Merger Control 2019 - China

25/03/2019 Merger Control 2019 | China
MERGER CONTROL | LAWS AND REGULATIONS | CHINA | ICLG › Annotations
Merger Control | China

DECEMBER ,
In early , the Price Supervision and Antimonopoly Bureau of the

National Development and Reform Commission (“NDRC”), the Anti-
Monopoly Bureau of the Ministry of Commerce (“MOFCOM”), and the
Antimonopoly and Anti-unfair Competition Bureau of the State
Administration of Industry and Commerce (“SAIC”) were integrated into
the Anti-Monopoly Bureau (“AMB”) within the State Administration for
Market Regulation (“SAMR”). e newly established AMB of SAMR is in
charge of regulating and enforcing the merger control regime in China.
Currently, the AMB has  divisions. Seven divisions are tasked with
antitrust enforcement; three of the seven oversee merger review: review
division I; review division II; and review division III. e three other
divisions investigate antitrust violations including monopoly agreements,
abuse of dominance and administration monopoly. A separate Supervision
and Enforcement Division looks at gun-jumping violations.
Besides the seven antitrust enforcement divisions, there are three

administrative divisions at the AMB: the General Office; the Competition
Policy and International Cooperation Division; and the Antimonopoly
Committee Coordination Division.
e three review divisions have about  officials; five to six officials in each
division. e final decisions are made at the SAMR level. In the normal
procedures, SAMR usually solicits opinions from relevant government
https://outline.com/4qCMeF 1/27
agencies for certain industries concerned in the notification and the

government agencies’ opinions will be considered by SAMR.
China begins setting up provincial-level Administration for Market

Regulation (“AMR”). Monopoly agreements, abuse of dominance and
administration monopoly investigations may be carried out at the local level.
However, the merger review will only be conducted at the state level in
SAMR.
China’s merger control regime is governed by the Anti-Monopoly Law

(“AML”). Chapter  of the AML concerns “concentrations of undertakings”.
SAMR is now in charge of regulating and enforcing the merger control
regime in China.
Since the AML was enacted in August , a number of regulations and
guidelines relating to the merger control regime have been promulgated. On
 September, , SAMR issued six guidelines:
Guiding Opinions on the Notification of the Concentration of

Undertakings (关于经营者集中申报的指导意见).
Guiding Opinions on Documents and Materials Required for the
Notification of Concentration of Undertakings (关于经营者集中申报
文件资料的指导意见).
Working Guidance for Anti-Monopoly Review on Concentration of
Undertakings (经营者集中反垄断审查办事指南).
Explanation on the Implementation of the Notification Form for Anti-
Monopoly Review of Concentration of Undertakings (关于施行《经营
者集中反垄断审查申报表》的说明).
Guiding Opinions on the Notification of Concentration of Undertakings
Subject to Simplified Procedure (关于经营者集中简易案件申报的指
导意见).
Guiding Opinions on Regulating the Titles of Cases on the Notification
of Concentrations of Undertakings (关于规范经营者集中案件申报名
称的指导意见).
ese new guidelines replaced the guidelines issued by MOFCOM and

provide SAMR sufficient ground to conduct merger review under its own
regulations.
Yes. ere are separate review procedures required for foreign mergers in
certain sectors, namely the foreign investment review (“FIR”) and the
national security review (“NSR”).
FIR
Since , China has been in the process of revising and simplifying its
review procedures for foreign investment in China. e review procedure
has been changed from a strictly case-by-case approval approach to a general
record-filing system, except for those foreign investments falling into the
China nationwide “negative list”.
On  July, , an updated version of China’s Catalogue of Industries for

Guiding Foreign Investment (“ Catalogue”) went into effect. e 
Catalogue, for the first time, explicitly refers to the restricted ( line items)
and prohibited ( line items) industries, plus the special encouraged
industries with restrictions on management and/or shareholding ratios,
collectively, as a negative list. For industries in the negative list, an approval
is still needed for the foreign investment in China. For industries outside the
negative list, only a filing for recording purposes is needed. e record-filing
is a notifying record to China’s commerce departments and it is not a pre-

condition for other procedures needed by the foreign-invested entities.
On  June, , MOFCOM further released the Interim Administrative

Measures on Filing of Incorporation and Change of Foreign-invested
Enterprises ( revised version, “Interim Measures”). For foreign mergers
in China, the Interim Measures explicitly specify that merger and
acquisition of non-foreign investment enterprises in China by foreign
investors and strategic investments of listed companies which do not involve
special administrative measures (i.e. foreign investments under the negative
list) shall be subject to the record-filing administration.
For such record filings, no filing fee is needed. ere is no specific timeframe
for obtaining the FIR clearance. Mergers falling within the scope of
industries in the negative list that fail to file the FIR cannot be cleared in
China.
NSR
Foreign investors acquiring Chinese domestic companies could file for a

voluntary NSR before closing if:
the domestic target business is involved in a business that concerns

national defence security; or
the domestic target business is involved in a business that concerns
national economic security, and the foreign acquiring business intends to
acquire de facto control of the target domestic business.
No filing fee is needed for a NSR either. ere is no sanction for failing to
file the NSR. However, the un-notified merger may face uncertainty, since
the authority could initiate a NSR at its discretion or according to third
parties’ complaints. e authority in charge may prohibit the merger if it

determines that the merger would severely harm national security.
ere are two phases of review in relation to the NSR procedure: a “General
Review” phase; and a “Special Review” phase (if required):
General Review. is phase takes a maximum of  working days from

the date on which the Joint Committee receives MOFCOM’s application
(the parties involved in the transaction are required to first submit an
application to MOFCOM). During this period, the Joint Committee will
determine if the proposed deal is clear of national security concerns or
whether more time is required to evaluate the proposed deal. During this
phase, the Joint Committee will also solicit opinions from other relevant
government departments. e determination as to whether the proposed
deal is clear of national security concerns or whether more time is
required to evaluate the proposed deal will be determined by the number
of government departments invited to join this process – all
determinations will be adopted on a unanimous basis.
Special Review. is phase takes a maximum of  working days. During
this period, the Joint Committee will evaluate the deal in more details.
e Joint Committee will decide during this phase whether the proposed
deal is free of national security concerns or whether there are national
security concerns, which will then lead to the proposed deal being
prohibited.
Yes. In China, many sectors require government approvals from different

authorities, such as publishing, automobiles manufacturing, railways, banks,
insurance and airfreight.
. Which types of transaction are caught – in particular, what constitutes a

“merger” and how is the concept of “control” defined?
In China, transactions which amount to a “concentration” will be caught if

the notification thresholds are met.
A concentration is defined as: (a) a merger of undertakings; (b) an

acquisition of a controlling stake in other undertakings by an undertaking
through acquisition of equity or assets; and (c) an acquisition of the
controlling stake in other undertakings by way of concluding contracts or
exercising decisive influences.
According to the Guiding Opinions of the Notification of Concentration of

Undertakings released by SAMR, the concept of “control” in a
concentration includes “sole control” and “joint controls”. e following
factors will be taken into consideration by SAMR when determining
whether an undertaking acquires control over another:
the equity structure of the other undertakings before and after the
transactions;
the voting matters and voting mechanism of the general shareholders
meeting of the other undertakings, the historical attendance, and the
voting record;
the composition of the board of directors or the board of supervisors of
the other undertakings and the voting mechanism;
the appointment and dismissal of senior executives of the other
undertakings;
the relationship among the shareholders and the board directors of the
other undertakings, whether there are situations such as the presence of
any person acting in concert; and
the existence of major business relationships and cooperation agreements

between the undertakings and the other operators.
Yes. ere are no provisions under the AML or in its related rules that
address the acquisition of minority ownership interests. However,
acquisition of minority interests may also give rise to a notifiable
transaction, depending on whether such acquisition may confer “control” of
the target company on the acquirer. As described in the response to question
., if based on the acquiring party’s right to appoint directors or senior
management, the veto rights against major business decisions, or the control
over key resources, the acquisition of a minority shareholding can also
amount to obtaining a control over the target, and SAMR can then decide
that a notifiable merger exists.
According to the Guiding Opinions of the Notification of Concentration of

Undertakings released by SAMR, the establishment of a joint venture is
subject to merger control review if more than two operators are determined
as having joint control over the joint venture, and meanwhile the
notification thresholds are met. Other factors will not be considered in
determining whether the joint venture is notifiable or not, such as whether
the joint venture is a newly established company, or whether the joint
venture has a market presence, etc.
Pure contractual arrangements without the creation of a new legal entity

may not be notifiable.
China adopts only the following turnover thresholds:
during the previous fiscal year, the total global turnover of all the
undertakings participating in the transaction exceeds RMB  billion,
and at least two of these undertakings each had a turnover of more than
RMB  million within China; or
during the previous fiscal year, the total turnover within China of all the
undertakings participating in the concentration exceeded RMB  billion,
and at least two of these undertakings each had a turnover of more than
RMB  million within China.
Yes, it does. For example, in the absence of a substantive overlap or a vertical

relationship, SAMR will examine the target company’s business in China.
. In what circumstances is it likely that transactions between parties

outside your jurisdiction (“foreign-to-foreign” transactions) would be caught
by your merger control legislation?
ere are no express provisions within the AML or in its accompanying

regulations which provide for special rules in respect of “foreign-to-foreign”
transactions. e only reason to trigger a China merger notification is the
turnover thresholds (please see the answer to question .) and the
concentration test (please see the answer to question .).
. Please describe any mechanisms whereby the operation of the

jurisdictional thresholds may be overridden by other provisions.
According to Article  of the Provisions of the State Council on Notification

resholds of Concentrations of Undertakings ( August, )
(“resholds Provisions”), if a merger does not trigger the turnover
thresholds, but it is reflected by facts and evidence that the merger may
eliminate or restrict competition, SAMR could initiate an investigation
according to law (at its own discretion).
. Where a merger takes place in stages, what principles are applied in
order to identify whether the various stages constitute a single transaction or
a series of transactions?
Article () of the Rules on Notification of Concentration of Undertakings

provides that any concentration implemented between identical
undertakings within two years that does not yet reach the notification
thresholds provided under Article  of the resholds Provisions shall be
regarded as one single transaction and the filing timing shall be the time
when the notification threshold is triggered. e purpose for such regulation
is to prevent the operators from circumventing the notification obligation by
splitting one merger into several sections.
Besides, Article () also stipulates that where an undertaking conducts the
above-mentioned behaviour with other equivalent undertakings over which
it has control, they are subject to the said provision.
e expression “equivalent undertakings” does not only mean the

undertakings themselves. e subsidiary(s), indirect subsidiary(s),
shareholder(s) and other affiliates of the undertakings concerned will also be
deemed to be the “equivalent undertakings”.
“Within two years” refers to the period between the day on which the first
concentration deal is completed and the day on which the agreement of the
last deal is executed.
e operators’ turnover shall be the aggregated turnover of the several deals

concerned.
. Where the jurisdictional thresholds are met, is notification compulsory

and is there a deadline for notification?
e merger control notification in China is compulsory, and such

notification shall be made before the execution of the proposed transaction.
Otherwise, the parties involved in the proposed transaction are subject to
“failure to file” sanctions under China’s AML.
. Please describe any exceptions where, even though the jurisdictional
thresholds are met, clearance is not required.
According to Article  of the AML, in the following cases, notification is

not required:
one of the parties to a concentration holds assets or shares that grant at

least  voting rights in each of the other undertakings; or
for in each of the parties to a concentration, assets or shares that grant
 voting rights in said undertakings are held by the same undertaking
which is not party to the concentration.
. Where a merger technically requires notification and clearance, what are
the risks of not filing? Are there any formal sanctions?
Pursuant to Article  of the AML, if the undertakings fail to seek clearance

in relation to a notifiable concentration, they could face the following
sanctions:
an order to cease implementing the concentration;

an order to dispose of stocks or assets within a stipulated period, transfer
the business within a stipulated period and/or adopt other necessary
measures to restore the status before the concentration occurs; and
an order to pay a fine of no more than RMB ,.
Specifically, MOFCOM published the Provisional Measures for

Investigating and Handling Failure to Legally Notify the Concentration of
Undertakings. e provisional measure was effective on  February, ,
which stipulates the rules mainly on the procedures for the investigation and
handling of this circumstance.
Since , MOFCOM and SAMR has published  cases of failure to

notify the concentration of undertakings. Among these cases, the fines range
from RMB , to RMB ,. e enterprises that have been fined
include Chinese companies and foreign companies; for Chinese companies,
there are both private enterprises and state owned enterprises. So far,
MOFCOM or SAMR has not requested unwinding any concentration.
No. ere are no express provisions within the AML or in its accompanying
regulations which provide for exceptions that allow parties to close or
implement a concentration prior to approval.
e notification can only be filed after the execution of the transaction

agreement and before the closing of the transaction. For the acquisition of a
listed company in the form of public offer, the announced report on the
acquisition by offer can be regarded as a signed transaction agreement.
Under very exceptional circumstances, SAMR would also accept the filing
without the executed definitive agreement. In order to ask SAMR to waive
the requirement of the executed definitive agreement, sufficient evidence
needs to be submitted to prove that the executed transaction agreements
cannot be submitted due to mandatory legal requirements of China or other
jurisdictions or any other legitimate reasons. In such a situation, the
notification could be filed with the relevant memorandums, framework
agreements, draft agreements or tender offers, accompanied by the main
terms and conditions of the transaction at the submission, instead of the

executed definitive agreement.
. What is the timeframe for scrutiny of the merger by the merger
authority? What are the main stages in the regulatory process? Can the
timeframe be suspended by the authority?
e following are the phases of review in relation to an antitrust merger

control filing:
Phase  of review takes a maximum of  calendar days (from the date on

which SAMR informs applicant(s) in writing that the filing is formally
accepted).
Phase  of review takes a maximum of  calendar days. SAMR will inform

applicant(s) in writing if the review period is extended from Phase  to
Phase .
SAMR has discretion to move the filing into a further extended phase of
review for a maximum of  calendar days, provided that:
the applicant(s) agrees to extend the time limit for the review;
the documents submitted by the applicant(s) are inaccurate and require
further verification; or
the circumstances surrounding the transaction have changed significantly
after notification by the applicant(s).
If SAMR fails to make a determination at the expiry of each set period of

time as stated above, parties may execute the transaction.
. Is there any prohibition on completing the transaction before clearance

is received or any compulsory waiting period has ended? What are the risks
in completing before clearance is received?
Transactions shall not be implemented before obtaining the merger control

clearance. Premature implementation may cause the sanctions as provided in
Article  of the AML (see the answer to question .).
An applicant who wishes to seek antitrust clearance in respect of their

transactions are required to fill in a Notification Form for Merger Review of
Concentration of Undertakings (issued by SAMR). e scope of the
Notification Form includes the following headings:
general information relating to each party to the notified concentration

(including business scope, information to do with subsidiaries or affiliates,
etc.);
summary of the proposed concentration (including deal amount and
steps taken thus far);
business rationale or motivations for undertaking the notified
concentration;
market definition (product and geographic market);
industry overview (in relation to the relevant market);
other information in relation to competitors in the relevant market.
All the required information should be included unless the parties can
persuade SAMR that such information is not applicable to a specific case.
For example, if the parties are basic material manufacturers, they may not
have suppliers.
. Is there a short form or accelerated procedure for any types of mergers?
Are there any informal ways in which the clearance timetable can be speeded
up?
MOFCOM launched the simplified merger control procedure in . e

notification form for the simplified merger control regime is shorter than
the normal filing form, and requires less information. e simplified merger
control procedure is applicable to the following situations:
Horizontal mergers where the collective market share of all undertakings

is less than .
Vertical mergers where the market share of each of the operators
concerned in the concentration in each of the relevant upstream and
downstream markets is less than .
Mergers that are neither horizontal nor vertical, and where the market
share of each of the operators concerned in the concentration in each of
the markets is less than .
Off-shore joint ventures which do not engage in any business operations
in China.
Acquisitions of off-shore targets which do not engage in any business
operations in China.
Reduction of the number of existing controlling shareholders where the
joint venture jointly controlled by two or more operators is controlled by
one or more existing operators through the concentration.
Despite meeting the above criteria, a notification may still be ineligible for a
simplified procedure due to reasons such as the relevant market being
difficult to define, or if the concentration may adversely affect market entry,
technology development, consumers or national economic development.
On the other hand, most mergers are time-sensitive, and as a result, most
merging entities generally wish for the merger review period and procedures
to proceed as swiftly as possible. To assist SAMR in clearing merger filings
smoothly and efficiently, we recommend the following approaches:
To speed up the clearance timetable, the parties need to have more

communication with SAMR, and cooperate with SAMR to provide
information as required: first, articulate why the merger is time-sensitive
(e.g. one entity is a failing firm); second, ensure that the merger filing report
is complete (according to SAMR requirements) and accurate; and third, if
SAMR asks any supplementary questions or asks for clarifications, respond
to these questions in a timely manner.
e party acquiring control shall be responsible for making the notification.
Specifically, for a concentration of undertakings implemented in the form of

merger, all the parties participating in the merger shall make notification; for
a concentration of undertakings in other forms, the undertaking that has
obtained control shall make notification, and other undertakings shall
cooperate. Moreover, if there are two or more undertakings who are obliged
to notify, they could agree on that one of them is responsible for making the
notification, or they can jointly make the notification. However, if the
undertaking that is agreed to make the notification fails to do so, the
aforementioned agreement shall not exempt other undertakings’ legal
liability for failing to notify the concentration in accordance with the law.
In addition, if the notification obligator fails to make notification of a

concentration, the other undertakings participating in the concentration
may propose to make the notification.
ere is no filing fee under China’s merger control rules.
. What impact, if any, do rules governing a public offer for a listed
business have on the merger control clearance process in such cases?
ere is no specific rule governing public offers for listed businesses that
would affect the merger control clearance process.
In practice, during SAMR’s review process, the acquiring party may face
some practical problems in a hostile transaction. First, most of the parties do
not sign any formal transaction agreements in the case of public tenders,
which are normally required by SAMR to be part of the filing materials.
However, SAMR may accept the public tender offer in lieu of a signed
transaction agreement pursuant to Article  of the Guiding Opinions of
the Notification of Concentration of Undertakings released by SAMR.
Secondly, in a hostile transaction, the acquired target may not be
cooperative in providing the information required in the filing, meaning
that some non-public information, including the market data of the
acquired target, may be difficult to obtain without the cooperation of the
target. Even though Article  of the Guiding Opinions has provided that
the acquired target shall have the obligation to assist with the acquirer’s
filing, there are no specific rules about the legal liabilities for breaching such
obligation to assist. As a possible solution, based on our experience, the
acquiring party may apply for pre-notification consultation with SAMR
under such circumstances, and SAMR would take a case-by-case approach
to reviewing the notification.
For cases prohibited or cleared with conditions, SAMR will publish its
decision, which includes the review timetable, the analysis SAMR made, and
the supplementary conditions, if any. For non-conditional cleared cases,
SAMR will publish a list which includes the names of these deals and date
of approval on a quarterly basis. For cases subject to simplified procedure,
SAMR will release a Public Notice Form which includes an introduction of
the deal and reasons for applying simplified procedure on its website during
the review period.
Article  of the AML sets out the factors to be considered by SAMR in

assessing the competitive effects of a merger:
market shares and market control power of the merging parties in the
relevant market;
concentration levels of the relevant market;
impact of the concentration on market entry and technological
development;
impact of the concentration on consumers and other relevant operators;
impact of the concentration on national economic development; and
other factors that should be considered.
On  August, , MOFCOM released the Provisional Rules on

Assessment of Competitive Effects of Concentration of Undertakings
(“Competition Assessment Rules”).
e Competition Assessment Rules set out the basic methodology for the
authority’s competitive analysis and the basic elements for application of
each factor in a merger review process. Market share/market control power
and market concentration levels appear to be considered as the most
important factors.
According to the Competition Assessment Rules, efficiency is one of the

factors to be considered by the authority in its competition assessment.
ere is no specific requirement as to the proof of the claimed future

efficiencies. Since the full decision regarding approved cases without
conditions is not published by SAMR, it cannot be confirmed whether a
case with competition concerns has been unconditionally approved based on
efficiencies. Nevertheless, we are not aware of any apparently anti-
competitive mergers has been cleared for the reason that the post-merger
consumer benefits arising from efficiencies are believed in practice to
outweigh the consumer detriments.
Yes. In the Competition Assessment Rules (Article ), non-competition

factors, such as public interest, economic efficiency, risk of bankruptcy of
undertaking and the offsetting buying power will be taken into
consideration in assessing the merger.
ird parties do not possess a statutory right to access merger control files,
but they do possess a right to challenge mergers in the process of review.
In its review process, SAMR may seek opinions from third parties (including
government agencies, industry associations and other entities) in respect of
the proposed acquisition, and third parties may voice their opinions through
these consultations. e opinion solicitation process is usually conducted
through fax or telephone communication. Particularly, for the simplified
merger control procedure, when a simple case has been formally accepted,
SAMR shall publish an announcement of the case on its website for a period
of  days. During the announcement period, any entity or individual
(third party) can submit written comments to SAMR regarding whether or
not the case shall be determined as a simple case. If the third party is of the
opinions that the disclosed case shall not be determined as a simple case,
objections can be raised to SAMR in the announcement period with
relevant evidence and contact information supported. Where SAMR finds a
case should not be qualified for simplified procedures, it shall require the
notifying party to withdraw the case and refile under normal procedures.
. What information gathering powers (and sanctions) does the merger
authority enjoy in relation to the scrutiny of a merger?
If the documents and materials submitted by the applicant(s) are

inadequate, incomplete or inaccurate, according to the Guiding Opinions
on the Notification of the Concentration of Undertakings, the applicant(s)
shall make supplements, revision, clarity and explanation within the time
limit specified by the SAMR. Only when SAMR believes that the
documents and materials for declaration, including the supplementary
documents and materials, comply with Article  of the AML, it will accept
the filing. SAMR has broader information gathering power to collect filing
related information.
Article  of the AML states that persons who provide false or misleading
information or any other act to refuse or obstruct an investigation may be
ordered by SAMR to: make a correction; pay a fine of no more than RMB
, (in the case of individuals) and no more than RMB , (in the
case of undertakings); or (in cases where the case is “serious”) a fine ranging
from RMB , to RMB , may be imposed on individuals and a
fine ranging from RMB , to RMB  million may be imposed on
undertakings. Where the case constitutes a criminal offence, criminal
liability may also be pursued in accordance with the relevant laws.
Article  of the Guiding Opinions on the Notification of the

Concentration of Undertakings provide that SAMR assumes responsibility
for the confidentiality of certain confidential information submitted in the
notification. No confidential information will be disclosed to third parties

without the notifying parties’ prior approval.
SAMR will generally issue a written notice of clearance. Unless the merger is
prohibited or cleared with supplementary conditions (remedies), the
decision will not be published or publicly announced.
Pursuant to Article  of the Rules on Review of Concentration of

Undertakings, a range of remedies may be accepted by SAMR, including
structural, behavioural and a mixture of both structural and behavioural
remedies. So far, MOFCOM and SAMR has imposed conditions in 
cases, of which  cases () are behavioural remedies, eight cases ()
are structural remedies and eight cases () are remedies composed of both
behavioural and structural requirements.
e remedies will be included in the review decision to be published by

SAMR on its website. e parties will also sign a formal undertaking to
perform the remedies.
SAMR has imposed both behavioural and structural remedies in foreign-to-

foreign mergers. ere is no difference in the approach adopted by SAMR
when remedies are being negotiated for foreign-to-foreign mergers
compared to other mergers.
. At what stage in the process can the negotiation of remedies be

commenced? Please describe any relevant procedural steps and deadlines.
e negotiation of remedies can be commenced at any stage of the review

process. ere are no express provisions within the AML or in its
accompanying regulations which provide for the procedural steps or
deadlines.
. If a divestment remedy is required, does the merger authority have a

standard approach to the terms and conditions to be applied to the
divestment?
Yes. MOFCOM issued the Rules for Restrictive Conditions on

Concentration of Undertakings for Trial Implementation (the “Divestiture
Rules”) on  December,  to set out the rules and procedures to do with
divestiture.
According to the Divestiture Rules, undertakings who are required to divest

assets pursuant to the merger control regime (known as “divestiture
obligors”) would have to divest their assets within a time limit stipulated in a
merger control decision by the authority (if there is no such time limit
provided in a merger decision, the divestiture obligors shall find the
appropriate buyer and implement such divesture within six months since the
issuance of the decision. Under certain exceptional circumstances, the
authority may grant an extra three months maximum to implement the
divesture). Divestiture obligors may appoint a “supervision trustee” and a
“divestiture trustee” to assist in the divestiture process. e former will
supervise the divestiture process and the latter would assist with locating a
purchaser, as well as assist with the actual sale process.
It is worth noting that since the decision on NXP’s acquisition of Freescale

in the end of , the authority has been consecutively applied “the
upfront buyer” requirement in its decisions with restrictive conditions.
Furthermore, a tight time limit for the completion of the divesture is usually
imposed in this situation. e rule for “the upfront buyer” is stipulated in
Article  of the Divestiture Rules, requiring that the determination of the
buyer of the business to be divested is the prerequisite of obtaining the
authority’s approval and the closing of the transaction. Up to now, current
laws and regulations only specify the rule of “the upfront buyer”; however,
there are limited regulations and cases related to the execution of this rule in
practice. Nevertheless, considering the situations of recent cases, it can be
reasonably predicted that the authority will apply “the upfront buyer”
requirement in its future decisions with restrictive conditions. Furthermore,
a tight time limit for the completion of the divesture is usually imposed in
this situation.
Whether the parties can complete the merger before the remedies have been
complied with is not provided in the AML or in its accompanying
regulations. is may be addressed in the review decision of the merger.
SAMR will supervise the enforcement of the remedies and request the
parties to report to SAMR from time to time.
No, there is no clearance decision cover ancillary restrictions.
Pursuant to Article  of the AML, entities that are not satisfied with a
decision of AMB in respect of merger control may seek a review of the
decision (i.e., administrative reconsideration) to SAMR. Entities who are
dissatisfied with the decision of SAMR may bring administrative
proceedings before the courts (i.e., judicial review).
To appeal the decision, undertakings need to apply for administrative review

with SAMR within  days after knowing the AMB’s decision. If the
operator is still not convinced by the result of the administrative review, the
operator could file for administrative litigation within  days after receiving
the administrative review decision.
e AML, including in its accompanying regulations, does not provide a

time limit for enforcement of merger control legislation.
e antitrust enforcement agency has enhanced its cooperation with

antitrust authorities in other jurisdictions. Since , MOFCOM has
signed memorandums of understanding (MoUs) on antitrust cooperation
with around  countries, including Australia, Canada, the European
Union, Japan, Kenya, Russia, South Africa, South Korea, the United
Kingdom and the United States. In May , all of China’s antitrust
enforcement agencies signed MoUs with competition authorities in the
BRICs.
Take the MoU with the United States as an example: on  July, ,
SAMR signed an antitrust MoU with its United States counterparts (i.e., the
US Federal Trade Commission and Department of Justice). e MoU lists
several specific areas for cooperation, including exchanging experiences on
competition law enforcement, when appropriate; and seeking information
or advice from one another regarding matters of competition law
enforcement and policy.
We understand that MOFCOM regularly consults with the competition

authorities from more experienced jurisdictions such as the United States
and the European Union. According to MOFCOM, it had cooperated with
the United States and the European Union competition enforcement
agencies in more than  multi-jurisdictional transactions in the year of
. e competition authorities from these jurisdictions also conduct
capacity building or technical assistance programmes for MOFCOM
officials.
. Monsanto/Bayer – March, 
MOFCOM has conditionally approved the proposed merger of Bayer and

Monsanto on  March, , because the deal may eliminate or restrict
competition in the Chinese markets for non-selective herbicides and certain

vegetable seeds, as well as the global markets for corn, soybean, cotton,
rapeseed trait and digital agriculture.
e conditions are that the concerned parties shall:
Divest Bayer’s global vegetable seed, non-selective herbicide, and the

above-mentioned trait businesses, including relevant facilities, staff,
intellectual property rights, and other tangible and intangible assets.
Allow all Chinese agricultural application developers, based on fair,
reasonable, and non-discriminatory terms, to connect their software with
concerned parties’ digital agricultural platform, as well as allow all local
users to register and employ concerned parties’ digital agricultural
products and applications within five years after the products enter the
Chinese market.
. Luxottica/Essilor – July, 
SAMR has conditionally cleared the merger of Essilor International and

Luxottica Group on  July, because the deal may have the impact of
eliminating or restricting competition in the Chinese wholesale markets for
mid-high-end optical lenses, low-end optical lenses, mid-high-end optical
frames, low-end optical frames, and mid-high-end sunglasses, and the
Chinese glasses retail market.
e conditions are that the concerned parties:
Shall not conduct tie-in sales of glasses products without justifiable

reasons, including but not limited to refusing to solely supply lenses,
frames, sunglasses, or whole spectacles (and offer necessary trademark
licensing) to Chinese glasses stores, as well as applying unreasonable
conditions to transactions, excluding lens and frames supplied only in

whole spectacles.
Shall offer the STARS programme to Chinese glasses stores, which may
independently choose to purchase frames and sunglasses through each
party’s wholesale system.
Shall not impose exclusive conditions on Chinese glasses stores (excluding
stores of a single brand and franchise stores) or restrict them from selling
lenses, frames, and sunglasses of rivals by improper means.
Offer glasses and essential trademark licensing in accordance with the fair,
reasonable, and non-discriminatory (FRAND) terms, and not
discriminate against trade counterparts.
Shall not sell glasses at prices lower than costs without justifiable reasons.
Shall notify the regulator of mergers with Chinese targets within 
working days of signing the agreement.
. Linde/Praxair – September, 
SAMR granted conditional approval to the proposed merger of Linde and

Praxair on  September, , because the proposed deal was likely to
eliminate or restrict competition in the global markets for helium, inert rare
gas mixture, fluorine-containing rare gas mixture, and hydrogen chloride
rare gas mixture; and the markets for liquid oxygen and liquid nitrogen in
Guangdong, China.
SAMR has imposed the following conditions on the parties:
Divestment of helium assets with a total annual production volume of 

million standard cubic metres.
e transfer of helium-related customer contracts involving assets with an
annual production volume of  million standard cubic metres with
customers’ consent.
Assisting buyers in transporting the helium purchased under contract to
China for processing and sale.
Finding buyers for the assets to be divested within six months from the
issue of the regulatory notice and completing the transfer of ownership
with SAMR’s approval.
Supplying the Chinese market with inert rare gas, fluorine-containing rare
gas, and hydrogen chloride rare gas mixtures at reasonable prices and
volumes in a timely and stable manner.
e AML’s amendment has been placed on the legislative agenda of the

Standing Committee of the irteenth People’s Congress. e possible
amendment may include introducing the Fair Competition Review System,
increased penalties for M&A gun-jumping, and revising the definition of
monopoly agreements.
ese answers are up to date as of  November, .
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25/03/2019 Merger Control 2019 | China

MERGER CONTROL | LAWS AND REGULATIONS | CHINA | ICLG › Annotations

Merger Control | China

In early , the Price Supervision and Antimonopoly Bureau of the

Besides the seven antitrust enforcement divisions, there are three

agencies for certain industries concerned in the notiﬁcation and the

China begins setting up provincial-level Administration for Market

China’s merger control regime is governed by the Anti-Monopoly Law

Guiding Opinions on the Notiﬁcation of the Concentration of

ese new guidelines replaced the guidelines issued by MOFCOM and

On  July, , an updated version of China’s Catalogue of Industries for

is a notifying record to China’s commerce departments and it is not a pre-

On  June, , MOFCOM further released the Interim Administrative

Foreign investors acquiring Chinese domestic companies could ﬁle for a

the domestic target business is involved in a business that concerns

parties’ complaints. e authority in charge may prohibit the merger if it

General Review. is phase takes a maximum of  working days from

Yes. In China, many sectors require government approvals from diﬀerent

. Which types of transaction are caught – in particular, what constitutes a

In China, transactions which amount to a “concentration” will be caught if

A concentration is deﬁned as: (a) a merger of undertakings; (b) an

According to the Guiding Opinions of the Notiﬁcation of Concentration of

the existence of major business relationships and cooperation agreements

According to the Guiding Opinions of the Notiﬁcation of Concentration of

Pure contractual arrangements without the creation of a new legal entity

China adopts only the following turnover thresholds:

Yes, it does. For example, in the absence of a substantive overlap or a vertical

. In what circumstances is it likely that transactions between parties

ere are no express provisions within the AML or in its accompanying

. Please describe any mechanisms whereby the operation of the

According to Article  of the Provisions of the State Council on Notiﬁcation

Article () of the Rules on Notiﬁcation of Concentration of Undertakings

e expression “equivalent undertakings” does not only mean the

e operators’ turnover shall be the aggregated turnover of the several deals

. Where the jurisdictional thresholds are met, is notiﬁcation compulsory

e merger control notiﬁcation in China is compulsory, and such

According to Article  of the AML, in the following cases, notiﬁcation is

one of the parties to a concentration holds assets or shares that grant at

Pursuant to Article  of the AML, if the undertakings fail to seek clearance

an order to cease implementing the concentration;

Speciﬁcally, MOFCOM published the Provisional Measures for

Since , MOFCOM and SAMR has published  cases of failure to

e notiﬁcation can only be ﬁled after the execution of the transaction

terms and conditions of the transaction at the submission, instead of the

e following are the phases of review in relation to an antitrust merger

Phase  of review takes a maximum of  calendar days (from the date on

Phase  of review takes a maximum of  calendar days. SAMR will inform

If SAMR fails to make a determination at the expiry of each set period of

. Is there any prohibition on completing the transaction before clearance

Transactions shall not be implemented before obtaining the merger control

An applicant who wishes to seek antitrust clearance in respect of their

general information relating to each party to the notiﬁed concentration

MOFCOM launched the simpliﬁed merger control procedure in . e

Horizontal mergers where the collective market share of all undertakings

To speed up the clearance timetable, the parties need to have more

e party acquiring control shall be responsible for making the notiﬁcation.

Speciﬁcally, for a concentration of undertakings implemented in the form of

In addition, if the notiﬁcation obligator fails to make notiﬁcation of a

ere is no ﬁling fee under China’s merger control rules.

Article  of the AML sets out the factors to be considered by SAMR in

On  August, , MOFCOM released the Provisional Rules on

According to the Competition Assessment Rules, eﬃciency is one of the