China: The New Anti-Monopoly Law In China

Last Updated: 20 May 2008

After over 13 years of drafting, the long awaited Anti-Monopoly Law of the People's Republic of China ("PRC") ("Anti-Monopoly Law") was finally promulgated by the Standing Committee of the Tenth National People's Congress on 30 August 2007. The Anti-Monopoly Law will come into effect on 1 August 2008 and aims to provide a comprehensive framework for regulating market competition in the PRC. The new Law is expected to have a more significant impact on foreign investments than the 12 existing PRC laws and regulations on anti-trust provisions and anti-competitive conduct.

As a result of the new Law, foreign mergers and acquisitions of domestic companies or foreign capital investing in domestic companies' operations through other forms in the PRC will now have to overcome anti-monopoly checks in addition to the already existing approvals through the Ministry of Commerce.

Monopolistic Conduct

The Anti-Monopoly Law defines three types of monopolistic conduct :-

(i) monopoly agreements made between undertakings;

(ii) abuse of dominant market position by undertakings; and

(iii) concentration conduct by undertakings that may have the effect of eliminating or restricting competition.

In addition, Chapter V prohibits the abuse of administrative powers to restrict competition - a highly controversial subject during drafting of the Anti-Monopoly Law.

(i) Monopoly Agreements

Pursuant to Article 13, horizontal monopoly agreements between competing undertakings are generally prohibited and the following agreements are not allowed :-

(a) fixing or changing the price of commodities;

(b) restricting the output or sales of commodities;

(c) dividing the sales market or raw materials purchasing market;

(d) restricting the purchase of new technology or new facilities, or restricting the development of new technology or new products;

(e) boycotting transactions jointly; and

(f) any other monopoly agreements as determined by the State Council Anti-Monopoly Enforcement Authority ("AEA").

The following vertical monopoly agreements between undertakings and their trading partners shall be prohibited as set out in Article 14 although vertical monopoly agreements are not in general prohibited :-

(a) fixing the resale price of commodities to a third party;

(b) restricting the minimum resale price of commodities to a third party; and

(c) any other monopoly agreements as determined by AEA.

The term "monopoly agreement" in the Anti-Monopoly Law refers to the agreements, decisions or other concerted behaviour that eliminates or restricts competition.

(ii) Abuse of Dominant Market

Undertakings with dominant market positions are prohibited from engaging in the following behaviour that abuses their dominant market positions :-

(a) selling commodities at unfairly high prices or buying commodities at unfairly low prices;

(b) selling commodities at prices below cost without justifiable reasons;

(c) imposing unreasonable trading conditions or "tie-ins" to sales without justifiable reasons;

(d) refusing to trade with partners or compelling trading partners to enter into exclusive trading arrangements; or

(e) any other behaviour that abuses the dominant market position as determined by the AEA, etc.

The term "dominant market position" in the Anti-Monopoly Law refers to the position held by an undertaking in the relevant market which is capable of controlling the price, the quantity or other trading conditions, or can block or affect the entry of other undertakings into the relevant market.

Further, an undertaking shall be presumed to have a dominant market position if the market share of the undertaking accounts for 50% or more of the relevant market.

(iii) Concentration

Concentration is defined in Chapter IV as "mergers; controlling other undertakings by acquiring shares or assets; and acquiring control by contract or by obtaining the ability to exercise decisive influence over other undertakings by contract or other means".

The merger control regime already exists in PRC under the pre-merger notification rules of the Provisions on the Takeover of a Domestic Enterprise by a Foreign Investor issued by six governmental departments in August 2006 and the Guide for the Anti-Monopoly Declaration by a Foreign Investor in the Merger or Acquisition of a Domestic Enterprise issued by the Ministry of Commerce in March 2007.

Under the Anti-Monopoly Law not only offshore transactions will be affected, but purely domestic acquisitions will also be covered. Another significant element of the Anti-Monopoly Law is that foreign investors intending to merge and/or acquire entities in the PRC will now have to comply with the procedure of anti-monopoly notification and be subject to the national security examination in Chapter IV.

Anti-monopoly Notification

Article 21 provides that undertakings are obliged to notify the AEA regarding concentration reaching the threshold of notification stipulated by the State Council. AEA will examine and make a decision on the application within 30 to 180 days after receipt of all relevant documents.

However, the Anti-Monopoly Law does not provide the specific criteria or detailed procedures for notification, which are expected to be addressed by AEA in the coming implementation rules.

National Security Examination of Foreign Investment

Article 31 requires that foreign investment merger activities to pass both anti-monopoly examination and national security examination, if such merger or acquisition is likely to threaten "national security". It is the first time that Chinese authority has put such a requirement in written form. The Anti-Monopoly Law is considered to increase the approval requirement of foreign investment in certain sensitive industry sectors, and the national security examination can only be separately conducted by the relevant governing department under specific national regulations.

Although such national security examination is not intended to be a further restriction on foreign merger and acquisition in the PRC (unless it concerns a military or sensitive industries), the specific threshold and criteria of such examination will need to be clarified in the coming implementation rules in order to address the concerns of potential foreign investors.


The Anti-Monopoly Law is regarded as one of the most important laws passed by the PRC Government since its entry into the World Trade Organization and a great milestone in PRC's legal history. It remains to be seen how the implementing rules can clarify the broad language used in the Anti-Monopoly Law and if the relevant authorities will apply foreign concepts and interpretations to the competition principles embedded in the new Law.

Our Services

If you wish to know more about PRC Anti-Monopoly Law or have any questions relating to that law, experienced lawyers in our China Business Department will be happy to assist you.

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”

Related Topics
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions