Introduction of the Anti-Monopoly Law and the enforcers

The Anti-Monopoly Law of the People’s Republic of China (AML) was enacted on 30 August 2007 and became effective on 1 August 2008. The AML covers the three main themes within the common territory of competition law, namely monopoly agreements, abuses of dominance and concentrations of undertakings. This chapter will centre around the laws and regulations, as well as our experience and practical advice relating to the review of concentrations of undertakings, such as the merger control review in China, and particularly on the imposition of remedies during the review process.

Before 21 March 2018, the duties of enforcement of the AML were shared by three different government agencies. Specifically, the State Administration for Industry and Commerce was responsible for monopolistic conduct (e.g., monopoly agreements and abuse of dominance) that was non-price-related; the National Development and Reform Commission was in charge of price-related monopolistic conduct; and the Ministry of Commerce (MOFCOM) was dedicated to merger control review, including the imposition, implementation and supervision of remedies.

On 21 March 2018, the Plan on Deepening Reform of Party and State Institutions was announced. The institutional reform includes, among others, consolidating the anti-monopoly enforcement functions of the three authorities above into a single agency: the State Administration for Market Regulation (SAMR). It is still uncertain as to how the new antitrust department of the SAMR will be organised, but the initial observation is that an anti-monopoly bureau will be established under the SAMR. Within the bureau, there exist several divisions in charge of different specific tasks, including merger control.

Overview of the merger control review

Article 27 of the AML sets out the standard for merger control review in China:

When reviewing concentration of undertakings, the following factors should be considered: (1) market shares and controlling power of the relevant market of undertakings to concentration; (2) degree of concentration of relevant market; (3) impact of the concentration of undertakings on market entry and technical progress; (4) impact of the concentration of undertakings on consumers and other relevant undertakings; (5) impact of the concentration of undertakings on the national economy; and (6) other factors which have an impact on market competition and that the anti-monopoly enforcement agency designated by the State Council deems should be considered.

Article 28 of the AML states the grounds for imposition of remedies in merger control review:

For a concentration of undertakings that has or may have an eliminating or restrictive effect on competition, the anti-monopoly enforcement agency designated by the State Council shall issue decision to prohibit the concentration of undertakings. However, if the undertakings can demonstrate that the pro-competitive effect of the concentration on competition clearly outweighs the anti-competitive effect, or that the concentration contributes to the social public welfare, the anti-monopoly enforcement agency designated by the State Council may issue a decision not to prohibit the concentration.

Under such premise, Article 29 stipulates that ‘[f]or a concentration of undertakings not to be prohibited, the anti-monopoly enforcement agency designated by the State Council may issue a decision to impose restrictive condition(s) to lessen the anti-competitive effect of the concentration on competition.’2

In addition to the AML, the SAMR enacted the Trial Provisions on Imposing Restrictive Conditions on Concentration of Undertakings (the Trial Provisions). This is a more specific set of regulations focusing on remedy imposition in China. Similar to Article 29 of the AML, Article 2 of the Trial Provisions reinstates the right of SAMR to attach restrictive conditions (i.e., remedies), and the purpose of remedies is to mitigate the anticompetitive effect on competition brought by concentrations. The Trial Provisions outline a basic structure and aspects that should be followed or covered by remedies, including types, determination, implementation, supervision, post-decision modification and removal. The contents will be introduced in the corresponding sections below.

Notably, the review standards specified by the AML include not only competition-related factors of a transaction, but also public interests and the impact on the development of the national economy. To take into account public interests and the impact on the development of the national economy in its review of concentrations of undertakings, the SAMR consults with stakeholders, including other government agencies regulating the industry involved, trade associations, key suppliers and customers, and sometimes competitors on their view of the potential impact of the concentration. This often leads to unique concerns to be identified in China, usually driven by complaints of stakeholders. Sometimes the complaints by stakeholders are not competition-specific, yet the SAMR and the parties have to address those concerns in the AML regime by agreeing upon remedies – mostly behavioural.

In practice, merger control review has become increasingly sophisticated in China in recent years. Over the decade since the AML came into force, MOFCOM announced 36 conditional clearances up until June 2018. According to MOFCOM’s annual performance report,3 it received 400 notifications in 2017, out of which 30 per cent were reviewed under normal procedure (in comparison with notifications eligible of simplified procedure). In addition, approximately 70 per cent of the notifications involved multi-jurisdictional mergers. In particular, MOFCOM imposed remedies in seven cases in 2017, which is a record high number for one year.

Key principles underlying merger remedies

Similar to other jurisdictions, the merger remedies in China centre around the SAMR’s concerns for the transaction. Normally, at the late stage of its review, the SAMR convenes a meeting with the parties and their counsel to express any competition concern they have identified verbally. The parties will then be under the obligation to propose remedies to address the competition concerns. The SAMR will assess the remedy proposal and bring it to market test with the stakeholders. If the feedback is positive from all stakeholders, the SAMR will clear the transaction with the proposed remedies imposed.

The AML requires the SAMR to publicise conditional clearance to the public in a timely manner. Parties will have the chance to review the decision before the announcement to ensure no business secret or confidential information is mentioned. In practice, conditional clearance will also be accompanied by a non-confidential version of the merger remedies, but the enforcement will be based on the full version.

As explained above, Articles 27 and 28 of the AML set forth the factors and standards for merger control review and finding competition concerns. For such review, the SAMR considers a number of factors, including market shares, market control power, concentration, impact on market entry and technological progress and impact on other undertakings. In practice, the SAMR’s review is still rather pro forma in many aspects. Market shares (including other parameters calculated based on market shares such as the Herfindahl-Hirschman index) still have the most weight in its review, although it does also consider other factors. As noted above, in addition to these factors, the SAMR takes into account and gives weight to the feedback it receives from the key stakeholders in its consultation process to assess the possible impact on public interests and the national economy.

This tendency leads to several distinctive features in terms of identifying competition concerns and imposing remedies with regard to global concentrations in China. Notably, although a concentration has been deemed to raise no competition concern in other major jurisdictions, the SAMR may identify competition concerns based on either the distinctive market dynamics and competitive landscape in China, or negative feedback from stakeholders in China. This is particularly true in China’s sensitive sectors, such as agriculture, semiconductors, mining, hi-tech and certain consumer goods.

Further, the concerns formulated based upon stakeholders’ feedback generally tend to be vague and broad, and often lead to behavioural remedies. Therefore, on its face, the SAMR seems to have a preference for behavioural remedies, as pointed out by many media reports. Out of the recent 10 cases conditionally cleared by SAMR, seven involved at least one behavioural remedy. The most typical remedy is commitment not to engage in tying and bundling.

Remedies in the context of multi-jurisdictional mergers

The SAMR tends to align with other major jurisdictions in its review, particularly in global mergers, which represent 70 per cent of the merger notifications received by the SAMR, both for the review of the merger and for determination of remedies. The SAMR has entered into cooperative memoranda of understanding with a number of key competition authorities, including the European Commission, the US Department of Justice and Federal Trade Commission, the Japan Fair Trade Commission, the Competition Commission of South Africa, the Federal Antimonopoly Service of Russia, and the Competition Authority of Kenya. In high-profile global mergers, the SAMR often requires the parties to provide waiver for it to communicate with other jurisdictions – most commonly the European Union and the United States, and in some cases other major jurisdictions such as India, Japan and Brazil. It is understood that during such conversations, the SAMR will exchange views on the review process, competition concerns identified, theory of harm and possible remedies with their counterparts in these jurisdictions.

In practice, the SAMR’s decision is usually in line with the decisions of other key competition authorities, in particular with regard to the scope of remedies. However, it is not uncommon for the SAMR to identify specific competition concerns based on the market dynamics and competitive landscape in China (particularly where the geographic market is national) or based on the feedbacks from the relevant Chinese stakeholders, since, as explained above, the SAMR also evaluates the impact of a transaction on public interests and the development of the national economy.

Types of remedies

As in other jurisdictions, in China the Trial Provisions set forth three types of remedies: structural, behavioural and hybrid. Structural remedies mostly refer to divestiture, which is also the focus of the Trial Provisions. The Trial Provisions cover many aspects of divestiture, including the definition, scope, review standards, crown jewel clause, implementation, purchaser criteria, divestiture and monitoring trustee, and review clauses. Further, the Trial Provisions also state the circumstances where the SAMR can request for an upfront buyer divestiture. Fix-it-first divestiture is not expressly specified in the Trial Provisions but has been adopted by the SAMR in practice. The SAMR usually accepts fix-it-first divestiture if the parties propose to divest a certain business to a certain buyer at the very early stage of the notification (i.e., before the SAMR raises its competition concerns to the parties).

However, as noted above, it is widely recognised that the Chinese competition authority appears to have a stronger preference for behavioural remedies than any other competition authority. Out of the 36 transactions conditionally approved by the SAMR (and formerly MOFCOM), 31 cases involved behavioural remedies (among the 31 cases, behavioural remedies were only imposed in 20 cases, while the other 11 involved both structural and behavioural remedies).

The conditional approvals made by the SAMR thus far and the types of remedies imposed on each case are listed below.







13 March 2018

Structural and behavioural



27 December 2017



Advanced Semiconductor/Siliconware

24 November 2017



Maersk Line/Hambur Süd

7 November 2017




6 November 2017

Structural and behavioural



5 October 2017




22 August 2017




29 April 2017

Structural and behavioural


Abbott/St.Jude Medical

30 December 2016



Anheuser Busch InBev/SAB Miller

29 July 2016




25 November 2015




19 October 2015



Corun New Energy/Toyota JV

2 July 2014



AZ Electronic/Merck

30 April 2014




8 April 2014



Life Technologies/Thermo Fisher Scientific

14 January 2014

Structural and behavioural


MStar Semiconductor/MediaTek

26 August 2013




8 August 2013

Structural and behavioural



22 April 2013




16 April 2013

Structural and behavioural


ARM/Gemalto/Giesecke & Devrient JV

6 December 2012




13 August 2012



Goodrich/United Technologies

15 June 2012

Structural and behavioural


Motorola Mobility/Google

19 May 2012



Hitachi/Western Digital

2 March 2012

Structural and behavioural


Henkel Hong Kong/Tiande JV

9 February 2012



Samsung’s HDD Business/Seagate

12 December 2011



General Electric/Shenhua JV

10 November 2011




31 October 2011




2 June 2011




13 August 2010




30 October 2009

Structural and behavioural



29 September 2009

Structural and behavioural


Delphi/General Motors

28 September 2009



Lucite/Mitsubishi Rayon

24 April 2009

Structural and behavioural



18 November 2008


The behavioural remedies imposed in the cases above include commitments:

  • • to hold separate (some argue that this is a quasi-structural remedy);
  • • not to raise prices;
  • • not to discriminate against Chinese customers;
  • • to ensure supply;
  • • to comply with the FRAND principles (not only relating to the license of standard essential patents, but also, in a couple of cases, relating to the supply of physical goods); and
  • • not to engage in tying or bundling, etc.

As noted above, the ‘no tying or bundling’ commitment has become increasingly common in the high-profile mergers involving complementary product portfolios reviewed by the SAMR. This is partially because the SAMR’s review places a lot of weight on market shares. Therefore, if the SAMR sees high market shares of the parties, even if there is no overlap, one concern it may raise is that the parties could potentially tie or bundle the products with high market shares with other products. Another reason is the complaints raised by stakeholders are often vague and broad, and sometimes not competition-specific. These may sometimes be interpreted as conglomerate concerns in order to be addressed within the AML regime.

Remedy negotiations

It is a fairly dynamic process for the parties to negotiate with the SAMR on the remedies after they have submitted the remedy proposal on the basis of the competition concerns identified by the SAMR. Starting from identification of concerns, this process in general can be dissembled into the following phases.

First, as noted above, the SAMR normally verbally shares its competition concerns over the transaction with the parties in a face-to-face meeting at a late stage of the review. Usually this meeting will be held after the parties have provided all the required data and information in the various rounds of information requests. Before the meeting, the SAMR will also ensure that it has received feedback from the key stakeholders that it has consulted with for the transaction. In addition, for global mergers, the SAMR also tends to align with other major competition authorities before the meeting.

Second, the parties will need to propose remedies to address the concerns raised by the SAMR. In exceptional cases, the remedy proposal could also be submitted before competition concerns were declared by the SAMR for the sake of timing. The SAMR may or may not review the proposal in such cases. Given that the Trial Provisions provide little guidance in terms of whether and how a proposal should be evaluated, there is a lot of space for the SAMR and the parties to bargain and agree on a mutually satisfactory remedy proposal. A balance often has to be struck between timing and scope of the remedy. A general principle is that the more the parties want to limit the scope, the more time they should allow for negotiations with the SAMR.

Third, after the SAMR is satisfied with the remedy proposal, it will bring the proposal to market test by sharing the non-confidential version with the stakeholders. The stakeholders will review the proposal and come back with their comments. If the stakeholders indeed raise comments, the SAMR will convey those to the parties and request them to further adjust the remedy proposal. Sometimes the comments can be very specific (e.g., on wordings or time period). If, on the contrary, all the stakeholders provide positive feedback, the SAMR could proceed with the internal procedures for clearance.

This dynamic process can be time-consuming, and estimating the time frame can be difficult. It is, however, important to note that, in practice, the SAMR will request for ‘pull-and-refile’ when it perceives that a decision cannot be reached in 180 days. This will restart the clock of 180 days. In fact, pull-and-refile has been observed as an increasing trend. As at June 2018, there have been 36 conditional clearances in total. Of the first 16 cases from 2008 to the end of 2012, there was only one case where pull-and-refile was required (Western Digital/Hitachi in 2012). For the subsequent 10 cases from 2013 to the end of 2015, there were four cases. For the last 10 cases, there were six and the remaining four all involved special circumstances.

Process and implementation

After a remedy proposal is accepted by the SAMR through the above process, the SAMR will proceed with its internal procedures for clearance, including, among others, preparing and drafting its decision. During that process, the SAMR may frequently request some additional information. Once the internal procedures are fulfilled, the SAMR will issue its decision of the case and publicise it on its official website.

As noted above, normally the parties are given the opportunity to review the decision of the SAMR before announcement in order to confirm that no business secrets or commercial confidential information is included in the announcement. In practice, conditional clearance will also be accompanied by a non-confidential version of the final remedy proposal, but the enforcement will be based on the full version.

After the decision is announced, the parties will go through the monitoring trustee selection process with the SAMR. After that, the parties will prepare and submit a detailed implementation plan (DIP) for the SAMR’s review and approval. The monitoring trustee will also produce its own DIP on how to monitor the implementation of the compliance. The DIPs provide the SAMR, the monitoring trustee and the parties with a comprehensive plan on the implementation and monitoring of the remedies finally approved by the SAMR. For example, the parties would have to provide the SAMR with a reasonable approach to comply with commitments not to raise prices or not to discriminate against Chinese customers, and the monitoring trustee will come up with manners to supervise the implementation accordingly. This process is especially important where behavioural remedies are involved.

In relation to structural remedies, the parties will also need to submit a list of proposed purchaser candidates for the SAMR’s selection and approval. According to the Trial Provisions, the list should contain at list three candidates for the SAMR to choose from. The SAMR can be very strict in complying with such formalities. Given the different timelines often followed by competition authorities around the world, one major concern shared by many companies in such process is whether the SAMR will ultimately choose a different purchaser from other jurisdictions where the process moves faster. Therefore, a condition precedent on the SAMR’s approval is often included in the sale and purchase agreement entered into with the buyer selected. In practice, although the SAMR tends to insist on the formality requirement for three candidates, it has never chosen a different buyer if one has been determined in other jurisdictions.

In addition, the Trial Provisions set forth the time frame for divestitures. In principle, the first divestiture period would last for six months and the SAMR may extend it by three more months upon the parties’ application. It is followed by the six-month second divestiture period, or trustee divestiture period, during which the divestiture trustee will take over the responsibility of implementing the divestiture. For behavioural remedies, the time frame depends solely on the final remedies proposal.


The implementation and compliance with structural remedies are more straightforward and generally consistent with other jurisdictions. For the implementation of behavioural remedies, the relevant documents that the parties need to bear in mind include: (1) the decision of the SAMR; (2) the final remedy proposal of the parties (which is usually approved by the SAMR as part of its decision); and (3) the DIP. The parties will have to implement and comply with the remedies and these documents. In particular, the DIP contains the detailed and specific contents on the scope of commitment, the measures to enforce and the standards to monitor. In practice, the most common approach adopted by the SAMR and the monitoring trustee to inspect the compliance of the parties is to require the parties to produce periodical compliance reports.

The monitoring trustee may also take other actions to ensure compliance by the parties, including on-site examination, requests for information, meeting with the parties and regular contact with stakeholders. As such, complaints by stakeholders on any non-compliance by the parties will have a formal channel to SAMR through the monitoring trustee and would be subject to further investigations by the SAMR. Therefore, the parties will have to work closely with the monitoring trustee when the merger remedies are in effect.

From publicly available information, it appears that non-compliance with remedies seldom occurs in China. To date, the SAMR has issued administrative sanctions in two cases, namely Western Digital/Hitachi (2012) and Thermo Fisher/Life Technologies (2014). According to the SAMR’s decisions, Western Digital violated its hold-separate obligation twice, while Thermo Fisher failed to provide a sufficient level of discounts to Chinese customers as set forth in its remedy proposal. The SAMR fined Western Digital 600,000 yuan in total, and Thermo Fisher 150,000 yuan.

Modification and lift of conditions

Chapter 5 of the Trial Provisions sets forth the provisions on modification or removal of merger remedies based on the parties’ application.

Article 27 of the Trial Provisions provides for factors to be taken into account. These include: (1) significant change on parties to the concentration; (2) substantive change on competitive conditions in the relevant market; and (3) unnecessity or unfeasibility for implementing the remedies.

There have been a few cases where the parties successfully applied for modification or lift of remedies. For example, in 2018, the SAMR approved the remedies imposed in Henkel/TDChem/JV (2012) based on a change to the parties to the concentration and unnecessity or unfeasibility for implementing the remedies, as Henkel exited from the joint venture. In addition, in 2018, the SAMR also approved the application to lift the remedies imposed in MediaTek/MStar (2013) based on substantive change on competitive conditions in the relevant market as the parties’ combined market share had decreased from 80 per cent to less than 50 per cent.

In practice, despite the MediaTek/MStar precedent, it is generally difficult for the parties to apply for modification or lift of remedies based on change of competitive conditions, particularly in more traditional and mature industries where the market shares of players tend to be stable. As such, the recent common practice is for the parties to explicitly include a sunset clause in a remedy proposal setting out the effective period and expressly stipulating that the remedy will automatically expire after that.


Enforcement of merger control review and merger remedies has become increasingly robust and sophisticated in China over the past decade. After the reorganisation and restructure, we anticipate that the SAMR will further reinforce its merger control review function. Established practices at large may remain, but our practice has already witnessed some changes and adjustments for establishing a more effective and delicate process toward remedy-applicable notifications. Aligning with other major jurisdictions is foreseen but undoubtedly the SAMR will involve more and more considerations with ‘Chinese characteristics’, as well as industrywide and policy-related concerns about their decision-making process. This may represent a more consistent timeline of review with other major jurisdictions, but also more unique or exclusive requests for merger remedies in China. Preference for conglomerate concern and behavioural remedies may continue, but discussion of the appropriateness of such inclination will be more extensive and frequent in the future. As the AML and many other relevant laws and regulations are currently being amended, we believe the competition law practice and merger control review in China will become even more important and worthy of the world’s notice in the next decade.

1 Yao Feng and Angus Xie are partners at Broad & Bright Law Firm. The authors would like to thank Herbert Ai, associate at Broad & Bright Law Firm, for his contribution to this article.

2 Emphasis added.

3 See MOFCOM, [2017 Commerce Affairs Annual Performance Report 9] Insisting on the New Idea of Development and Diligently Completing Anti-Monopoly Tasks of the New Era, 9 January 2018,

Unlock unlimited access to all Global Competition Review content