Transactions With Chinese State-Owned Companies More Likely To Trigger Merger Filing

The European Commission recently published a decision which may significantly impact future transactions involving Chinese state-owned entities. In its decision regarding the joint venture between Chinese state-owned CGN and French EDF, the Commission held that CGN should be deemed to be controlled by the Chinese State and forms an economic unit with other state-owned entities in the energy sector. Consequently, the Commission looked at the aggregated turnover and market shares of all Chinese state-owned entities in the energy sector to establish whether the filing thresholds were met and whether the transaction caused any competition concern. If the Commission follows the same reasoning for other sectors as well, transactions involving Chinese state-owned entities are more likely to trigger merger filings in Europe, and the filing procedures will be more complex and cumbersome. We recommend carefully assessing in each transaction by a Chinese SOE in Europe whether the