer concentration is high.
(2) The buyer's ability to switch between different suppliers. We need to focus on when a supplier takes measures such as raising prices or reducing quality and delivery conditions. Whether the buyer has the ability to switch to other suppliers within an appropriate time, vertically integrate upstream suppliers, support other upstream suppliers to expand their market share, support new suppliers to enter the relevant market, refuse to buy or delay the purchase of other products (especially durable goods) of the supplier, etc.
[Case 29] Company A intends to acquire Company B. Both Company A and Company B compete in the market of product A. The total market share of both parties is 40% -45%, and the product A of both parties is mainly supplied to downstream retail stores. Downstream 40% -50% of retail stores purchase A products from A and B. Due to the large number of A product retail stores, generally small scale and weak bargaining power, it is difficult for the buyer's power to eliminate the effect of exclusion and restriction of competition that may arise from the concentration, which may restrict the choice of downstream retail stores, squeeze their profit margins, and damage the relevant market competition and consumer interests. Article
73 The existence of buyer power does not in itself guarantee that buyer power can effectively offset the competitive harm that may result from concentration. When assessing whether buyer power can play an effective offsetting role, anti-monopoly law enforcement agencies usually focus on the following three factors:
(1) whether the exercise of buyer power by an operator with buyer power can benefit other operators without buyer power;
(2) When the operator with buyer's power is not the end consumer, whether the benefits obtained by exercising the buyer's power can be passed on to the end consumer;
(3) Whether the operator with buyer's power has sufficient motivation and willingness to exercise its buyer's power. Article
74 When assessing buyer power, it is important to note that the buyer power that existed before the concentration does not necessarily continue after the concentration, because the concentration may lead to the enhancement of market control by the entity after the concentration, or may eliminate important alternative suppliers. As a result, antitrust enforcers typically assess buyer power after concentration rather than before. Chapter
X Efficiency
Article 75 The term "efficiency" as mentioned in these Guidelines refers to the efficiency improvement that may be brought about by the concentration of operators, including the cost savings brought about by economies of scale and scope, as well as the innovation efficiency brought about by the promotion of technological progress and the improvement of commodity quality. Efficiency improvement is a defense factor that has or may have the effect of excluding or restricting competition. Cost savings from
consolidation can be in the form of fixed, variable, or marginal cost reductions. The innovation efficiency brought by
concentration includes the synergy effect of operators in the field of scientific and technological research and development. Article
76 The following conditions must be met at the same time for the efficiency improvement generated by the concentration that can be recognized by the anti-monopoly law enforcement agency:
(1) The efficiency improvement must be directly or indirectly beneficial to consumers. The benefits of efficiency improvement to consumers are not limited to price reduction, but may also be the improvement of commodity quality, or enable consumers to benefit from commodity innovation.
(2) The improvement of efficiency must be unique to centralization. Efficiency gains are a direct result of concentration and cannot be achieved in other ways that are less harmful to competition.
(3) The improvement of efficiency must be verifiable. The more accurate and convincing the operator's efficiency claim is, the more likely it is to be accepted by the anti-monopoly law enforcement agencies. Article
77 If the concentration has or may have the effect of excluding or restricting competition, the parties to the concentration may, if conditions permit, submit quantitative analysis evidence materials to explain the impact of the concentration on efficiency improvement and downstream customers. If the required quantitative evidence does not exist or is difficult to provide, the operator should also provide real and verifiable qualitative evidence on efficiency improvement and impact on downstream customers.
To assess whether the above efficiency improvements can inhibit the possible anti-competitive effects of concentration, we mainly consider the following two aspects:
(1) to what extent the cost savings brought by concentration can eliminate the possible unilateral effects or coordination effects of concentration;
(2) To what extent can innovation efficiency brought about by concentration compensate for the losses caused by price increases to downstream customers. Article
78 If the target operator is a start-up enterprise, the anti-monopoly law enforcement agency will consider the efficiency factors that the transaction may provide follow-up R & D, marketing, management and production support for the start-up enterprise. Chapter
11 Other Factors
Article 79 In assessing the impact of a concentration of undertakings on the development of the national economy, the anti-monopoly law enforcement authorities usually consider the importance of the industry in which the concentration is located to the development of the national economy and the impact of the concentration on the development of the national economy. If the
operator can prove that the concentration is conducive to the healthy development of the national economy, even if the concentration has or may have the effect of eliminating or restricting competition, the anti-monopoly law enforcement agency may not prohibit it. When analyzing the impact of the aforementioned concentration on the development of the national economy,
the anti-monopoly law enforcement authorities will focus on whether the following three conditions are met at the same time:
(1) whether the concentration will have a positive impact on the development of the national economy and whether the impact is substantial;
(2) whether there is a causal relationship between the concentration and the positive impact on the development of the national economy; and
(3) whether there would be no positive impact on the aforementioned development of the national economy without the concentration.
Article 80 Where an operator can prove that the concentration of operators has a positive impact on the promotion of employment, the protection of the rights and interests of small and medium-sized operators, energy conservation, environmental protection, disaster relief and other social and public interests, even if the concentration has or may have the effect of eliminating or restricting competition, the Anti-monopoly Law Enforcement Agency may not prohibit it. When analyzing the aforementioned public interest,
the anti-monopoly law enforcement agencies will focus on whether the following three conditions are met at the same time:
(1) whether the concentration will have a positive impact on the public interest and whether the impact is substantial;
(2) Whether there is a causal relationship between the concentration and the positive impact of the public interest; and
(3) Whether there would be no positive impact on the aforementioned public interest without the concentration. Article
81 Where an operator can prove that the acquired or merged operator is about to go bankrupt and withdraw from the relevant market, even if the concentration has or may have the effect of eliminating or restricting competition, the anti-monopoly law enforcement agency may not prohibit it. When analyzing the aforementioned bankruptcy defense,
the anti-monopoly law enforcement agency will focus on whether the following three conditions are met at the same time:
(1) The operator to be acquired or merged has difficulties in operation, and if it is not acquired or merged, it will withdraw from the market in a short time;
(2) There is no alternative scheme to prevent the above-mentioned operators from withdrawing from the market that is less harmful to competition than concentration;
(3) Compared with the withdrawal of the above-mentioned operators from the market, the effect of eliminating and restricting competition that the concentration may bring is weaker. Article
82 Where there is evidence to prove that the domestic and foreign government subsidies obtained by the operators participating in the concentration may have an adverse impact on the relevant market competition, the Anti-monopoly Law Enforcement Agency may require the operators participating in the concentration to provide relevant information such as the government subsidies obtained, and consider the adverse impact of the government subsidies on the fair competition of the relevant market during the examination. The term "government subsidies" as mentioned in the
preceding paragraph includes central government subsidies and local government subsidies of a country or region.Chapter
12 Supplementary Provisions
Article 83 Where a new joint venture is established between the operators participating in the concentration, and the joint venture intends to engage in business in the same relevant market as the operators participating in the concentration, the competition evaluation shall be conducted with reference to these Guidelines. When
assessing the possible competitive impact of a newly established joint venture among business operators, factors such as the competitive relationship between the joint venture and the parties to the joint venture, the scale and duration of the joint venture, the business scope of the joint venture, and whether the joint venture only involves a certain business link shall be taken into account in the light of the actual situation of concentration. Where the business of a
joint venture involves only one link in the business chain of one or more joint venture parties, the considerations and emphasis of the competitive analysis will generally vary according to the specific link in the complete business chain of the business engaged in by the joint venture (such as research and development, raw material procurement, production, marketing or sales). Generally speaking, the farther the business link of a joint venture is from the sales link, the smaller the impact on market competition; a joint venture only involving joint sales may compete with the monopoly agreement, which may cause serious competition problems and need to be examined. Article
84 When investigating the illegal concentration of business operators, the anti-monopoly law enforcement authorities shall assess whether the horizontal concentration of business operators has or may have the effect of eliminating or restricting competition with reference to these Guidelines. Article
85 The Anti-monopoly Law Enforcement Agency and other entities and individuals shall undertake the obligation to keep confidential the business secrets, undisclosed information, confidential business information, personal privacy and personal information they know, except for those that should be disclosed in accordance with the provisions of laws and regulations or with the prior consent of the obligee. Article
86 These Guidelines only provide general guidance on the examination of horizontal concentration of undertakings and related compliance work for the reference of anti-monopoly law enforcement agencies and undertakings, and are not mandatory. The cases listed in these Guidelines do not cover all the review scenarios and risk types. Anti-monopoly law enforcement agencies and operators shall analyze and evaluate the specific issues in accordance with the relevant laws and regulations on concentration of operators when referring to these Guidelines. Article
87 The State Administration of Market Supervision and Administration shall be responsible for the interpretation of these Guidelines, which shall come into force as of the date of promulgation.
