Chapter 18: Comments on merger control under China’s Anti-Monopoly Law
2006 was known as the ‘monsoon year’ for mergers and acquisitions in China. According to Dealogic statistics, over 1786 mergers occurred in 2005, worth a total of $61.8 billion; in 2006 this number increased to 2263, for a total of over a trillion dollars, 68 per cent more than in 2005. The wave of mergers in China swept across all industries, from construction materials to hi-tech industries – virtually all manufacturers felt the pressure of mergers. For instance, in the concrete industry, many companies hoped to use mergers to consolidate dispersed small-scale producers into a powerful unified company with a large economy of scale. In Shandong Province, Laiwu Steel Group and Jinan Steel Group merged in August 2006, becoming the second largest steel producer after Shanghai Baosteel. Gome Appliances bought out Yongle Appliances in one of the most notable corporate mergers. Before this merger, home appliance retail chains in China included Gome, Suning, and Yongle in a steady triumvirate, with their sales values at 49.8 billion CNY, 17.8 billion CNY, and 15.2 billion CNY, respectively. Now, Gome and Yongle have merged, so the triumvirate has fallen, and Suning can no longer compete with Gome. People estimate that China’s corporate mergers will not slow down in 2007. Corporate mergers and acquisitions in China occur primarily because of the role of the market. That is, compared with small companies, large companies can usually easily achieve greater economies of scale and scope, and so have better capital resources and competitive advantages, high production efficiency, and a large market share.
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