Understanding merger control remedies in China

Area of Science:

• Economics
• Law
• Business Analytics

Background:

• Merger control is a key tool for maintaining market competition.
• China's Anti-monopoly Law (AML) has been in effect since 2008, with increasing merger reviews.
• Assessing the real-world impact of remedies imposed during merger reviews is crucial for policy evaluation.

Purpose of the Study:

• To evaluate the effectiveness of remedies imposed in Chinese merger cases.
• To compare the competitive outcomes of mergers with and without remedies.
• To differentiate the impact of structural versus behavioral remedies.

Main Methods:

• Utilized data from 8 merger cases with remedies and approximately 150 comparable cases without remedies in China (2008-2018).
• Employed the synthetic control method (SCM) to construct a counterfactual for merger cases with remedies.
• Compared post-merger competition levels against the synthetic control counterfactual to assess remedy effectiveness.

Main Results:

• Overall, remedies imposed in merger cases were found to be effective in preserving competition.
• Structural remedies demonstrated a more abrupt and pronounced effect on competition compared to behavioral remedies.
• The synthetic control method provided a robust framework for evaluating remedy impacts.

Conclusions:

• Antitrust remedies in China play a significant role in mitigating potential anti-competitive effects of mergers.
• Policy-makers should consider the distinct impacts of structural and behavioral remedies when designing merger control interventions.
• Further research can explore the long-term effects and specific industry impacts of different remedy types.