China: Merger Control Review 2009 - China

Last Updated: 19 September 2010
Article by Susan Ning


The following two authorities deal with mergers:

a. the Anti-Monopoly Bureau within the Chinese Ministry of Commerce ('Mofcom') is the authority responsible for reviewing and clearing merger filings; and

b. the Anti-Monopoly Commission (a division of the State Council) is the authority responsible for formulating and issuing merger guidelines (it is also the coordinating government agency between Mofcom and the two other antitrust enforcement agencies, the National Development and Reform Commission (NDRC) and the State Administration for Industry and Commerce (SAIC)).

In China, pre-merger notification is required when the entities participating in the merger possess a certain amount of turnover. Specifically, pre-merger notification is mandatory when, during the previous fiscal year:

a. the total global turnover of all business operators participating in the concentration exceeded 10 billion renminbi, and at least two of these business operators each had a turnover of more than 400 million renminbi within China; or

b. the total turnover within China of all the business operators exceeded 2 billion renminbi, and at least two of these operators each had a turnover of more than 400 million renminbi within China.

The Anti-Monopoly Law (AML) is the primary antitrust legislation which governs merger control. Since the AML was enacted in August 2008, a number of regulations and guidelines relating to  mergers, have been promulgated. The regulations and guidelines listed below, came into effect in 2009:

a. Market Definition Guidelines issued by the Anti-Monopoly Commission of the State Council (effective on 1 January 2009);

b. Rules for Calculating Turnover concerning Concentration Notification of Financial Operators (effective on 15 July 2009);

c. Working Guidance for Anti-Monopoly Review on Concentration of Business Operators (effective on 5 January 2009);[1]

d. Guidance on the Documentation of the Notification of Concentration of Business Operators (5 January 2009); [2]

e. Measures for the Undertaking Concentration Declaration (released on 21 November 2009, effective on 1 January 2010); and[3]

f. Measures for Examination of Concentration of Business of Operators (released on 24 November 2009, effective on 1 January 2010).[4]


In 2009, we understand that Mofcom received approximately 87 merger review filings. In the same year, we understand that Mofcom made decisions on 67 of the filings. Among these 67 decisions, 62 mergers were approved without conditions; four mergers had conditions imposed; and one merger was not cleared.

As can be seen from above, the vast majority of merger filings were cleared without conditions. The four mergers that were approved with conditions along with the merger that was not approved have sparked considerable discussion and interest. The following are brief descriptions of these five merger cases.

i Merger that was not approved

The merger which was not approved was Coca-Cola Company's (Coke) proposed acquisition of China Huiyuan Juice Group Limited (Huiyuan). In this case, Huiyuan's market share in the Chinese juice market was 10.3 per cent. Coke's market share in the same market was 9.7 per cent. Therefore, post-acquisition, the merged entity's market share would be just under 20 per cent. Due to this relatively low combined market share figure, commentators therefore assumed that the proposed-acquisition would be cleared smoothly. However, Mofcom did not approve of the proposed acquisition. The main reason cited was because Mofcom was of the view that Coke would have the ability to leverage its dominant position in the carbonated soft drink market into the juice market.

According to Mofcom, this leveraging would have the effect of restricting or eliminating competition from other juice supply entities, and would eventually harm the interests of beverage consumers.

ii Mergers that were approved with conditions.

The following four mergers were approved with conditions:

Acquisition of Lucite International Group Limited (Lucite) by Mitsubishi Rayon Co., Ltd. (Mitsubishi)

Mitsubishi is a leading manufacturer of monomers and polymers, based on methyl methacrylate (MMA) and acrylonitrile (AN) complexes. Lucite is the world's leading supplier of MMA, accounting for approximately 24 per cent of the global acrylic monomer market. The merged entity, Mitsubishi Rayon possessed approximately 64 per cent of the MMA market in China. Mofcom imposed a variety of conditions on this acquisition, including a partial divestiture of the MMA output of Lucite China and restrictions on expansion in China in respect of the merged entity over the next five years.

Acquisition of Delphi Corp (Delphi) by General Motors Company (GM)

Delphi is a supplier of automobile components. General Motors is a vehicle or automobile manufacturer. This was an acquisition between two vertical entities. The conditions stipulated by Mofcom were behavioural conditions. For instance, Mofcom stipulated that after the acquisition was completed, both Delphi and GM must guarantee that Delphi and its controlling affiliates shall continue to supply products to Chinese vehicle manufacturers without any discrimination. These behavioural conditions are aimed at eliminating and mitigating anti-competitive adverse effects on other entities in the automobile components and vehicle or automobile manufacturing markets in China.

Acquisition of Wyeth Corp (Wyeth) by Pfizer Inc (Pfizer)

Both Pfizer Inc and Wyeth Corp supply a range of pharmaceutical products in the human health and animal health sector. Mofcom stipulated that Pfizer had to divest its swine mycoplasma pneumonia vaccine business in China.

Acquisition of SANYO Electric (Sanyo) by Panasonic Corporation (Panasonic)

Panasonic and Sanyo are Japanese conglomerates with diversified businesses and operations worldwide. Mofcom identified competition issues in three specific product markets: (1) rechargeable coin-shape lithium batteries; (2) nickel-metal hydride batteries for daily use; and (3) nickel-metal hydride batteries for vehicle use. Both Sanyo and Panasonic were required to divest their businesses (to different extents) in respect of the categories in (1) to (3).

The merger control decisions listed above show that Mofcom is a very active competition authority and would not hesitate to impose conditions (structural or behavioural conditions, or both) or to deny clearance to a merger, when the need arises. Companies who wish to merge or acquire in China should therefore should plan ahead and put in place a well-thought-out merger control strategy.

In practice, we note that Mofcom consults widely with the relevant stakeholders in respect of each merger filing. Relevant stakeholders could include other government authorities, industry associations, competitors and entities in the upstream and downstream industries. We understand that Mofcom undertakes these consultations by questionnaire, by way of phone interviews and sometimes even through visiting and interviewing these stakeholders face-to-face.


i Waiting periods and time frames

There are broadly two review phases in which a merger filing would have to go through with Mofcom. First, there is a pre-acceptance phase. Second, there is a formal review phase.

Pre-acceptance phase

When entities submit a merger filing or notification to Mofcom, a 'pre-acceptance' case handler within Mofcom would determine if Mofcom is able to formally accept the filing. This case handler would review the filing for completeness and may also seek clarifications or ask for more details in respect of the filing, if certain aspects of the filing are unclear or need to be supplemented. From our experience, this pre-acceptance period generally takes between two and six weeks. I n other cases (for instance in the Coke/Huiyuan and Mitsubishi/Lucite cases) this phase may even 'stretch' to two or three months. We understand that during this pre-acceptance phase, the entities listed above were repeatedly asked by Mofcom to submit supplementary information in respect of their filings.

Formal review phase

Pursuant to the AML, there are two phases within the formal review phase: Phase 1, the preliminary review period and Phase 2, the further review period. Phase 1 is known as the preliminary review period and lasts 30 calendar days. During this phase, Mofcom will attempt to review the merger filing and make a decision as to whether the filing should be cleared. If merging entities do not hear from Mofcom upon the expiry of these 3 0 days, then the merger or acquisition is by default cleared or approved.

Phase 2 is known as the further review period and lasts 90 calendar days. I f Mofcom has made a decision that a merger filing warrants further review, Mofcom will inform the parties (in writing) before or by the expiry of Phase 1 that the review period is extended into Phase 2.

Furthermore, Mofcom may extend the Phase 2 period by another 60 calendar days at the most, provided that:

a. the applicant agrees to extend the time limit for the review;

b. the documents submitted by the applicant are inaccurate and require further verification; or

c. the circumstances surrounding the filing have significantly changed after notification by the applicant.

It is important to note that if Mofcom fails to make a decision upon the expiry of each set period of time as stated above, the parties may execute the transaction.

The following table summarises the various waiting periods as described above and possible outcomes of the review (i.e., approved, approved with conditions or prohibited).

No Decision

Phase Duration Possible Results Clearance

Phase 1  (preliminary) 30 days Decision for no further review Pending
Decision for further review Attachment Obtained conditionally
No restrictive conditions Obtained
No Decision Obtained

Phase 2  (Further review) 90 days possibly additional days)   Decision of prohibition Denied
Decision of not prohibiting the transaction Attachment of restrictive conditions Obtained conditionally
No restrictive conditions Obtained

ii Parties' ability to accelerate the review procedure

Most mergers are time-sensitive. Most merging entities generally wish for the merger review period and procedures to be as swift as possible. I n order to assist Mofcom in clearing merger filings smoothly and efficiently, we would recommend the following approach: first, articulate why your merger is time-sensitive (e.g., is one entity a failing firm?); second, ensure that your merger filing report is complete (according to the Mofcom requirements) and accurate; and third, if Mofcom asks any supplementary questions or asks for clarifications, respond to these further questions swiftly.

iii Third-party access to the file and rights to challenge mergers

Third parties do not possess a statutory right to access merger control files, nor do they possess a statutory right to challenge mergers in the process of review. However, in its review process, Mofcom 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.

In addition, pursuant to Articles 7 and 8 of Mofcom's Draft Measures for Inspecting Concentration of Business Operators, third parties may be involved in the merger control review process if Mofcom decides to conduct hearings. Participants in these hearings may include: entities involved in the filing; competitors; representatives of upstream and downstream entities (and other related entities); experts; representatives of industry associations; representatives of relevant government authorities; and consumers. Third parties may therefore express their opinions on the proposed merger or acquisition through these hearings.

iv Resolution of authorities' competition concerns, appeals and judicial review

Pursuant to Article 29 of the AML, Mofcom has the right to impose conditions in respect of mergers, in order to alleviate the negative impact of a merger on competition. This gives Mofcom wide discretion to impose a variety of conditions, including structural and behavioural conditions or both. Further, pursuant to Article 11 of Mofcom's Draft Measures for Inspecting Concentration of Business Operators, either the entities involved in the merger or Mofcom may propose conditions.

Pursuant to Article 53 of the AML, entities that are not satisfied with a Mofcom decision in respect of merger control, may seek a review of the decision (i.e., appeal).

We understand that this review process and decision will be undertaken by the Treaty and Law Department of Mofcom.

Entities who are dissatisfied with the decision of the Treaty and Law Department of Mofcom may then seek a further review of the Treaty and Law Department's decision in the courts (i.e., judicial review).

Entities may only seek a review of Mofcom's decisions based on an error of law (including because administrative procedures are in violation of the law, administrative discretionary power has been abused or the result of the merger control review is unjust).

v Effect of regulatory review

Mofcom is the sole authority formally in charge of reviewing mergers. Therefore, it is not obligated by law to consult with or seek the opinions of other authorities or regulators.

However, we are aware that Mofcom does consult with other government agencieson certain mergers. For instance, Mofcom may consult with the State Administration of Radio, Film and Television (SARFT) and obtain the SARFT's opinions in respect of a merger within the broadcasting industry. Such consultation procedures will take time and this is a factor that entities have to consider when submitting a merger filing. Mofcom may consider that such consultations are important and a merger filing may therefore last into Phase 2 if Mofcom is awaiting responses from other government agencies.


i How to coordinate with other jurisdictions

We are not aware of any formal agreements signed between Mofcom and the competition authorities of other jurisdictions in respect of sharing information or otherwise coordinating with each other (in the context of multi-jurisdictional merger filings). We note also that China has not yet joined the International Competition Network.

However, we understand that Mofcom does regularly consult with the competition authorities from the more experienced jurisdictions such as the United States and European Union. The competition authorities from these jurisdictions also conduct capacity building or technical assistance programmes for Mofcom officials.

In practice (in the context of multi-jurisdictional filings), we note that Mofcom will monitor the progress of merger control reviews in other jurisdictions very closely. Mofcom may also ask the entities involved in the proposed merger or acquisition to supply information in respect of their filings in other jurisdictions.

ii How to deal with special situations – financial distress and insolvency, hostile transactions, minority ownership interests, etc.

Financial distress and insolvency

Previously, foreign entities that wished to purchase domestic entities in financial distress or insolvency could apply to Mofcom for an exemption (in respect of notification or review). Despite the fact that there are no statutory exemptions (pursuant to the AML or in related regulations and rules) in respect of acquiring entities in financial distress or insolvency, we are of the view that Mofcom will take this factor into consideration when undertaking the merger review. This is, in particular, in terms of allocating a time-frame for the review.

Hostile transactions

There are no provisions within the AML or in its related regulations or rules that address the manner in which a hostile transaction will be reviewed. We are of the view that under such circumstances, the target entity should nevertheless submit its views to Mofcom for consideration.

Minority ownership interests

There are no provisions within the AML or in its related regulations and rules that address acquiring minority ownership interests. However, the conduct of acquiring minority interests in another entity may also be a notifiable transaction (depending on whether such conduct is construed by Mofcom, as acquiring 'control' of the target company).


i Pending legislation

Currently, the measures listed are in draft form:

a. Tentative Measures for Investigation and Handling of Concentration of Business Operators That Are Not Legally Notified (Draft); Cf Article 54(2) of the now-repealed Acquisition of Domestic Enterprises by Foreign Investors Provisions.

b. Tentative Measures for Investigation and Handling of Concentration of Business Operators Not Satisfying Notification Thresholds But Involving Alleged Monopoly Acts (Draft); and

c. Tentative Measures for Collection of Evidences on Concentration of Business Operators Not Satisfying Notification Thresholds But Involving Alleged Monopoly Acts (Draft).

ii Unresolved issues

In our view, it would be useful for the merger control regime if Mofcom could clarify matters pertaining to the following issues:

a. the factors that Mofcom would consider when determining whether a joint venture is a notifiable transaction;

b. the factors that Mofcom would consider when determining whether acquiring minority shares in an entity is a notifiable transaction; and

c. whether the resale of goods to China should be taken into consideration when considering an entity's turnover in China.

In addition, it would be helpful if Mofcom could issue public statements (or give a summary of issues considered) in relation to some of the mergers that have been cleared.

This would be helpful in terms of building jurisprudence and increasing transparency in relation to the merger clearance process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.