Announcement on Approved Conditional Approval of the Establishment of a Joint Venture Anti-Monopoly Review Decision by General Electric (China) Co., Ltd. and China Shenhua Coal Chemicals Co., Ltd.

[Publisher] People's Republic of China Ministry of Commerce

[Published Document] Announcement No. 74 of 2011

【Published Date】2011-11-10

【Implementation Date】2011-11-10

The Ministry of Commerce of the People's Republic of China (hereinafter referred to as the Ministry of Commerce) received the centralized management of the joint venture established by General Electric (China) Co., Ltd. (hereinafter referred to as "GM China") and China Shenhua Coal-to-oil Chemical Co., Ltd. (hereinafter referred to as Shenhua Coal-to-Liquid Oil). Antitrust reporting. After review, the Ministry of Commerce decided to attach restrictive conditions to approve the concentration of this operator. According to Article 30 of the "Anti-Monopoly Law of the People's Republic of China" (hereinafter referred to as the "Anti-Monopoly Law"), the following is announced:

First, file and review procedures

On April 13, 2011, the Ministry of Commerce received a centralized declaration from the joint venture company operator of GM China and Shenhua Coal Oil. After review, the Ministry of Commerce considers that the declaration documents and information are incomplete and requires the applicant to supplement it. On May 16th, the Ministry of Commerce confirmed that the supplemented declaration documents and materials were in compliance with the requirements of Article 23 of the Anti-Monopoly Law, and filed the case for centralized reporting of the operator and began preliminary examination.

After review, the Ministry of Commerce believes that this concentration may have the effect of eliminating or restricting competition in the licensing market for coal-water slurry gasification technology. On June 15th, the Ministry of Commerce decided to implement a further review on this item. On September 13, the Ministry of Commerce decided to extend the period for further review.

During the review process, the Ministry of Commerce solicited opinions from relevant government departments, industry associations, and competitors in the industry, used third-party information to verify the data provided by the reporting party, and consulted industry experts on relevant issues.

Second, competition analysis

According to the factors stipulated in Article 27 of the “Anti-Monopoly Law”, the Ministry of Commerce has conducted a centralized review of this operator and has conducted an in-depth analysis of the influence of this operator on market competition, and believes that it may have the effect of eliminating or restricting competition. Negative Effects.

Participating in establishing a joint venture company General China is a foreign-invested company established by General Electric in China. General Infrastructure Technology Corporation is a subsidiary of General Electric Company. In this transaction, it is responsible for the establishment of a joint venture to license general coal-water slurry gasification technology. The other party involved in the establishment of the joint venture, Shenhua CTL, is mainly engaged in the development and operation of coal liquefaction, coal chemical projects and supporting projects. Shenhua Group's parent company, Shenhua Group Co., Ltd. (hereinafter referred to as Shenhua Group) is an integrated energy company, which focuses on the production and supply of coal, electricity, and heat, and railway and port transportation services.

The business of the proposed joint venture is mainly to provide coal-water slurry gasification technology licensing and engineering services to industrial and power projects. Coal-water slurry gasification technology is a coal gasification technology that converts solid-form coal into coal-water slurry and reprocesses it to produce a mixture of carbon monoxide and hydrogen gas. The coal-water slurry gasification technology and other coal gasification technologies have significant differences in technical processes, raw coal requirements, and feed methods, and the coal-water slurry gasification technology licensing market constitutes a related commodity market. The business scope of the proposed joint venture company is limited to China, and the scope of the domestic coal-water slurry gasification technology demand side selection technology provider is limited to China, and the relevant geographical market for this concentration is the Chinese market.

China Coal Water Slurry Gasification Technology licensing market has a high degree of concentration, only the general infrastructure technology company coal-water slurry gasification technology, Yankuang East China Polytechnic multi-nozzle opposed coal-water slurry gasification technology and the Northwest Institute of Chemical Industry multi-component slurry Gasification technology has three major competitors, among which the general infrastructure technology company has the highest market share in coal-water slurry gasification technology.

The coal-water slurry gasification technology has specific requirements on the ash content, ash melting point, and internal water content of the raw coal, and the technical demand party must have a reliable raw coal supply for the new coal-water slurry gasification project. The coal quality in China's Shenfu area (including Ordos, Inner Mongolia Autonomous Region and Yulin, Shaanxi Province) can meet the requirements of coal-water slurry gasification technology. Shenhua Group's coal production in the Shenfu area accounts for the highest share of total coal production in the region, with strict quality control and stable coal quality. The coal produced by the Shenhua coal mine of the Shenhua Group was used as raw coal by a number of coal-water slurry gasification technology projects. In 2010, Shenhua Group was the largest supplier of raw coal for coal-water slurry gasification technology. In addition, the Shenhua coal transportation in the Shenfu area mainly relies on self-supported railways and coal terminals, which have lower transportation costs.

The Ministry of Commerce investigated the entry of the coal-water slurry gasification technology licensing market. The survey found that the coal-water slurry gasification technology is a complex of many complex technologies. The involved technology and engineering technologies need to be matured after long-term practice. The unsufficiently tested new technologies have high commercial risks. To enter the coal-water slurry gasification technology licensing market, it is necessary to look for technology users who are willing to bear the cost of some of the first demonstration units. It is very difficult for new technology licensees to enter this market. Coal-water slurry gasification technology has a high technological content and involves a large amount of patent protection. Technological development and implementation of industrialization have a long application cycle. The Ministry of Commerce believes that it is very difficult for the coal-to-water slurry gasification technology licensing market to enter.

In summary, Shenhua Group is the largest supplier of raw coal for coal-water slurry gasification technology and General Infrastructure Technology Corporation has the highest market share in coal-water slurry gasification technology. GM China and Shenhua CTL set up a joint venture to engage in the licensing of coal-water slurry gasification technology. It may use Shenhua Group's advantage of raw coal to control the supply of raw coal and limit the competition in the coal-water slurry gasification technology licensing market.

III. Negotiations with additional restrictive conditions

The Ministry of Commerce proposed to the reporting party that there may be restrictions on competition in this concentration, and requested the applicant to provide explanations and propose solutions to the problems. After many discussions, on October 28th, Shenhua Group and Shenhua Coal Oil submitted the final solution. After evaluation, the Ministry of Commerce believes that the final solutions submitted by Shenhua Group and Shenhua Coal Oil can solve the competition concerns.

Fourth, the review decision

Given that the establishment of joint ventures between GM China and Shenhua Coal-to-Liquid Oil may have a restrictive competitive impact on the licensing market for China's coal-water-slurry gasification technology, the Ministry of Commerce decided to impose restrictive conditions to approve this concentration and requested Shenhua Group and Shenhua Coal Chemicals to perform the following obligations: :

GM China and Shenhua Coal Chemicals set up a joint venture to engage in the licensing of coal-water slurry gasification technology and must not use coal raw materials to restrict the supply of raw coal for gasification, or use raw coal as a condition to force technology demanders to use the joint venture. Technology, or increase the cost of using other technologies.

The Ministry of Commerce has the right to supervise and inspect the implementation of the above restrictive conditions.

This announcement is effective as of the date of publication.

People's Republic of China Ministry of Commerce

November 10, 2011

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