Article by Martyn Huckerby, Kien Choong and Alex Yang

The Chinese Ministry of Commerce's Anti-Monopoly Bureau (AMB) has issued a series of guidelines on the merger review framework and process, including guidelines on the information required by the AMB about transactions that must be notified to the AMB in accordance with the compulsory pre-merger notification regime under the PRC Anti-Monopoly Law (AML). The AMB has also commenced a consultation on three draft guidelines on:

  • market definition
  • investigating transactions that have not been notified to the AMB in contravention of the compulsory pre-merger notification regime, and
  • proactively investigating transactions that do not meet the merger notification thresholds but may nevertheless eliminate or restrict competition.

The new guidelines issued by the AMB, while broadly similar to the AMB's current practices, provide greater certainty regarding the filing process. Collectively, the published guidelines (including draft guidelines issued for consultation) suggest that the AMB will be taking an increasingly activist role in relation to mergers and acquisitions involving businesses in China. In particular, the AMB may proactively investigate transactions that have not been notified to the AMB, including transactions that do not meet the pre-merger notification thresholds under the AML. Firms with investments in China that are contemplating a merger or acquisition should have a comprehensive regulatory strategy early in the process and allow time for the AMB clearance to be obtained.

Background and guidelines

In January 2009 the AMB issued a series of four guidelines outlining the merger review framework and process, and the information that parties must submit when notifying the AMB of a transaction in accordance with the compulsory pre-merger notification regime under the AML, and clarifying the procedures the AMB will adopt when undertaking that review. In general, these guidelines are broadly similar to the March 2007 Guidelines on Anti-monopoly Filings for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors published by the Ministry of Commerce (2007 Guidelines). The four documents issued by the AMB in January 2009 are:

  • "Guidelines for Merger Review" (1 January 2009) - outlines the AMB's merger review framework
  • "Flow Chart for Merger Review" (1 January 2009) - illustrates the AMB's merger review process in an easily digestible form
  • "Guidelines on Declaration of Concentration of Business Operators" (gazetted on 7 January 2009) - provides an overview of the requirements for pre-notification consultation with the AMB and the documentation necessary for a successful merger filing, and
  • "Documentation Guidelines for Declaration of Concentration of Businesses" (gazetted on 7 January 2009) - outlines the information and documentation filing parties must submit to the AMB with a merger filing. These guidelines also annex a template merger filing form that parties may use in preparing the notification.

MOFCOM's merger review process

The AMB's merger review process, as described in its guidelines, can be summarised as follows:

Phase Authority in charge Description Timing
Pre-notification consultation AMB The filing party should submit a written application seeking an appointment with the AMB, which should cover the details of the applicants, subject matter of the application, the transaction, issues to be discussed and the contact information Filing party's discretion
Filing AMB's Administration Service Centre Formal filing submitted to the AMB Once the information required to be submitted with a filing becomes available
Preliminary review AMB The AMB undertakes a preliminary review of the documentation. The AMB may reject the formal filing if incomplete or inaccurate documents have been submitted, or if material information has been concealed AMB's discretion
Phase 1 substantive review AMB The AMB reviews the information submitted and determines if further review is required 30 calendar days
Phase 2 substantive review AMB In certain circumstances, the AMB will carry out a more detailed review (for example, where a transaction raises substantive issues). We understand that the AMB's review of Coca Cola's proposed acquisition of Huiyuan Juice may currently be subject to Phase 2 review 90 calendar days (unless extended)
Decision and publication AMB/Ministry of Commerce (MOFCOM) Senior officials of MOFCOM will make a decision on the proposed transaction and, if the transaction is prohibited or conditions are imposed, the decision will be published AMB's discretion

Merger filings - information requirements

The guidelines issued by the AMB clarify the information that parties must give when notifying the AMB of a transaction. That information includes:

  • information about the parties to the transaction, including business licences, approval certificates, and registration documents (which must be notarised in the case of foreign enterprises)
  • details of the transaction and a copy of relevant agreements
  • analysis of the effect of the transaction on competition in relevant markets, including details of market participants and their market shares, turnover information, marketing strategies, and details of customers and suppliers
  • the effect of the transaction on market structure, competitors, other operators, consumers, technology development, economic development and public interest;
  • details of relevant industry associations, and
  • other information that must be disclosed to the appropriate authorities where the parties are going into bankruptcy or where the transaction involves national security, industry policy, state-owned assets, or famous trademarks.

While the information outlined above is broadly similar to that contained in the 2007 Guidelines, there are some notable differences, including the following:

  • the AMB has confirmed that information about possible efficiencies achieved by the proposed concentration is relevant to its analysis
  • internal or external analyses and reports which help evaluate the proposed concentration are considered relevant by the AMB, such as feasibility study reports, due diligence reports, and research reports, and
  • filing parties are now asked to clarify the possible impact on the parties and the relevant market if the proposed transaction is prohibited by the AMB.

The guidelines also provide some insight into the factors that the AMB will take into account when it reviews proposed transactions. In particular, the AMB may now require the filing parties to provide to the AMB the opinion of local government, feedback from the public, and information regarding the possible social effect of the transaction.

Draft guidelines published for consultation on market definition and investigating transactions that have not been notified to the AMB

MOFCOM has issued the following draft guidelines for consultation:

  • "Guidelines for defining the relevant market" - outlines the way in which the authorities will define the relevant market for the purposes of merger control as well as other provisions of the AML (such as the provisions relating to abuse of dominant market position)
  • "Interim Measures for Investigating and Disposing of Suspected Concentration of Undertakings Failing to File Notification in Accordance with the Law" - provides details of the measures the AMB will take to investigate transactions that have not been notified in contravention of the compulsory pre-merger notification regime, and
  • "Interim Measures for Collecting Evidence on Suspected Monopolistic Concentration of Undertakings below the Thresholds" (Investigation Guidelines) - describes the circumstances in which the AMB may investigate transactions that may eliminate or restrict competition even though the transactions do not exceed the thresholds for merger notification.

The Investigation Guidelines may have greatest impact on firms with investments in China that are contemplating a merger or acquisition. While the Rules and Notification Thresholds for Concentrations of Undertakings authorises the AMB to review transactions even where the merger thresholds are not met, it was previously unclear whether the AMB would exercise this power. The Investigation Guidelines, if adopted, suggest that the AMB intends to proactively investigate transactions that are not notifiable under the merger control regime in a broad range of circumstances, including where there is negative public reaction to a transaction. Merging parties should prepare for such possible intervention by the AMB when entering into transactions involving businesses in China.


The guidelines issued by the AMB clarify the merger control procedures it will follow when reviewing transactions under the AML. The guidelines also include a helpful merger filing template for use by filing parties. It is clear from these guidelines that the AMB requires a substantial amount of information and documents prior to accepting any merger notification for review. There is still uncertainty though regarding a number of key issues relating to the application of the AML, including whether and how the AMB will apply the AML to joint ventures and how turnover should be calculated. We anticipate that further guidelines addressing these issues will be published in due course, as suggested by the distribution of the additional draft guidelines for consultation. In the meantime, firms should be prepared for potential intervention by the AMB in respect of transactions that do not meet the pre-merger notification thresholds under the AML.

The views set out in this publication are based on our experience as international counsel representing clients in their business activities in China. As is the case for all international law firms licensed in China, we are authorised to provide information concerning the effect of the Chinese legal environment. However we are not admitted to practice Chinese law and so are unable to issue opinions on matters of Chinese law.
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