A rough estimate shows that no more than 4 percent of enterprises in China will be obligated to file their mergers and acquisitions once China's Anti-Monopoly Law becomes effective August 1.
Mr. Zhao Xiaoguang, Director-General of the Department of Industry, Communication and Commerce, the Legislative Affairs Office of the State Council, released the information in his article for People's Daily Online about the filing threshold of M&A deals.
According to the threshold which is on the pipeline, companies are required to file their M&A deals with anti-monopoly enforcement authorities if such deals involve parties with a combined turnover of 9 billion yuan globally or 1.7 billion yuan in China in the previous fiscal year; or a turnover of 300 million yuan on the Chinese market in the previous fiscal year for a single operator.
A 20 percent floating flexibility will be allowed if the proposal by the legislation expert team is adopted.
Most of the deals will not have to be filed if the proposed standards get the nod. Figures from the National Bureau of Statistics show that nearly 97 percent of major enterprises in the manufacturing, mining, power, gas, transportation, warehousing, post, retailing and wholesale industries reported less than 400 million yuan of turnover in 2006.
A majority of M&A deals will not have to file for a review by the authorities. At most, 4 percent of enterprises would likely go through the process according to the standards. This is also international common practice.
Zhao recognized that setting the standard was a difficult decision. Too low or too high a threshold would cause difficulties. The final draft is based on a State Council research by an expert team which has drawn on the experience of 48 economies including the US, EU, Germany, Canada, Japan and France.
Various factors, such as the GDP per capita in 2007 and the scale of market and industrial policies, have also been taken into consideration.
Further adjustments are pissible in order to adapt this into economic development and practice.
By People's Daily Online
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