CHINA Law and Practice Contributed by: Liu Cheng and Li Yumeng (Audrey), King & Wood Mallesons
ing factors that may mitigate the potential anti- competitive effects of horizontal mergers. Technological Development When assessing the impact on technological development, factors such as the impact on the incentive and capacity for technological innova - tion, investment in and utilisation of R&D, and integration of technological resources shall be considered. Impact on Consumers When assessing the impact on consumers, fac - tors such as the impact on quantity, price, qual - ity, diversification, etc, of relevant products or When assessing the impact on other undertak - ings, factors such as the impact on market entry, and transaction opportunities of undertakings in the same relevant market, shall be considered. Impact on National Economic Development When assessing the impact on national eco - nomic development, factors such as impact on the economic efficiency, economic scale, and the development of relevant industries shall be considered. 4.2 Markets Affected by a Transaction As provided by Article 15 of the AML, “relevant market” 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, ”rel - evant market” includes both relevant product market and relevant geographic market. services shall be considered. Impact on Other Undertakings The Guidelines on Market Definition further pro - vide that “demand substitution analysis” and ”supply substitution analysis” shall be applied
in market definition, and that market definition shall mainly be based on the demand substitu- tion analysis while supply substitution shall also be considered if it provides similar competitive constraints. The Horizontal Merger Review Guidelines fur - ther clarify the approach to market definition in different types of horizontal mergers, including mergers concerning special products such as intermediate products, differentiated 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: • evidence indicating that consumers are shifting or intend to shift to purchasing other commodities due to changes in price or other competing factors; • overall characteristics and purposes of the commodity; • price difference among commodities; and • sales channels of the commodity. Supply substitution analysis should consider factors such as: • evidence indicating the response of other undertakings in respect of the changes of competing factors such as price; • other undertakings’ production process and technology; • difficulties in switching to other products; • time required for switching production; • any extra expenses and risks incurred by such product switch; • market competitiveness of the products manufactured after the shift; and
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