Merger Control 2024 Comparisons

In PRC (for the purposes of this article, the term “PRC” refers to the mainland of the People’s Republic of China, excluding the Hong Kong Special Administrative Region, the Macao Special Administrative Region and the Taiwan Region of the People’s Republic of China), Chapter IV of the Anti-Monopoly Law ((AML), amended and promulgated on 24 June 24 and effective as of 1 August 2022) serves as the fundamental legislation for the merger control regime. It provides the general rules, including the definition of the concentration of undertakings, the notifications mechanism, notification document requirements, the review procedures, the review criteria, etc.

Several regulations, guidelines and opinions act as indispensable supplements to the AML, including, among others:

• Provisions of the State Council on Thresholds for Notification of Concentrations of Undertakings (“Provisions on Notification Thresholds”, amended and effective as of 22 January 2024);
• Provisions on the Review of Concentration of Undertakings (“Provisions on Concentration Review”, promulgated on 10 March 2023 and effective as of 15 March 2023);
• Anti-monopoly Compliance Guidelines for Concentration of Undertakings, issued on and effective as of 5 September 2023;
• Guidelines on Antitrust Compliance for Undertakings, issued on and effective as of 25 April 2024;
• Guiding Opinions on the Notification of Concentrations of Undertakings, Guiding Opinions on the Notification Documents and Materials for Concentration of Undertakings, and Guiding Opinions on Standardising the Case Titles of Notification of Concentrations of Undertakings, amended on and effective as of 29 September 2018;
• Guiding Opinions on the Notification of Simplified Cases of Concentration of Undertakings, promulgated on and effective as of 29 September 2018; and
• Guidelines for the Definition of Relevant Market, promulgated on and effective as of 24 May 2009.

Foreign Investment Regime

The Foreign Investment Law ((FIL), promulgated on 15 March 2019, and effective as of 1 January 2020) aims to regulate foreign investment activities, providing a legal framework for entry, promotion, protection and management of foreign investments. For industry sectors falling outside the “negative list”, the FIL implements the principle of consistency between domestic and foreign investments/investors and attaches no restrictive measure.

Specifically, the negative list identifies industry sectors in which foreign investors are prohibited or restricted. For the prohibited industries, foreign investors are fully prohibited from any form of investment, while they can have limited access to invest in restricted industries after satisfying certain requirements, including specific foreign capital ratios, executive restrictions or controlling shareholder restrictions, etc.

The negative list is updated regularly under the approval of the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) and the latest version came into effect on 1 January 2022.

National Security Review

See 9. Foreign Direct Investment/Subsidies Review.

Other Particular Sectors

Given the special nature of the financial industry, China implemented the Measures for Calculating the Turnover for the Notification of Concentration of Undertakings in the Financial Industry (“Calculating Measures for Financial Industry”).

In addition, several sector-specific antitrust guidelines issued by the State Council also contain issues related to merger control, including:

• Guidelines for Anti-monopoly in the Field of Active Pharmaceutical Ingredients (2021);
• Guidelines for Anti-monopoly in the Field of Platform Economy (2021); and
• Guidelines for Anti-monopoly in the Automotive Industry (2019).

Since the institutional reforms in 2018, the State Administration for Market Regulations (SAMR) has replaced MOFCOM as the sole enforcement authority responsible for reviewing the merger control notification. Specifically, the authority for merger control filling reviews rests with the Second Department of Antitrust Enforcement of SAMR.

In addition, the amended AML introduces a “classified and graded review” system. Shortly after, on 15 July 2022, SAMR announced a pilot programme (the Notice on Pilot Programme of Partial Delegation of Review of Concentration of Undertakings), detailing partial delegation of review works for simplified cases to five provincial-level administrations for market regulation (AMR), namely, Beijing AMR, Shanghai AMR, Guangdong AMR, Chongqing AMR, and Shaanxi AMR.

For any transaction that constitutes a “concentration of undertakings” (See 2.3 Types of Transactions) and meets the notification thresholds (See 2.5 Jurisdictional Thresholds), a prior notification must be filed with SAMR.

Nevertheless, the AML also provides certain exemption scenarios for certain notifiable transactions, typically for intra-group transactions, namely where:

• one undertaking to the concentration holds more than 50% of the voting shares or assets of each of the other undertakings; or
• more than 50% of the voting shares or assets of each of the undertakings to the concentration is held by an undertaking not participating in the concentration.

Additionally, where a concentration does not meet the notification thresholds, the undertakings to the concentration can still notify the transaction voluntarily to SAMR. Such voluntary filings may occur when the undertakings believe the transaction could potentially raise competition concerns, as exemplified by the Simcere/Tobishi case (2023) (See 10.2 Recent Enforcement Record).

In non-notifiable cases, SAMR also has the discretion to require the undertakings to the concentration to submit the notification if it believes there is evidence proving the concentration has or may have the effect of eliminating or restricting competition.

According to Article 58 of the AML, in a failure-to-notify concentration, whereas competition concerns may arise, SAMR may order the undertakings to cease the implementation of concentration, dispose of the shares or assets or transfer the business within a time limit and/or take other necessary measures to restore to the status before the concentration, and impose a fine of up to 10% of the undertaking’s sales revenues in the previous fiscal year. Where no competition concern is found, SAMR may impose a fine of up to CNY5 million.

In PRC antitrust enforcement practice, the most commonly imposed sanction is a fine, as most cases are concluded by SAMR without finding competition concerns. The only case being deemed as having the effect of eliminating or restricting the competition was the Tencent/China Music Corporation (CMC) Case (2021) where SAMR determined that Tencent’s acquisition of 61.64% of CMC’s shares in 2016 constituted a failure to notify with competition concerns. As a result, Tencent was not only handed down a penalty of CNY500,000 (the maximum fine for failure to notify cases under the pre-amended antitrust law), but also ordered to restore competition in the online music broadcasting platform market by:

• not entering into exclusive agreements over copyrights;
• not requesting upstream copyright holders to provide Tencent with preferential terms over their competitors without justifications; and
• not excluding or restricting competition by pushing up the cost of competitors through high advance payment and other means.

Notably, SAMR has only published one failure-to-notify case since the amended AML took effect on 1 August 2022. It remains to be seen how and to what extent SAMR will apply and interpret the new penalty standard under the amended AML.

The AML and Provisions on Concentration Review have defined “concentration of undertakings” as:

• the merger of undertakings;
• acquiring control over other undertakings by acquiring their equities or assets; or
• acquiring control over other undertakings or the ability to exert a decisive influence on other undertakings by contract or any other means.

Therefore, the key factor in determining whether a transaction is caught by the AML is the change in control over other undertakings. This means that even if the transfer of assets or shares is not involved, any change in control (for example, through amendment of decision-making mechanisms for shareholders and/or the board of directors) may still cause the transaction to fall within the scope of the merger control review.

Internal restructuring or reorganisations under certain scenarios may be exempted (See 2.1 Notification).

Under the PRC merger control regime, “control” encompasses the control itself and the ability to exercise decisive influence over an undertaking, which includes both sole control and joint control.

Determining whether control has been obtained usually involves numerous legal and factual factors and is assessed on a case-by-case basis. Typical factors to be considered are as follows:

• the purpose of the transaction and future plans;
• the equity structure and the changes thereof;
• voting matters, voting mechanism, historical attendance and voting of the shareholders’ (general) meeting and other authorities;
• composition and voting mechanism of the board of directors and other decision‑making or management bodies as well as the historical attendance and voting;
• appointment and dismissal of the senior executives;
• the relationship among the shareholders and directors of other undertakings, including whether there is any entrusted voting, concerted action, etc; and
• whether there is any material business relationship and co-operation agreement, among others, with other undertakings.

It is important to note that “control” under the AML differs from its definition under corporate law, as acquiring a minority interest may also constitute “control”. An undertaking, even with a minority shareholding, tends to be deemed to have “control” if it can exert decisive influence over the other undertaking on certain “red-flag” issues (eg, annual business plan, financial budget, appointment or dismissal of senior management, etc) through veto rights.

The notification thresholds set out in the Provisions on Notification Thresholds are applied uniformly across all sectors. The current jurisdictional thresholds, which were recently increased for the first time since the implementation of the antitrust law, are as follows:

• the total global turnover of all the undertakings to the concentration in the last fiscal year exceeds CNY12 billion (approximately USD1.67 billion), and at least two of these undertakings each have a turnover of more than CNY800 million (approximately USD110.96 million) within PRC in the last fiscal year; or
• the total turnover within PRC of all the undertakings to the concentration in the last fiscal year exceeds CNY4 billion (approximately USD0.55 billion), and at least two of these undertakings each have a turnover of more than CNY800 million (approximately USD110.96 million) within PRC in the last fiscal year.

For turnover calculation, only the net income from selling products and providing services in the last fiscal year shall be included, deducting relevant taxes and surcharges. 

In addition, the Calculating Measures for Financial Industry has set up detailed calculation methods for the financial industry. It usually applies to financial undertakings with licences issued by the People’s Bank of China, the China Banking and Insurance Regulatory Commission or the China Securities Regulatory Commission, including financial institutions in the banking industry, security companies, futures companies, fund management companies, insurance companies, etc.

As for the conversion of foreign currency, turnover is usually calculated by applying the China Central Bank’s annual average central parity of exchange rate to the corresponding fiscal year.

Under the PRC antitrust regime, the threshold of an individual undertaking refers to the aggregate turnovers of all entities that have a direct or indirect relationship with that individual undertaking, including:

• the individual undertaking concerned;
• other undertakings under direct or indirect control of the individual undertaking concerned;
• other undertakings which directly or indirectly control the individual undertaking concerned;
• other undertakings under direct or indirect control of the undertakings specified in the bullet point above; and
• other undertakings under joint control of two or more undertakings under the first to fourth bullet points above.

The turnover of the individual undertaking concerned shall exclude the turnover generated between the undertakings listed above.

When an undertaking acquires parts of another undertaking (including assets or shares), and the seller no longer retains control or decisive influence over those parts, the turnover of the target parts should only encompass the turnover generated by those acquired parts excluding the seller’s turnover.

When there is another undertaking jointly controlled by the undertakings to the concentration, or between the undertakings to the concentration and those not involved in the concentration, the turnover of the undertakings to the concentration shall encompass the turnover between the jointly controlled undertaking and a third-party entity. This turnover should be calculated once and evenly distributed among the undertakings to the concentration with joint control.

The criteria for notifying a concentration of undertakings applies to all types of transactions that meet the turnover thresholds, regardless of whether or not the transactions are foreign-to-foreign, and it doesn’t require a test of local effect or local presence.

Where the target has no sale and/or assets in China, a notification is still required if there are two or more undertakings to the concentration and their turnovers have reached the notification thresholds.

There is currently no market share jurisdictional threshold in the PRC.

The establishment of a jointly controlled joint venture by two or more undertakings, which satisfies the notification thresholds, requires a notification, whereas a joint venture being solely controlled by one undertaking does not.

There are no special rules specified for the notification thresholds of the joint ventures.

In cases where a concentration falls below the notification thresholds but raises competition concerns, SAMR can require the involved undertakings to notify the concentration. If the undertakings fail to submit a notification after being requested, and SAMR believes there is evidence indicating that the concentration may eliminate or restrict competition, an investigation will be launched.

However, it is still unclear as to how SAMR obtains the so-called “evidence”, what are the criteria for review, what is the process of investigation, etc, and no statuary limitation in this regard has been published.

Undertakings shall not implement the concentration until clearance.

Implementing a concentration before clearance is treated the same as failure-to-notify cases, and incurs the same penalties (see 2.2 Failure to Notify), regardless of the nationality of undertakings involved.

The penalty decisions are public on SAMR’s official website under the “Administrative Penalty Cases” section.

The PRC antitrust legislative regime does not explicitly provide any exceptions to the suspensive effect or possible waiver or derogation from the suspensive effect. In practice, undertakings may communicate with SAMR for special circumstances (eg, public bids) and possible acceleration of the review process.

According to the AML, the undertakings shall not implement the concentration before clearance. Based on the knowledge of the authors, there are no known instances in practice where SAMR has allowed closing before clearance.

The AML and relevant regulations do not provide an explicit deadline for notification, while it requires that the undertakings shall not implement the concentration before SAMR’s clearance, otherwise penalties may be imposed as mentioned in 2.13 Penalties for the Implementation of a Transaction Before Clearance. In practice, the undertakings typically submit the notification after signing the transaction agreement.

For concentrations that have already been implemented and are deemed to have or may have competition concerns, the undertakings must submit a supplemental notification within 120 days upon receipt of SAMR’s request.

A binding agreement between undertakings for the future implementation of concentration is required, which may include transaction agreements, contracts of the concentration and corresponding supplementary documents, etc.

There are no filing fees for the notification of concentration.

In a merger concentration, all undertakings to the concentration are obliged to file the notification, while in other forms of concentration, the undertaking that obtains control is responsible for filing. When several responsible undertakings are identified, one undertaking can be appointed and entrusted to file the notification. However, this doesn’t exempt the other undertakings from the obligation to submit the notification if the appointed undertaking fails to do so.

To file a concentration, the responsible undertakings must complete and submit main documents and materials to SAMR as follows:

• the notification form (including the name, domicile and scope of business of the undertakings, the nature of the concentration, the background of the concentration and the scheduled date of implementation, the power of attorney (if any), etc);
• analysis of the concentrations’ impact on the competition in the relevant market;
• the executed transaction documents, including agreements, contracts and the supplementary documents thereto;
• the audited financial and accounting reports of each undertaking to the concentration; and
• other documents and materials required by SAMR.

If the original materials were written in foreign languages, preparation of a Chinese translation is necessary. In the case the materials are lengthy, at least a Chinese summary shall be prepared, and SAMR may further require a full version document when deemed necessary. Additionally, foreign undertakings shall also submit notarised and apostilled identity/registration certificates to SAMR. With the Hague Convention coming into force in China in November 2023, SAMR now in practice accepts either Hague-apostilled or foreign consular-apostilled documents.

If the initial submission of the notification form and relevant documents is deemed incomplete, it will not automatically lead to any penalties or negative consequences; instead, SAMR will issue a request for supplementary information. In fact, SAMR will accept a case and begin the formal review process only upon receipt of complete notification documents.

During the review process, SAMR may request additional materials from the undertakings, which usually shall be provided within the specified time limit. Failure to do so may trigger the “stop-the-clock system” mechanism. See 3.10 Requests for Information During the Review Process for detailed information.

Undertakings that deliberately provide false materials or information will be ordered by SAMR to make corrections and may be fined up to 1% of their sales revenues in the previous year. If the undertaking has no sales revenues in the previous year or it is difficult to calculate a specific number, the fine can be up to CNY5 million. Responsible individuals may also be fined up to CNY500,000. Where the provision of misleading information is severe, the fines may be escalated to between two and five times the initial amounts. In addition, undertakings punished by SAMR for these offences will be recorded in the PRC credit system and disclosed to society.

These penalties have not been applied in practice since the amended AML came into effect in 2022.

Upon the formal acceptance of the notification, theoretically, SAMR’s review may include the following phases (the time period before the formal acceptance has not been counted hereafter).

• Phase I: Maximum 30 days. SAMR will review the materials and documents after its formal acceptance of the case and decide whether to conduct further review.
• Phase II: Maximum 90 days. SAMR will notify the undertakings of its decisions regarding further review of the notification in writing.
• Phase III: Maximum 60 days. SAMR may further extend the review where:
1. the undertakings agree to extend the review period;
2. the documents and materials submitted by the undertakings are inaccurate and need to be further verified; or
3. major change has occurred to the undertakings after the filing of the notification.

That being said, not all cases in practice would involve the aforementioned three phases. Simplified cases are typically cleared before Phase I expires, while normal cases may extend to Phase II or even Phase III (especially for those with potential competition concerns).

It is worth mentioning that with the introduction of the stop-the-clock mechanism, the calculation of review period can be suspended. See 3.10 Requests for Information During the Review Process for detailed information.

Pre-notification discussion is not a mandatory procedure, while it is normally welcomed by SAMR. The application for a pre-notification discussion shall be made in writing, including the basic information of the transaction, specific issues to discuss, proposed time, and contact information. This process is treated as confidential and is more commonly observed in complex cases, where the undertaking would like to seek guidance on issues such as whether a concentration is notifiable or how to define the relevant markets.

The rounds and burden of information requests (RFI) vary from case to case. For relatively straightforward concentrations without anti-competitive effects, one to three rounds of RFIs may be involved before clearance. However, for more complex concentrations or those with potential anti-competitive effects, SAMR may issue more RFIs. Addressing RFIs will not suspend the review period.

Having said that, if the undertaking fails to submit the required supplementary information, the stop-the-clock mechanism may be applied and SAMR may decide to suspend the calculation of the review period. Besides this, under the stop-the-clock mechanism, SAMR may also suspend the review period where:

• new circumstances or facts significantly impact the review of the concentration, making it impossible to proceed without verification; or
• the remedy proposal requires further evaluation and the undertakings request a suspension.

Concentrations reviewed through the simplified procedure are typically cleared within Phase I, which could be considered a fast-track. To qualify for the simplified procedure, the concentration must meet at least one of the following conditions:

• where, in the same relevant market, the combined market share of the undertakings to the concentration is below 15%;
• where, in upstream and downstream markets, the market share of each undertaking to the concentration is below 25%;
• where the market share of the undertakings to the concentration, not in the same relevant market nor with an upstream or downstream relationship, is below 25% in each market related to the transaction;
• where an undertaking to the concentration establishes a joint venture outside the PRC that does not engage in economic activities in the PRC;
• where an undertaking to the concentration acquires the equity or assets of an overseas enterprise that does not engage in economic activities in the PRC; or
• where a joint venture jointly controlled by two or more undertakings becomes controlled by one or more of these undertakings through the concentration.

Notably, at a press conference held by the State Council Information Office in January 2024, SAMR introduced a “20-20” internal working requirement applied for simplified cases – ie, in general, the period from the undertaking’s filing of the notification to SAMR’s official acceptance should not exceed 20 days, and that from official acceptance to clearance should not exceed 20 days. Therefore, a more efficient review regime for simplified cases can be expected.

Article 33 of the AML generally introduces the factors to be considered in assessing the competition effects, which are detailed in the Provisions on Concentration Review, as follows:

• the market shares and market control power in the relevant market of the undertakings to the concentration;
• the degree of market concentration of the relevant market;
• the impact of the concentration of undertakings on market entry and technological advancement;
• the impact of the concentration of undertakings on consumers and other relevant undertakings;
• the impact of the concentration of undertakings on the development of the national economy; and
• other factors affecting market competition that are necessary to consider.

Article 34 of the AML provides that a concentration shall be prohibited if it has or may have the effect of eliminating or restricting competition. However, if the undertakings can prove that the positive impact of the concentration on competition significantly outweighs the negative impact, or that the concentration aligns with the public interest, SAMR may decide not to prohibit the concentration.

Relevant markets under the AML include both product market and geographical market and the scope of a relevant market mainly depends on the extent of substitutability of a product/geographic area.

Relevant Product Market

Defining the relevant product market, SAMR will consider both demand-substitution aspects and supply-substitution aspects factors. Specifically:

• for demand-substitution aspects, factors including consumers’ intent to switch from one product to another due to changes in price or other competition factors, overall characteristics of products (such as shape, features, quality and technical features), price difference, selling channels and other factors like consumer’s preference or dependence of the product will be evaluated; and
• for supply-substitution aspects, factors including evidence that other undertakings’ response to changes in product price and other competition factors, other undertakings’ production process and technologies, difficulties in switching to other products, time required for such production switch, additional cost and risks for such production switch, market competitiveness of switched products and marketing channels will be considered.

Relevant Geographic Market

Similar to the relevant product market, substitution factors of the geographic markets are also considered from both demand and supply aspects. Specifically:

• for demand-substitution aspects, evidence that consumers switch to the purchase of products in other geographic areas in response to changes in product price or other competition factors, transportation costs and characteristics, main areas from which consumers choose to purchase products and to which undertakings sell products, regional barriers like tariff and local regulations, and other factors like consumers’s preference will normally be the major factors; and
• for supply-substitution aspects, the factors to be taken into account generally include evidence of the response of the undertakings in other areas to the changes in product price and other competitive factors, the promptness and feasibility to supply or sell relevant products by the competitors in other geographic areas, for instance, customer’s cost for switch orders for the products to the competitors in other areas, etc.

There is no de minimis level used for evaluating the competitive concerns. However, the market share level applied in defining simplified cases might serve as a reference to some extent (see 3.11 Accelerated Procedure).

Though previous cases are not legally binding under the PRC antitrust regime, they may serve as valuable references, particularly on key issues such as relevant market definition and competition analysis, for SAMR when reviewing notifications.

As regards the precedents in foreign jurisdictions, SAMR may refer to them as appropriate and necessary as the review needs. Among these foreign precedents, EU cases normally receive the most attention.

Though the PRC antitrust legislative regime does not explicitly specify the competition concerns, SAMR typically examines and investigates competition concerns mainly from three aspects as follows:

• unilateral effects – to evaluate if the concentration may create or strengthen the ability, incentive or possibility of an individual undertaking to unilaterally exclude or restrict competition in the relevant market;
• co-ordinated effects – to evaluate if the concentration may jointly create or strengthen the ability, incentive or possibility of two or more undertakings to co-ordinate to exclude or restrict competition in the relevant market; and
• foreclosure effects – to evaluate if the concentration may create or strengthen the ability of the undertaking(s) to foreclose competitors’ access to inputs or customers.

Generally speaking, SAMR’s focus on identifying and examining the competition concerns differs in various types of concentrations. Specifically, co-ordinated effects are examined in almost all types of concentrations, while unilateral effects are more commonly examined in horizontal concentrations and those that are neither horizontal nor vertical. Foreclosure effects are typically only examined in non-horizontal concentrations.

It is reasonably believed that SAMR would consider economic efficiency as a crucial factor in its review process, not only because Article 1 of the AML includes the economic efficiency improvement as an objective, but also because Article 34 allows SAMR to approve a concentration with anti-competitive effects if it could be demonstrated that such concentration could yield significant pro-competitive efficiencies outweighing its negative impact on competition.

Having said that, SAMR’s approach to assessing and weighing economic efficiencies lacks detailed regulations and established precedents.

Non-competition issues, including national security, industrial policy and national economic development, etc, will also be considered by SAMR when reviewing the notifications. This is in fact in line with the legislative purpose of the AML, safeguarding the interests of consumers and the public and promoting the sound development of the socialist market economy.

In practice, SAMR sometimes is not the only government department involved in the review of a transaction, and other relevant government agencies may also need to provide their opinions on the transaction during SAMR’s solicitation period. Undertakings would need to address the concerns and comments they may have. (See 7.2Contacting Third Parties).

Such circumstances occur more frequently when it comes to high-profile cases. For example, in the Samsung/Seagate Case (2011), the Western Digitial/Hitachi Case (2012) and the MaxLinear/Silicon Motion Case (2023), the sector regulators and trade associations were also involved. Undertakings would have to address the concerns and comments regarding the industry development from the stakeholders.

For information related to FDI, see 9. Foreign Direct Investment/Subsidies Review.

In the PRC, joint venture concentrations are subject to the same substantive review as other types of concentrations. While there are no explicit rules regarding co-ordination issues between joint venture parents in the notification review, it is indeed one of SAMR’s focuses during its review, especially in high-profile transactions, as evidenced by several cases.

For instance, in the P3 Network shipping alliance Case involving Maersk, MSC and CMA CGM in 2014, MOFCOM believed the proposed establishment of a new network alliance would consolidate these top three competitors in the relevant market, potentially harming competition, and subsequently decided to prohibit the case. Furthermore, in the Zhejiang Garden Biochemical High-Tech and Royal DSM’s establishment of a joint venture case, which was cleared with remedies, SAMR mentioned in its competition analysis that the concentration may substantially increase concentration in the relevant market, thereby increasing the incentives and ability of the deal parties to co-ordinate prices.

Additionally, unlike the EU, the PRC antitrust legislative regime does not make a distinction between “full-function” and “non-full-function” joint ventures. Even joint ventures that do not independently carry out business activities in the market, or SPV joint ventures, may trigger a notification of a concentration.

If the concentration has or may have the effect of eliminating or restricting competition, and the proposed remedies are able to mitigate and reduce the adverse effect effectively, SAMR may approve the concentration with restrictive conditions; if the undertakings fail to propose remedies within the prescribed period or the proposed remedies cannot effectively reduce the anti-competitive effect, SAMR shall render a decision prohibiting the concentration.

SAMR will notify the undertakings when it believes that the concentration has or may have the effect of eliminating or restricting competition. The undertakings to the concentration have the option to propose remedies, including structural remedies, behavioural remedies, or a combination of both, to address and mitigate potential anti-competitive effects of the concentration. If SAMR considers the proposed remedies as insufficient, it may negotiate with the undertakings and require them to submit other commitment proposals within a reasonable time limit.

Typical Remedies in Practice

Structural remedies

Structural remedies include divestiture of tangible assets, intangible assets such as intellectual property and data, or related rights, and are typically used in practice.

Both “upfront buyer” and “fix-it-first” rules have been applied in the precedents involving structural remedies. For example, “upfront buyer” divestiture remedies were observed in the NXP/Freescale Case (2015) and the Dow Chemical/DuPont Case (2017). In these cases, the parties were required to propose a purchaser and were prohibited from completing the main transaction following the conditional approval until they have entered into a binding divestiture agreement with the proposed purchaser which shall be approved by the MOFCOM. “Fix-it-first” divestiture remedies were imposed in the ABI/SABMiller Case (2016) and the Abbott/St Jude Medical Case (2016). In such cases, the parties were required to seek a remedy purchaser and sign a divesture agreement before obtaining conditional clearance of the main transaction.

However, more recent divestiture conditions in structural remedies have followed “classic” procedure – ie, the parties could close the main transaction first after obtaining the clearance but are required to find a purchaser and divest the relevant business within a fixed time limit after the conditional clearance. Recent examples include the Tobishi/Simcere Pharma Case (2023), the GlobalWafers/Siltronic Case (2022), the Danfoss/Eaton Case (2021), etc.

Behavioural remedies

Behavioural remedies include but are not limited to opening up infrastructure (such as networks or platforms), licensing key technologies (including patents, proprietary technology, or other intellectual property), terminating exclusive or monopolistic agreements, maintaining independent operations, modifying platform rules or algorithms, committing to compatibility or not lowering the level of interoperability, and are also very common in the remedy cases. Those commonly seen behavioural remedies could be basically divided into two major categories:

• (i) supply commitments (such as ensuring stable and reliable supply – the Linde/Praxair Case (2018); following fair, reasonable, and non-discriminatory principles – the GlobalWafers/Siltronic Case (2022); refraining from tie-in sales or bundling or refusal/restrictions on supply without justification – the Samsung Electronics/HP Case (2017) and the MTS/Illinois Case (2021)); and
• price commitments (such as setting an upper limit price for specific products – the Dow Chemical/DuPont Case (2017); refraining from increasing prices without justification – the Cargotec/TTS Case (2019); decreasing prices – the Life Technologies/Thermo Fisher Case (2014)).

Combination of structural and behavioural remedies and other remedies

A combination of behavioural and structural remedies can also be adopted and imposed under certain circumstances, such as the Novelis/Aleris Case (2019), the Danaher/GE Biopharma Case (2020), the GlobalWafers/Siltronic Case (2022), the Tobishi/Simcere Pharma Case (2023), etc.

The competition authority has in the past imposed “hold-separate” remedies, mandating that undertakings operate independently in various aspects such as management, sales, and R&D for a specified period after closing. This practice was observed in cases such as the Samsung/Seagate Case (2011) and the Cargotec/TTS Case (2019).

Remedies to Address Non-competition Issues

As mentioned above, SAMR would consider non-competition issues, such as industrial policy, during the review process, aligning with the legislative intent of the AML – ie, protecting consumers and promoting the socialist market economy (see 4.6 Non-competition Issues). In certain cases, remedies may likely be aimed at addressing non-competition issues, for example, in the AMD/Xilinx Case (2022), the undertaking commits to further facilitate co-operation with Chinese companies on the basis of existing co-operation, which can be seen to some extent as addressing industrial policy concerns due to Chinese customers’ concerns about supply stability and security.

Upon receiving the proposed remedies from the undertakings to the concentration, as prescribed by Article 39 of the Provisions on Concentration Review, SAMR will assess the effectiveness, feasibility, and timeliness of such proposed remedies and promptly inform the undertakings of the assessment results. Although the PRC antitrust legislation regime does not elaborate on the detailed standards in this regard, fundamentally, SAMR is concerned with whether the remedies can effectively mitigate the anti-competitive impacts caused by the transaction. Thus, if SAMR believes that the proposed remedies are sufficient to realise such intent, the remedies may be deemed acceptable and the concentrations would be conditionally approved; otherwise, SAMR may negotiate the remedies with the undertakings, or request them to propose alternative remedies within a reasonable timeframe. If sufficiently effective remedies cannot ultimately be realised, the concentration may be prohibited.

In principle, the undertakings to the concentration can begin negotiating remedies with SAMR at any stage of the review process, as it is the undertakings that own the initiative to propose the remedies. However, in practice, the proposal for remedies and subsequent negotiations typically arise after SAMR identifies the substantial competition concerns and notifies the undertakings, which usually occurs at later stages during the review process, such as Phase II and Phase III.

Negotiating remedies is a relatively interactive process in practice. Initially, the undertakings often submit their proposed remedies along with a corresponding commitment plan. Following this, as mentioned above, SAMR conducts an assessment focused on the effectiveness, feasibility, and timeliness of these proposals. If SAMR finds the initial proposals from the undertakings insufficient to address potential anti-competitive effects, it may suggest modifications or negotiate further on the parameters and scope of the remedies. However, such proposals by SAMR do not directly exert coercive force; instead, all remedies are the results of the mutual agreement between the undertakings and SAMR. Therefore, such negotiations and modifications may involve multiple rounds before the remedies and the commitment plan are finalised and imposed.

It is worth noting that, according to Article 26 of the Provisions on Concentration Review, upon the undertakings’ application, the calculation of the review period may be suspended whilst SAMR evaluates the proposed remedies and the commitment plan, if SAMR deems it necessary.

Conditions and Timing for Divestitures

Conditions for divestitures

The fundamental requirement for divestitures is that they must address or mitigate any actual or potential negative impact on the competition in a feasible, effective and prompt manner. Furthermore, the Provisions on Concentration Review outlines that, prior to the completion of divestitures, the undertakings to the concentration must adhere to the following obligations to ensure the existence, competitiveness, and marketability of the divested business.

• Maintain the independence of the divested business from the undertakings’ retained business and manage it in the best interest of the divested entity.
• Refrain from any actions that could negatively affect the divested business, such as hiring key employees from the divested entity or obtaining its confidential information, trade secrets or other confidential information of the divested business.
• Designate a dedicated manager responsible for managing the divested business.
• Provide potential buyers with fair and reasonable access to sufficient information about the divested business to evaluate its commercial value and development potential.
• Offer necessary support as requested by the buyer to facilitate a smooth transition and ensure the stable operation of the divested business.
• Hand over the divested business to the buyer and fulfill any relevant legal procedure.

Timing for divestitures

As per Article 48 of the Provisions on Concentration Review, the undertakings to the concentration are obligated to find a purchaser for the divested business within a specified period as defined in the conditional clearance decision. If this timeframe is not specified, then the undertakings have six months from the conditional clearance to secure a buyer. SAMR retains the authority to extend this period by up to three months if deemed necessary. In instances where the parties fail to secure a buyer within the designated timeframe, SAMR is empowered to designate a divestiture trustee to oversee this process. The actual divestment must be finalised within three months of executing the divestiture agreement, unless SAMR approves an extension upon request from the undertakings.

Typically, the completion of the primary transaction occurs before the full divestiture process is finalised. However, depending on specific circumstances, such as the “fix-it-first” rule or the “upfront buyer” rule applied by SAMR, the divestment may need to be initiated or concluded prior to the finalisation of the main transaction.

Failure to Comply with Commitments Under the Remedies

According to Articles 58, 63 and 64 of the AML, if the undertakings fail to fulfill the obligations and commitments under the remedies, the following legal liabilities may arise.

• If the failure to comply with the remedies does not have the effect of eliminating or restricting competition, SAMR may impose a fine of up to CNY5 million.
• If the failure to comply with the remedies results in or may result in the elimination or restriction of competition, SAMR may order the termination of the concentration, disposal of shares or assets within a specified period, temporary divestiture of business, and other necessary measures to restore the status quo ante, and impose a fine of up to 10% of the undertaking’s turnover in the previous fiscal year of the previous year.
• In cases of particularly serious circumstances, exceptionally adverse effects, or particularly serious consequences, SAMR may impose a fine of up to 50% of the undertaking’s turnover in the previous fiscal year.
• The administrative penalty decision will be announced to the public and recorded in the undertaking’s credit record.

SAMR will issue a formal decision to the parties, permitting or prohibiting a concentration. It will also publish the results of all merger control reviews on its official website on a regular basis, including unconditional approvals, conditional approvals and prohibitions, although the scope of disclosure varies. For those unconditionally approved cases (including those processed through normal and simplified procedures), SAMR will periodically disclose the case name, the undertakings to the concentration and the date of approval. For conditional approvals and prohibitions, a more detailed decision will be published, and such decision, with certain confidential information being redacted, usually includes the review timetable, basic information about the undertakings, relevant defined market(s) and competition analysis, the remedies imposed (if any), etc.

SAMR does not treat foreign-to-foreign transactions more strictly and foreign-to-foreign transactions undergo the same merger filing review and competition assessment process as other transactions. For cases that have or may have the effect of eliminating or restricting competition in the PRC market, regardless of whether they are domestic transactions or foreign-to-foreign transactions, SAMR may impose prohibitions or remedies. Among remedy cases in recent years, there have been both foreign-to-foreign transactions and domestic transactions.

Under the PRC antitrust legislation regime, there is neither specific terminology nor explicit rules for ancillary restraints, at least not in the manner observed in the EU competition law regime.

Having said that, according to the requirements indicated in the Notification Form for Anti-monopoly Review of Concentrations of Undertakings, the undertakings are required to disclose and include in the filing documents any major horizontal or vertical co-operation agreements in the relevant markets or other arrangements between the undertakings. This includes agreements or arrangements related to research and development, licensing, joint production, distribution, long-term supply, and information exchange, among others. Therefore, SAMR may take these relevant agreements or arrangements into account when conducting a competition assessment during the merger control filing review process.

Third parties are allowed to participate in the review process in various forms and to varying extents. For cases under the normal procedure, upon solicitation by SAMR during the review process, third parties, including but not limited to customers, competitors, trade associations, and the sector regulator, are encouraged to provide comments and opinions on the concentration and market and product-related issues (see 7.2 Contacting Third Parties). For cases under the simplified procedure, during the ten-day public notice period following the date of case acceptance, third parties may submit written comments, such as opinions on the definition of the relevant market, market share or whether the case should apply a simplified procedure.

Furthermore, according to Article 43 of the Provisions on Concentration Reviews, any entity or individual that discovers a concentration, which does not meet the notification thresholds but may have the effect of eliminating or restricting competition, can report to SAMR in writing, along with relevant facts and evidence.

SAMR can engage various third parties, including relevant government departments, trade associations, competitors, upstream and downstream undertakings, consumers, experts, and scholars, when deemed necessary in its review process by means of written meeting, questionnaire, entrusted consultation, on-site survey, etc, as mandated by Article 30 of the Provisions on Concentration Review. In practice, such involvement is more common in cases undergoing the normal procedure. Additionally, SAMR may organise hearings during the review process, if deemed necessary.

Moreover, during the negotiation of the proposed remedies, SAMR usually conducts market tests and solicits comments and feedback from third parties to assess the effectiveness, feasibility, and timeliness of the proposed remedies.

SAMR bears a legal obligation of confidentiality for the undertakings’ trade secrets, undisclosed information, confidential business information, and personal information known to them during the review process. The undertakings are required to submit a confidential version of the notification documents containing comprehensive information, as well as a non-confidential version (where the undertakings can redact relevant confidential information) which may be circulated to third parties to solicit comments.

The disclosure of the notification and/or description of the concentration varies.

• During the review period, only in respect of cases under the simplified procedure will SAMR publish a notice form on its website for public comments for a period of ten days, upon its formal acceptance of the case. The notice form includes introductions of the undertakings, a summary of the transaction, the basis for the simplified procedure, the defined relevant markets and a range of market shares of the undertakings.
• Upon unconditional approval (including cases under the simplified procedure and normal procedure), SAMR will publish certain basic information of the notification on a weekly basis, including the case name, the undertakings to the concentration and the date of approval, while the full decisions are not publicly available.
• For decisions on prohibition and conditional clearance, SAMR will publish the full decisions on its official website, with certain confidential information being redacted. These decisions usually include the review timetable, basic information about the undertakings, relevant market and competition analysis, the remedies/prohibition imposed, etc, (see 5.6 Issuance of Decisions).

SAMR places high importance on, and actively engages in, communications and co-operation with other jurisdictions concerning general competition policy. For instance, SAMR has signed memoranda of understanding with many enforcement agencies in other jurisdictions, including the EU, the USA, Singapore, South Korea, Japan, Brazil, etc. Additionally, SAMR and authorities from other jurisdictions engage in mutual visits and meetings from time to time. To date, SAMR and the European Commission have successfully hosted 27 sessions of the China-EU Competition Policy Week. Most recently, on 18 March 2024, SAMR hosted the European Commission’s delegation in Beijing, where they conducted the China-EU competition policy dialogue and discussed fair competition review and other related issues. Previously, in 2019, SAMR led delegations to Serbia, Morocco, Portugal, South Korea, Japan, and the Philippines, engaging in high-level exchanges on competition policy and antitrust enforcement. Through these activities, SAMR and authorities from other jurisdictions exchange information about their significant policies, legislative updates, and enforcement actions, etc.

In terms of co-operation on specific cases, it is relatively common for PRC competition authorities to collaborate with other jurisdictions since the era when the Ministry of Commerce served as the authority responsible for merger control filing review. Particularly in high-profile, complex cross-border merger cases triggering filing obligations in multiple jurisdictions, SAMR may co-operate with involved jurisdictions and exchange information on relevant issues such as relevant market definitions, competition landscape, assessment of competition impact, etc. For example, in recent years, SAMR co-operated with the antitrust authorities in Korea, the US and the European Union on cases such as the Korean Air/Asiana Airlines Case (2022), the Ammo/NVIDIA Case (2022), and the Eaton/Danfoss Case (2022). For specific cases, before conducting case co-operation with authorities from other jurisdictions, SAMR usually seeks permission from the undertakings.

According to Article 65 of the AML, if the undertakings to the concentration are dissatisfied with SAMR’s decision on prohibition or conditional clearance, they may first appeal to SAMR for administrative reconsideration. If the undertakings are still not satisfied with the outcome, they can then initiate an administrative action to challenge SAMR’s decision before the People’s Court.

The PRC antitrust legislation regime does not explicitly prescribe the timeline for such appeal and it shall follow the general rules under the Administrative Reconsideration Law. Accordingly, the parties may appeal to SAMR for administrative reconsideration within 60 days upon receiving the clearance decision. If the parties are still not satisfied with the reconsideration outcome, they may bring an administrative litigation within 15 days of receipt of SAMR’s administrative reconsideration decision.

Based on the knowledge of the authors, there is no public track record of successful appeals in practice.

The PRC antitrust legislation regime lacks clear regulations on this matter, while general principles in relevant administrative laws provide some guidance. According to Article 2 of the Administrative Reconsideration Law and Article 28 of the Regulations for the Implementation of Administrative Reconsideration Law, individuals, legal entities, or other organisations with an interest in specific administrative actions may apply for administrative reconsideration. Additionally, as per Article 25 of the Administrative Procedure Law, parties directly affected by administrative actions, as well as other individuals, legal entities, or organisations with an interest, have the right to file administrative lawsuits. Given such, theoretically, third parties with an interest in SAMR’s decisions can appeal through administrative reconsideration or administrative litigation. Nevertheless, based on the knowledge of the authors, there is no public track record of such successful appeals from third parties in practice.

Foreign Subsidies Legislation

There isn’t a separate filing procedure specifically for foreign subsidies prior to the implementation of the transaction, while the authority to initiate an investigation remains within the Trade Remedy Investigation Bureau under MOFCOM as prescribed in the Anti-subsidy Regulations (amended on 31 March 2004 and effective as of 1 June 2004). These regulations empower the Trade Remedy Investigation Bureau under MOFCOM to investigate instances where foreign subsidies granted by foreign governmental bodies or public institutions cause substantial damage or threat of substantial damage to an established domestic industry or substantial hindrance to the establishment of a domestic industry.

NSR Regime

Another prior approval procedure that may be required in foreign investment is the national security review (NSR) regime. Initially established in 2011 and reiterated in the Foreign Investment Law, this regime was further detailed in the Measures for the Security Review of Foreign Investment (promulgated on 19 December 2020, and effective as of 18 January 2021, (the “NSR Measures”)), which outline the scope, procedures, and criteria for conducting national security reviews on foreign investment projects.

The NSR regime applies to two main scenarios:

• investments made by foreign investors in China’s military, military-industrial supporting and other fields relating to the security of national defence, and investments in areas surrounding military facilities and military industry facilities; and
• foreign investors’ acquisition of control over Chinese domestic businesses engaged in critical sectors such as agriculture, energy and resources, equipment manufacturing, infrastructure, transportation services, cultural products and services, IT-related or internet products and services, financial services, key technologies, and other critical sectors.

For foreign investment under such scenarios, it is notifiable in front of the NSR working mechanism office (the “Office”) led by the National Development and Reform Commission and the MOFCOM. This Office is institutionally situated within the NDRC.

The NSR process unfolds in three phases.

• The preliminary review phase, lasting up to 15 working days, where the Office determines whether the foreign investment triggers a national security review.
• The general review phase, lasting up to 30 working days.
• The special review phase, lasting up to 60 working days and activated if the foreign investment poses or potentially poses a threat to national security. This phase may be extended under exceptional circumstances. Importantly, during the review, the Office can pause the review period while awaiting responses to information requests from the parties.

If the Office identifies national security concerns during its review, undertakings involved may be compelled to either abandon the transaction, unwind it (if already completed), or implement remedial measures to address the identified concerns.

In the recent PRC antitrust regulatory landscape, the most significant legislative change remains the amendment to the AML, which came into effect on 1 August 2022. Following this, from early 2023 to June 2024, substantial changes were made by introducing supporting merger review regulations and relevant guidelines, which underscore SAMR’s efforts to implement a series of regulatory reforms aiming to foster a more dynamic and practical merger control regime.

Provisions on Concentration Review – the “All-Inclusive” Rules Concerning Merger Control Review

Provisions on Concentration Review, serving as the most comprehensive rules for the merger control review regime, build upon most of the previous merger control review rules found in the Interim Provisions on the Review of Concentrations of Undertakings and other relevant regulations, and introduce several notable changes and amendments, including:

• optimisation of the factors used to determine “control” under the merger control filing requirement;
• clarification of notification and investigation procedures for transactions that do not meet notification thresholds but raise competition concerns, a move often interpreted as aimed at addressing killer acquisitions;
• clarification of the standard of “last fiscal year” in turnover calculation for undertakings involved in the concentration;
• refinement of the “stop-the-clock” mechanism;
• reaffirmation of the grading and classification system for merger control review (ie, delegating some cases to provincial administration for market supervision); and
• optimisation of the whistle-blowing mechanism.

Provisions on Notification Thresholds – The First Amendment Raising the Notification Turnover Thresholds

Provisions on Notification Thresholds, the first amendment to the turnover thresholds since the enactment of the AML in 2008, raise the turnover thresholds – concentrations meeting the following thresholds must be notified to the competition authorities prior to implementation. (See 2.5 Jurisdictional Thresholds)

Additionally, the Provisions on Notification Thresholds reiterate the authority of competition authorities to investigate transactions falling below the thresholds if there is evidence indicating actual and potential anti-competitive effects.

The Notice of the State Administration for Market Regulation on the Establishment of the Anti-Monopoly “Three Documents and One Letter” System – a “Soft” Administration Approach

This notice, issued in December 2023, marks the official establishment of the “Three Documents and One Letter” system. Under such system, before officially probing into and accepting a failure-to-notify case, the authorities can issue the Reminder Letter to the target undertaking and such undertaking shall report to the authorities in writing of the implementation situations. If the matters being instructed to rectify under the Reminder Letter are overdue or not sufficiently implemented, the authorities can issue the Notice of Regulatory Talk and the undertaking shall report in writing of the rectification measures. If the undertaking still fails to notify the concentration within required time, the authorities shall accept the case and initiate the investigation officially.

Other Relevant Legal Documents That Have Been or to be Published

In pursuit of a more practical, transparent and dynamic merger filing review framework, the authorities have issued other relevant legal documents, including the Anti-monopoly Compliance Guidelines for Concentration of Undertakings (issued on and effective as of 5 September 2023) and the Guidelines on Antitrust Compliance for Undertakings(issued on and effective as of 25 April 2024). Also, SAMR is currently revising and soliciting comments on the Horizontal Concentration Review Guidelines, the Notification Form and Notice Form for Simplified Cases. Additionally, it is noteworthy that, as confirmed by SAMR, criteria for administrative penalties for illegal concentrations, and the rules for handling cases that do not meet the filing thresholds but may have anti-competitive effects have been included in its upcoming legislative plan.

Failure-to-Notify Cases

SAMR has only published one failure-to-notify case, on 7 June 2024, since the issuance of the revised AML in June 2022. In this case, SAMR imposed a fine of CNY1.5m (approximately USD0.21 million) on each of the two shareholders for establishing a joint venture without notifying a concentration of undertakings.

However, given that the revised AML significantly increases administrative penalties for failure-to-notify cases, the lack of sufficient reference cases makes it unclear whether the penalty level in this case is moderate. Therefore, it remains to be seen what the “median” level of penalties for failure-to-notify cases will be.

Prohibited Cases

As mentioned above, since the implementation of the AML in 2008, only three concentrations have been prohibited by the PRC competition authorities. The latest case that has been prohibited is the Douyu/HUYA Case (2021) relating to the gaming streaming market, with both undertakings being local entities.

Cases Cleared with Remedies

From early 2023 to June 2024, SAMR conditionally cleared five cases, including:

• the Wanhua Chemical/Yantai Juli Case in the chemical industry, conditionally approved on 7 April 2023;
• the MaxLinear/Silicon Motion Case in the semiconductor industry, conditionally approved on 26 July 2023;
• the Simcere/Tobishi Case in the pharmaceutical industry, conditionally approved on 22 September 2023;
• the Broadcom/VMware Case in the semiconductor industry, conditionally approved on 21 November 2023; and
• the JX Nippon/Tatsuta Case in the semiconductor industry, conditionally approved on 11 June 2024.

Among these cases, some commonalities can be observed. Apart from the Wanhua Chemical/Yantai Juli Case, SAMR has stopped the clock in the other three cases, signifying SAMR’s active application of the “stop-the-clock” mechanism since its establishment under the revised AML. As regards the remedies, only the Simcere/Tobishi Case was cleared with both structural and behavioural conditions, while the other three cases had only been imposed with behavioural remedies.

Furthermore, it is worth noting that the Simcere/Tobishi Case marks the first instance where the concentration below the notification thresholds was notified voluntarily and was cleared with restrictive conditions.

What’s more, the MaxLinear/Silicon Motion Case underscores SAMR’s focus on ensuring stable market supply within its merger control review framework. Despite the absence of the identification of horizontal, vertical, or neighbouring relationships between the undertakings to the concentrations, SAMR expressed concerns regarding the target’s substantial market share in the NAND flash controller chip sector and the significant reliance of downstream customers on the target’s products. To address these concerns, SAMR imposed several remedies aiming at safeguarding the consistent supply of NAND flash controller chips to Chinese consumers. Interestingly, shortly after SAMR’s decision, MaxLinear announced the termination of the concentration.

Under the purview of PRC merger control review, significant developments have unfolded across various sectors, reflecting the evolving landscape of competition concerns. This includes heightened scrutiny in merger reviews, particularly in semiconductor-related cases, a notable shift in regulatory approaches within the internet industry, and an emphasis on safeguarding livelihoods and bolstering the real economy.

Enhanced Quality and Efficiency in Merger Review

SAMR continues to enhance its efficiency of merger review work, as evidenced by the shortened review period in practice and sustained emphasis on the effectiveness of merger control reviews. In 2023, SAMR concluded a total of 797 merger cases, a slight decrease of approximately 2.02% compared to 2022, with the vast majority receiving clearance. Notably, the average time taken to conclude a case was 25.7 days.

With the raised notification thresholds, it is expected by SAMR that the average number of small and medium-sized merger filings will decrease by over 200 cases annually, constituting more than 30% of all filings. Consequently, it is foreseeable that the efficiency of routine merger review cases will further improve in the future, which enables competition authorities to concentrate their efforts on scrutinising high-profile and complex cases. What is more, under the “classified and graded review” system, SAMR has actively delegated merger control review cases to provincial AMRs, which handled 352 simplified cases in 2023. This decentralisation also signifies a move towards a more targeted and effective regulatory approach.

Changing Stance on the Internet Industry

SAMR’s regulatory approach towards the internet industry has undergone a notable transformation. Unlike previous years characterised by stringent and aggressive regulatory stances, SAMR now emphasises a balanced approach that promotes both development and regulatory compliance. This shift entails a transition from reactive investigation and penalties to proactive and comprehensive regulation throughout the “entire lifecycle” of internet platforms for merger control activities. The “entire lifecycle” regulatory approach encompasses:

• pre-compliance measures, such as the issuance of the Guidelines on the Anti-Monopoly Compliance for Undertakings and the establishment of regular communication mechanisms with platform enterprises;
• mid-process scrutiny measures, such as the issuance of the Provisions on Concentrations Review, streamlining procedures for simplified cases; and
• post-process scrutiny measures, such as developing criteria for administrative penalties for illegal concentrations and rules for handling cases that fall below filing thresholds but may have anti-competitive effects.

Continued Scrutiny on Semiconductors

Semiconductor-related merger control cases remain a focal point of SAMR’s scrutiny, influenced by geopolitical tensions. From early 2023 to June 2024, out of the five cases with conditional clearance, three were related to the semiconductor industry. SAMR’s conditional clearance of merger cases such as MaxLinear/Silicon Motion underscores the importance of maintaining a stable semiconductor supply to the Chinese market. Additionally, high-profile cases like Intel’s abandoned acquisition of Tower Semiconductor (2023) highlight the challenges posed by prolonged review processes and regulatory conditions, reflecting broader implications of the geopolitical tensions on merger activities.

Prioritising Livelihoods and Real Economy

SAMR’s attention to real economy sectors and livelihood-related industries underscores its commitment to fostering economic stability and social welfare. Notably, SAMR focuses on cases related to industrial reorganisation in sectors vital to the real economy, such as manufacturing industries encompassing chemical materials, automobiles, computers, electronics, and pharmaceuticals. This emphasis is evident in the significant number of concluded cases in the real economy manufacturing sector in 2023, reaching a peak of 291 cases, which accounted for 37% of all cases. Among these, chemical materials and products were the most frequently addressed, followed by automobile manufacturing, computer and electronic equipment manufacturing, and pharmaceutical manufacturing.

Furthermore, SAMR and provincial AMRs have progressed with multiple rounds of specialised anti-monopoly enforcement actions in livelihood-related areas during 2023. SAMR also conveyed a commitment to strengthening regulatory oversight of anti-monopoly issues in livelihood-related sectors through several significant public speeches and meetings.