The Antimonopoly Law of the People’s Republic of China (AML), the legal basis for Chinese merger control, was passed on 30 August 2007 and came into force on 1 August 2008. Over the course of the next decade, Chinese merger control saw significant progress: the antimonopoly law enforcement agency reviewed more than 2,500 filings of concentration of undertakings, with a total transaction value of more than 40 trillion yuan.[2]

Notably, in 2018 – the 10th anniversary of the implementation of the AML – the State Administration for Market Regulation (SAMR) was officially inaugurated. The new Antimonopoly Bureau of SAMR integrates the antimonopoly responsibilities of the National Development and Reform Commission, the Ministry of Commerce (MOFCOM) and the State Administration for Industry and Commerce, responsible for unified antimonopoly law enforcement, including the antimonopoly review on concentrations of undertakings.

This chapter provides a practical guide on merger remedies to address any anticompetitive concerns resulted from complicated merger filing cases in China.

Overview of the Chinese merger control process

A concentration triggers a filing requirement to the SAMR only if certain turnover thresholds are met, and the merging parties are required to notify the SAMR before the implementation of the concentration. After receipt of the notification, the SAMR makes supplemental information requests to the merger parties. The clock for review will not start to run until the SAMR declares the materials and information submitted by the merger parties are complete and formally accepts the case, after which, Phase 1 proceedings are initiated. The SAMR then has 30 calendar days for an initial assessment of the merger. If SAMR cannot clear the merger within Phase 1 review, it can initiate a more in-depth review (Phase 2 review), which may take up to 90 calendar days. The Phase 2 review can be extended for a further 60 calendar days (extended Phase 2 review) in exceptional circumstances or with the parties’ consent. However, some conditional clearance decisions show that the SAMR can in practice take a longer time than the maximum statutory review period of 180 days to finish the review. This is the case, for example, where the SAMR is running out of the time to complete its review owing to complex remedy negotiations. In such a case, the notifying party may need to agree to withdraw and refile the notification, which restarts a further 180-day review period.

When reviewing concentration of undertakings, the SAMR considers the following factors as provided in Article 27 of the AML:

(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.

Merger remedies

Grounds of imposition of remedies

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 [a] 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.’[3]

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. Since the AML came into force, MOFCOM and the SAMR have announced 40 conditional clearances up to June 2019. According to the SAMR, it received 513 notifications in 2018, out of which 468 were concluded.[4] In particular, the SAMR imposed remedies in four cases in 2018 – fewer than in the previous year, which saw seven cases with conditions.

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. The most recent five cases conditionally cleared by the SAMR since 2018 all involved behavioural remedies. The most typical remedy is commitment not to engage in tying and bundling.

Remedies in the context of multi-jurisdictional mergers

The SAMR has entered into more than 50 international antitrust cooperative documents with competition agencies in 30 jurisdictions,[5] including a number of key competition authorities, for instance, 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). If the proposed fix-it-first divestiture constitutes another notifiable concentration, the transaction in relation to the fix-it-first divestiture shall be notified to and cleared by the SAMR.

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 40 transactions conditionally approved by the SAMR (and formerly MOFCOM), 35 cases involved behavioural remedies (among the 35 cases, behavioural remedies were only imposed in 22 cases, while the other 13 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.

1KLA-Tencor Corporation/Orbotech Ltd13 February 2019Behavioural
2United Technologies Corporation/Rockwell Collins, Inc23 November 2018Structural and behavioural
3Linde AG/Praxair, Inc30 September 2018Structural and behavioural
4Essilor International/Luxottica Group SpA25 July 2018Behavioural
5Bayer/Monsanto13 March 2018Structural and behavioural
6BD/Bard27 December 2017Structural
7Advanced Semiconductor/Siliconware24 November 2017Behavioural
8Maersk Line/Hambur Süd7 November 2017Behavioural
9Agrium/Potash6 November 2017Structural and behavioural
10HP/Samsung5 October 2017Behavioural
11Broadbom/Brocade22 August 2017Behavioural
12Dow/DuPont29 April 2017Structural and behavioural
13Abbott/St Jude Medical30 December 2016Structural
14Anheuser Busch InBev/SAB Miller29 July 2016Structural
15Freescale/NXP25 November 2015Structural
16Alcatel-Lucent/Nokia19 October 2015Behavioural
17Corun New Energy/Toyota JV2 July 2014Behavioural
18AZ Electronic/Merck30 April 2014Behavioural
19Nokia/Microsoft8 April 2014Behavioural
20Life Technologies/Thermo Fisher Scientific14 January 2014Structural and behavioural
21MStar Semiconductor/MediaTek26 August 2013Behavioural
22Gambro/Baxter8 August 2013Structural and behavioural
23Gavilon/Marubeni22 April 2013Behavioural
24Xstrata/Glencore16 April 2013Structural and behavioural
25ARM/Gemalto/Giesecke & Devrient JV 6 December 2012Behavioural
26Yihaodian/Wal-Mart 13 August 2012Behavioural
27Goodrich/United Technologies 15 June 2012Structural and behavioural
28Motorola Mobility/Google 19 May 2012Behavioural
29Hitachi/Western Digital2 March 2012Structural and behavioural
30Henkel Hong Kong/Tiande JV 9 February 2012Behavioural
31Samsung’s HDD Business/Seagate 12 December 2011Behavioural
32General Electric/Shenhua JV10 November 2011Behavioural
33SAVIO/Alpha V31 October 2011Structural
34Silvinit/Uralkali2 June 2011Behavioural
35Alcon/Novartis13 August 2010Behavioural
36Sanyo/Panasonic30 October 2009Structural and behavioural
37Wyeth/Pfizer29 September 2009Structural and behavioural
38Delphi/General Motors 28 September 2009Behavioural
39Lucite/Mitsubishi Rayon 24 April 2009Structural and behavioural
40Anheuser-Busch/InBev18 November 2008Behavioural

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, or any other abusive conducts.

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. All five cases conditionally approved in 2018 and the first half of 2019 were required to ‘pull-and-refile’. From the notification date to the clearance date, the review processes of the above five cases lasted between 291 days and 428 days.

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.


A significant number of conditional approvals have been granted by the SAMR (and formerly MOFCOM) since the implementation of the AML. By observing those conditional clearances, we may conclude the general trends in merger remedies cases in China.

The SAMR is actively engaging with other antitrust authorities to coordinate global remedies packages when dealing with the international transactions with competition concerns. However, the remedies with Chinese characteristics were not uncommon in the previous remedies cases. It is foreseen that where public interest or industry policy-related issues specific to the Chinese market arose, the SAMR will be likely to impose additional remedies to address these specific issues.

The SAMR has shown a strong preference to imposing behavioural remedies with a view to preventing abusive behaviours that might happen after the merger. The behavioural remedies usually include a series of commitments specific to each case, such as supplying at reasonable prices, not engaging in exclusive behaviours and no tying or bundling.

The time taken for the SAMR to review these filings involving remedies also varies considerably from case to case. Parties to a potential remedies transaction should therefore be prepared for a degree of uncertainty when it comes to the merger review time frames in China. It is highly recommended that the parties to the transaction with potential competition concerns to plan the proposal for remedies at early stage. In our practice, it was feasible for the parties to secure clearance by fix-it-first divestiture. The parties could bring its proposal at the beginning of the notification to speed up the merger review process.


1 Yi Xue (Josh) is a partner at Zhong Lun Law Firm. The information in this chapter was accurate as at September 2019.

2 See speech made by Gan Lin on press conference on the 10th anniversary of the implementation of the AML, 16 November 2018.

3 Emphasis added.

4 See speech made by Gan Lin on National Market Supervision System Antitrust Work Conference, 9–10 May 2019,

5 See Lin Hang: Antitrust Law is a Common International Language, Competition Policy Forum 2018,

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