Leaf Leaf

The Merger Control under China’s Anti-monopoly Law, (the “AML”) was promulgated on August 30, 2007. Subsequently, it entered into force on 1 August 2008. Foreign investors in China should carefully consider the impact of the AML on their operations and investments so that they can act accordingly to ensure compliance.

Under the AML, all concentrations exceeding certain thresholds must be notified to Anti-Monopoly Bureau of the State Administration of Market Regulation (the “SAMR”).
Thereafter, the bureau administration will conduct a review to ensure that the concentration may not induce the elimination or inhibition of competition in the relevant market.

What is a concentration?  

Concentration of operators means the followings: 

  • A merger of operators; 
  • An equity or asset acquisition where the acquirer obtains controlling power of one or more target operators 
  • Acquiring the ability of exercising decisive influence over other operators by contract or other means are considered as concentrations.  

What are the thresholds to be met with?  

Transactions qualifying as concentrations must be notified to Anti-Monopoly Bureau if in their last completed accounting year:   

  • All the “relevant business operators” have aggregate revenues exceeding RMB 10 billion globally. Each of at least two “relevant business operators” generated at least RMB 400 millionin revenues or sales in or into China
  • All the “relevant business operators” have aggregate revenues exceeding either RMB 2 billion in China. In addition, each of at least two “relevant business operators” generated at least RMB 400 million in revenues or sales in or into China.

How long does the procedure of merger control with the Anti-Monopoly Bureau take?  

The Anti-Monopoly Bureau has 30 days to do a preliminary review of the transaction. Such period can be extended by 90 days, and in certain circumstances by an additional period of 60 days.

At the end of this period, the Anti-Monopoly Bureau either clears, with or without conditions, or prohibits the concentration. In other words, if at the expiry of the review period, the Anti-Monopoly Bureau does not make any decision, the parties are free to implement the concentration.  

More questions:

What are the possible restrictions for transfers of equity interests to non-shareholders in a domestic company?

What are the legal liabilities for concentration of operators?

To know more, download our legal handbook related to M&A in China…

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