The Antitrust Paradox of China Inc.

47 Pages Posted: 6 Mar 2017 Last revised: 6 Dec 2017

See all articles by Angela Huyue Zhang

Angela Huyue Zhang

The University of Hong Kong - Faculty of Law

Date Written: March 4, 2017


Common ownership by the Chinese State caused a stir in Europe recently. During its review of a joint venture involving a Chinese nuclear power company, the European Commission held that it would treat all Chinese state-owned enterprises (SOEs) in the energy sector as a single entity. This decision carries significant legal and practical implications for both businesses and the regulator. It also contradicts the previous approach that the Commission has taken in dealing with European SOEs. In this Essay, I argue that the legal framework under the EU Merger Regulation (EUMR) is unsuited to deal with the anticompetitive effects of state ownership. While the delineation of the boundary of an undertaking is a prerequisite for merger review, ownership and control are not absolute. Importantly, the extent to which the coordination by the Chinese State has lessened competition is a quantitative question, rather than a qualitative one. Consequently, a bright-line approach of defining an undertaking would lead to both over-inclusive and under-inclusive outcomes. To address the EU’s dilemma in dealing with Chinese SOEs, I propose that the Commission ought to view national security review as a complement to its merger review. The optimal regulatory response to the Chinese acquisitions hinges not only on economics, but also, perhaps more importantly, on politics.

Keywords: State Capitalism, Common Ownership, Passive Investment, Sovereign Wealth Fund, Antitrust

JEL Classification: K21

Suggested Citation

Zhang, Angela Huyue, The Antitrust Paradox of China Inc. (March 4, 2017). New York University Journal of International Law and Politics (JILP), Vol. 50, 2017, Available at SSRN: or

Angela Huyue Zhang (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong


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