CHINA Law and Practice Contributed by: Liu Cheng and Li Yumeng (Audrey), King & Wood Mallesons
• impact of the concentration on consumers and other relevant undertakings; • impact of the concentration on national eco - nomic development; and • other factors that should be considered. The Provisions on Concentration Review provide further guidance on the factors set out by the AML in assessing the competitive effects of a merger, as outlined below. Market Control Power When assessing the market control power of the merging parties, the following factors shall be taken into account: • merging parties’ market share in the relevant market; • the substitutability of products or services; • the capability, financial and technical con - ditions to control the sales or raw material procurement market; • the capability to control and process data; • market structure of the relevant market; • production capability of other undertakings; • purchase capability of downstream custom - ers and the capability to switch suppliers; and • market entry of potential competitors. Concentration Level of Relevant Market When assessing the concentration levels of the relevant market, the number of undertakings in the relevant market and their market share shall be considered. For horizontal mergers, the Horizontal Merger Review Guidelines provide the assessment framework based on the Herfindahl-Hirschman Index (HHI), as outlined below:
• If post-concentration HHI < 1000, or ΔHHI < 100, SAMR will normally consider that there are no anti-competitive effects. • If post-concentration HHI is between 1,000 and 1,800, and ΔHHI > 100, SAMR tends to consider the transaction as having or likely having anti-competitive effects and therefore consider it necessary to conduct a compre - hensive review. • If post-concentration HHI > 1,800, and ΔHHI is between 100 and 200, 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, SAMR will normally presume there are anti-competitive effects, unless the parties can prove otherwise. We understand that SAMR is also drafting a detailed guidance in relation to non-horizontal mergers, which may be released in the year of 2025. Market Entry and Buyer Power When assessing the impact on market entry, the following factors shall be considered: • merging parties’ influence on market entry through input, sales and procurement chan - nels, key technologies, 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 Guidelines, sufficiently easy market entry and strong buyer power can serve as countervail -
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