CHINA Law and Practice Contributed by: Liu Cheng, Li Yumeng, Ye Hongtao and Jiang Hanxue, King & Wood
Impact on Consumers When assessing the impact on consumers, factors such as the impact on quantity, price, quality, diver - sification, etc, of relevant products or services will be considered. Impact on Other Undertakings When assessing the impact on other undertakings, factors such as the impact on market entry, and trans - action opportunities of undertakings in the same rel - evant market, will be considered. Impact on National Economic Development When assessing the impact on national economic development, factors such as impact on the economic efficiency, economic scale, and the development of relevant industries will be considered. 4.2 Markets Affected by a Transaction As provided by Article 15 of the AML, “relevant mar - ket” refers to the commodity coverage and territorial scope in which undertakings compete in respect of a specific commodity or service during a given period of time. Generally, “relevant market” includes both rele - vant product market and relevant geographic market. The Guidelines on Market Definition further provide that “demand substitution analysis” and “supply sub - stitution analysis” will be applied in market definitions, and that market definitions will mainly be based on the demand substitution analysis while supply sub - stitution will also be considered if it provides similar competitive constraints. The Horizontal Merger Review Guidelines and Non- Horizontal Merger Review Guidelines further clarify the approach to market definition in different types of mergers, including mergers concerning special products such as intermediate products, differenti - ated products, products targeting specific customer groups and regulated products. Relevant Product Market For the relevant product market definition, demand substitution analysis should consider factors such as:
• If post-concentration HHI is between 1,000 and 1,800, and ΔHHI > 100, the SAMR tends to con - sider the transaction as having or likely having anti-competitive effects and therefore considers it necessary to conduct a comprehensive review. • If post-concentration HHI > 1,800, and ΔHHI is between 100 and 200, the SAMR is more inclined to believe there are anti-competitive effects which require a comprehensive review. • If post-concentration HHI > 1,800, and ΔHHI > 200, the SAMR will normally presume there are anti- competitive effects, unless the parties can prove otherwise. For non-horizontal mergers, the concentration levels may be assessed with reference to the Horizontal Merger Review Guidelines. Market Entry and Buyer Power When assessing the impact on market entry, the fol - lowing factors must be considered: • merging parties’ influence on market entry through input, sales and procurement channels, key tech - nologies, key facilities, data, etc; and • the possibility, timeliness and adequacy of market entry. The buyer power may be assessed based on: • the concentration of buyers; and • the buyers’ ability to switch suppliers. As provided in the Horizontal Merger Review Guide - lines and Non-Horizontal Merger Review Guidelines, sufficiently easy market entry and strong buyer power can serve as countervailing factors that may mitigate the potential anti-competitive effects of mergers. Technological Development When assessing the impact on technological develop - ment, factors such as the impact on the incentive and capacity for technological innovation, investment in and utilisation of R&D, and integration of technological resources will be considered.
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