EU: Chinese SOEs face reviews

Chinese state-owned companies seeking to buy European assets are going to face greater regulatory scrutiny, following a landmark European Commission decision.

In its review of a proposed joint venture between France’s EDF and state-owned China General Nuclear Power, the commission — which has exclusive power over antitrust issues in the EU — ruled that CGN was not independent from China’s central administrator for state-owned enterprises. As a result, it decided that it did have the power to decide whether the deal should be cleared. It meant that the commission did not consider only CGN’s own revenue, but the combined revenue of all Chinese energy SOEs when considering whether the deal came under its jurisdiction.

This approach bumped CGN’s turnover above the minimum EU threshold for merger clearance, a warning shot for other Chinese SOEs that may be considering buying assets in Europe, and were not anticipating needing to obtain a regulatory green light.

The commission generally reviews a merger only if each party to it has more than €250m in sales in the EU. CGN’s turnover, alone, did not cross that threshold, but the Chinese energy SOEs as a whole do breach that level.

Full Content: Business Day

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