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The Single-Entity Theory: An Antitrust Time Bomb For Chinese State-Owned Enterprises?

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  • Angela Huyue Zhang

Abstract

In five recent cases involving the acquisition of European companies by Chinese state-owned enterprises, the European Commission has delved deeply into the relationship between Chinese state-owned enterprises and the wider Chinese State. A common issue arose in these cases: did the notifying state-owned enterprise operate independently of the Chinese State, or was there scope for the Chinese State to coordinate the behavior of the notifying enterprise and other state-owned enterprises in the same sector? In the latter case, all the state-owned enterprises in the same sector would be treated as part of a single entity for the purpose of merger analysis. To provide an in-depth analysis of this issue, this article first reviews the historical development of the reform of state-owned enterprises and examines their current corporate governance structure. By applying the economic theory of the firm to understand the concept of “undertaking” under the EU Merger Regulation, this article reveals the flaws in the European Commission's analysis of this issue. As the single-entity theory can be used as both a shield and a sword, the European Commission's decision on this issue will have far reaching implications for future antitrust cases involving Chinese state-owned enterprises.

Suggested Citation

  • Angela Huyue Zhang, 2012. "The Single-Entity Theory: An Antitrust Time Bomb For Chinese State-Owned Enterprises?," Journal of Competition Law and Economics, Oxford University Press, vol. 8(4), pages 805-830.
    • Handle: RePEc:oup:jcomle:v:8:y:2012:i:4:p:805-830.
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    File URL: http://hdl.handle.net/10.1093/joclec/nhs026
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    Citations

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    Cited by:

    1. Bickenbach, Frank & Liu, Wan-Hsin & Li, Guoxue, 2015. "The EU-China bilateral investment agreement in negotiation: Motivation, conflicts and perspectives," Kiel Policy Brief 95, Kiel Institute for the World Economy (IfW Kiel).
    2. Liu, John Zhuang & Zhang, Angela Huyue, 2019. "Ownership and political control: Evidence from charter amendments," International Review of Law and Economics, Elsevier, vol. 60(C).
    3. Haiyan Zhang & Daniel Bulcke, 2014. "China’s direct investment in the European Union: a new regulatory challenge?," Asia Europe Journal, Springer, vol. 12(1), pages 159-177, March.

    More about this item

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East

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