Europe on alert

Author: | Published: 23 Dec 2011

Mergers and acquisitions in Europe by China’s state-owned enterprises (SOEs) are now being reviewed by the European competition authorities as if all Chinese SOE’s controlled by the state are involved in the transaction.

In-depth assessment for competition issues by the European Commission (EC) can result in significant costs, months of delay, and distraction of senior management. This is because the requirement to notify a transaction in Europe is based on the worldwide and European turnover of all the entities ultimately controlled by the Chinese state.

The accumulation of turnover of all SOEs doing business in Europe, even for a relatively small transaction, can mean the SOE concerned will have to obtain approval from the EC. Failure to obtain prior approval can result in fines of tens of millions of euros.

Four Chinese SOEs – PetroChina, China National Agrochemical Corp (CNAP), Sinochem and China National Chemical Corp...