Beijing is on its way to joining Washington and Brussels, the EU capital, as a required stop for gaining antitrust approval for global merger deals.
Chinese officials are working on an anti-monopoly law that would require companies seeking mergers or acquisitions to notify Chinese authorities if one or more of the parties involved has 1.5 billion yuan (US$184 million) of business in China.
Authorities would then review the deals for their impact on competition in the domestic market -- just as the US and EU do.
Passage of the Anti-monopoly Law is expected early next year.
That prospect is filling people in Chinese business and legal circles with uncertainty as they wait for Beijing to finish up a law that will add antitrust enforcement to its wide powers over the economy.
China's growing role in the global economy will give the law international reach. There are about 280,000 foreign-financed companies in China, and most of the world's biggest companies have some kind of local operation.
The drafting of the law has attracted an unusual amount of international comment and advice, particularly from US and EU governments and business groups.
"China realizes that the world is watching and it must play fair in the implementation of the Anti-monopoly Law," said James Zimmerman, a Beijing-based partner with Squire, Sanders & Dempsey LLP.
"Given the long history of state-managed enterprises and protectionism, it still is going to take time for China to fully accept cross-border mergers and acquisitions," he said.
The most recent public draft of the law, dated July, says that any global transaction with a value of more than 200 million yuan, and in which one party has at least 1.5 billion yuan in sales or assets in China is subject to the notification requirement.
How such a process would play out is untested. But in similar cases elsewhere, rejection by a foreign authority has killed deals.
Most famously, opposition from EU antitrust authorities in 2001 triggered the collapse of General Electric Co's proposed purchase of Honeywell International Inc -- marking the first time that the European Commission thwarted a merger between two US companies.
Now operations in China are beginning to affect transnational deals.
Joerg Wuttke, vice president of the EU Chamber of Commerce in China, said one of its member companies this year has had to seek approval from European antitrust authorities for an acquisition in China because the deal would push its global market share in certain products above set levels.
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