Answer ... The merger control regime in China is governed by the Anti-monopoly Law of the People’s Republic of China, which came into effect on 1 August 2008 – in particular, Articles 20 to 31 of Chapter 4 on “Concentrations between Undertakings”.
Supporting regulations and guidelines include:
- the Provisions of the State Council on the Notification Thresholds for Concentrations between Undertakings;
the Guidelines of the Anti-monopoly Commission of the State Council on Defining Relevant Markets;
- the Guiding Opinions on Notifications of Concentrations between Undertakings;
- the Measures for Review of Concentrations between Undertakings;
- the Interim Provisions on Standards Applicable to Simple Cases of Concentrations between Undertakings; and
- the Guiding Opinions on Simple Cases of Notifications of Concentration between Undertakings (for Trial Implementation).
Answer ... Yes. According to the Notice of the General Office of State Council on Establishment of Security Review System Pertaining to Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, mergers and acquisitions in the following sectors through which a foreign investor assumes control of a domestic target post-merger shall be reviewed under the security review regime:
- military and military supporting enterprises;
- enterprises located around key or sensitive military facilities;
- other enterprises related to national defence and security; and
- enterprises that provide key agricultural products, key energy and resources services, critical infrastructure, important transportation services, key technologies, major equipment manufacturing or similar which relates to national security
Answer ... The Anti-monopoly Bureau of the State Administration for Market Regulation (SAMR) is responsible for enforcing the merger control regime in China.
No transaction under the merger review regime can be implemented without SAMR clearance. The SAMR may block a transaction which it finds may harm competition or may impose remedies in order to mitigate the anti-competitive effects of the transaction. It also has the power to initiate investigations of transactions that have not been notified to it. If business operators implement a notifiable concentration/transaction without notifying the SAMR and obtaining its approval, or before the expiration of the merger review period, the SAMR may order that:
- implementation of the concentration be halted; and
- the shares or assets be disposed of or the business be transferred by a certain deadline.
The SAMR may also take other measures to restore the pre-transaction status quo and has stepped up its efforts to impose fines on offending parties. Currently, the SAMR may impose a fine of up to RMB 500,000, although it hopes to increase this limit.