Maintaining domestic market competition


China's merger control regime has long been a topic of discussion. Some commentators interpret Chinese merger control as being influenced by political factors – namely, authorities trying stop foreign competitors from flooding China's market, rather than just encouraging competition.(1) But is that really the case?

This article is the second in a three-part series on merger reviews in China (for part one, please see "Merger review priorities: introduction to Chinese regime"). The third instalment will provide an overview of developing a nuanced understanding of Chinese merger control in order to better predict merger approvals.

Maintaining domestic market competition

Antitrust law and accompanying legislative intent vary across economic regions. That said, merger control rules are generally designed to prevent excessive concentration of market power within a given market. Since the implementation of the 2008 Anti-Monopoly Law (AML), Chinese antitrust authorities have published regulations, guidelines and other documents to clarify the country's AML standards. Accordingly, there usually are six main factors to be considered during the review of a concentration:

  • the market share (in the relevant market) of each undertaking involved in the concentration and their existing control over the market;
  • the existing market concentration in the relevant market;
  • the effect of the concentration of undertakings on market entry and technological progress;
  • the effect of the concentration of undertakings on consumers and other relevant undertakings;
  • the effect of the concentration of undertakings on the development of the national economy; and
  • other factors affecting market competition, such as the effect of the concentration on the public interest, and whether the undertakings involved in the concentration are enterprises on the verge of bankruptcy.

In practice, Chinese antitrust authorities apply these factors to review merger filing cases, even if a foreign entity is involved. In recent years Chinese antitrust authorities have shown that they typically approve merger filings involving foreign entities. According to its 2020 annual report, the State Administration for Market Regulation (SAMR) approved 85 merger filings for transactions between domestic and foreign entities. These approvals included:

  • 37 foreign acquisitions of domestic entities;
  • 15 domestic acquisitions of foreign entities; and
  • 33 joint ventures between domestic and foreign entities.

For filings between foreign entities, the SAMR approved 179 concentrations of undertakings. For concentrations involving only domestic entities and no foreign entities, the numbers show that the failure to notify typically leads to an investigation and subsequent penalties. In 2021, the SAMR published 107 penalty decisions against concentrations that failed to notify under law. Among these penalties, 105 were applied only against domestic entities (98% of all cases). In other words, domestic (and not foreign) firms overwhelmingly bear the brunt of the SAMR's merger controls and accompanying penalties.


One interpretation of these numbers is that the SAMR is significantly more lenient in its application of merger control rules towards foreign investors than it is towards domestic entities. Another interpretation is that foreign investors are typically more antitrust aware (even to the point of adopting China-specific market strategies) and, as such, are more likely to retain experienced antitrust counsel when considering large transactions. Both theories appear to have at least some traction in academia.(2) Merger review across different jurisdictions is mainly based on whether the transaction will raise competition concerns within the jurisdiction. As a result, the same transaction may face different competition concerns and merger decisions across different countries and areas. For example, in 2017 Chinese antitrust authorities unconditionally approved ChemChina's acquisition of Syngenta, a global business operating in the agrochemical sector with its headquarters in Switzerland. However, this same concentration received only conditional approval from authorities in the European Union, which had major reservations about the deal's effect on competition in the European market.

For further information on this topic please contact Hao Zhan or Ying Song at AnJie Law Firm by telephone (+86 10 8567 5988) or email ([email protected] or [email protected]). The AnJie Law Firm website can be accessed at


(1) Angela Huyue Zhang, "Problems in Following EU Competition Law: A Case Study of Coca-Cola/Huiyuan", 3 PekingUJ LegStudies (2011) 96 at 97. Foreign multinationals were also concerned that they would be the primary targets under the AML, see ibid.

(2) See Sandra Marco Colino, "The Internationalization of China's Foreign Direct Investment Laws", 45:2 Fordham Intl L J 275 at 288 ("the increased presence of overseas investors in China suggests that they are getting the hang of corporate negotiations in the country, and that perhaps enforcers afford them greater latitude").