The following authorities deal with mergers:

  • a the Anti-monopoly Bureau within the Chinese Ministry of Commerce (MOFCOM) is responsible for reviewing and clearing merger filings; and
  • b the Anti-monopoly Commission (a division of the State Council) is responsible for formulating and issuing merger guidelines (it is also the coordinating government agency between MOFCOM and the two other antitrust enforcement agencies, the National Development and Reform Commission and the State Administration for Industry and Commerce).

In China, pre-merger notification is required when the entities participating in the merger possess a certain amount of turnover. Specifically, pre-merger notification is mandatory when, during the previous fiscal year:

  • a the total global turnover of all business operators participating in the concentration exceeded 10 billion yuan, and at least two of these business operators each had a turnover of more than 400 million yuan within China; or
  • b the total turnover within China of all the business operators exceeded 2 billion yuan, and at least two of these operators each had a turnover of more than 400 million yuan within China.


i Legislation

The Anti-monopoly Law (AML) is the primary antitrust legislation that governs the merger control regime. Since the AML was enacted in August 2008, a number of regulations and guidelines relating to the merger control regime have been promulgated in 2015, including:

  • a the Remedy Trustee Agreement Template for Merger Review (Merger Remedy Trustee Template), which was released on 27 November 2015;2
  • b the Guiding Opinions of the Anti-Monopoly Bureau of the Ministry of Commerce on Regulating the Titles of Cases on the Declaration of Concentration of Business Operators, which were released on 6 February, 2015;3 and
  • c the Provisions on Imposing Restrictive Conditions on the Concentration of Undertakings (for Trial Implementation) (Provisions on Imposing Restrictive Conditions), which were released on 4 December 2014 and came into effect on 5 January 2015.4
ii Enforcement
Administrative clearances of merger control filings

In 2015, a total of 352 merger cases were notified to MOFCOM with 338 cases being accepted. 319 transactions were approved, among which, 317 were cleared unconditionally and two were imposed with conditions. 74 per cent of the transactions were approved within Phase 1. In addition, penalties were imposed in nine cases for failure to notify and in two cases for non-compliance with the conditions imposed by MOFCOM. Below is a brief description of the two mergers that were cleared with conditions in 2015.

Acquisition of Alcatel-Lucent by Nokia

On 19 October 2015, MOFCOM conditionally approved Nokia’s acquisition of Alcatel-Lucent.

MOFCOM found that the acquisition of Alcatel would increase Nokia’s holding in 2G, 3G and 4G standard essential patents (SEPs), and strengthen its market power in the information and communication technology SEP licensing market. According to MOFCOM’s announcement, it believes that an SEP holder may distort downstream competition if it abuses its SEPs and engages in restrictive and anticompetitive behaviour, such as refusing to license, charging overly high royalty fees or engaging in discriminatory licensing. MOFCOM also found in its investigation that most wireless communication equipment manufacturers and handset makers are unable to engage in cross-licensing with Nokia and therefore lack sufficient countervailing buyer power.

Therefore, MOFCOM imposed remedies on Nokia that, inter alia, Nokia will not use injunctions to prevent enforcements of FRAND-encumbered SEPs on a reciprocal basis, unless the potential licensees are unwilling to sign FRAND licensing agreements; where Nokia transfers its SEPs to a third party, Nokia will inform Chinese licensees, as well as Chinese companies that are actively engaging in licensing talks, about the transfer details; and when transferring its SEPs to a new owner in the future, Nokia will only do so on the basis that the new owner accepts the existing FRAND commitments made by Nokia.

Acquisition of Freescale Semiconductor by NXP Semiconductors

On 25 November 2015, MOFCOM conditionally approved Dutch chipmaker NXP Semiconductor’s acquisition of US-based Freescale Semiconductor. In this case, MOFCOM was very concerned that the proposed transaction could eliminate or restrict competition in the global radio frequency power transistor product market, in which the two undertakings concerned overlap. The global and Chinese radio frequency power transistor product markets are highly concentrated with few competitors. Freescale and NXP are ranked the top and the second players in the said market, and both are far ahead of their rivals in the market.

In its decision, MOFCOM imposed structural remedies on NXP by disposing its radio frequency power transistor product operations to Beijing Jiangguang Asset Management, and required the proposed transaction to be completed only after the disposal has occurred.

Administrative penalty decisions

In 2015, MOFCOM published four administrative penalty decisions imposed against Fujian Electronics and Information, Fosun Pharma, CSR Nanjing Puzhen, Bombardier Transportation, Best TV and Microsoft on its website. Fujian Electronics and Information was fined 150,000 yuan for failure to notify the authority of its acquisition of Chino-E’s 35 per cent shares, while Fosun Pharma was fined 200,000 yuan for failure to notify its acquisition of Suzhou Erye’s 65 per cent shares. The authority also fined CSR Nanjing Puzhen and Bombardier Transportation 150,000 yuan respectively for setting up a joint venture without notification, and fined Best TV and Microsoft 400,000 yuan in total for failure to notify their joint venture.


i Fast-track process

The Interim Provisions on the Standards for Simple Cases, which became effective on 12 February 2014, set forth the substantive criteria for determining which cases may be treated as a simple case. For example, the market share threshold for horizontal mergers is 15 per cent, and for other mergers, including vertical mergers and those that are neither horizontal nor vertical, it is 25 per cent. For notifications involving joint ventures or where the acquisition targets are located offshore, mergers will qualify for the simplified procedure if the joint venture or acquisition target does not engage in business operations in China.

Despite meeting the above criteria, a notification may still be ineligible for a simplified procedure due to reasons such as the relevant market being difficult to define, or if the concentration may adversely affect market entry, technology development, consumers or national economic development.

It is worth noting that MOFCOM may cancel the application of the simplified procedures under certain circumstances.

In accordance with the Guidelines for the Notification of Simple Cases, after the official acceptance of a case filed under simplified procedures, MOFCOM must publish an announcement of the simple case on its website for a period of 10 days. Any entity or individual (third party) may lodge an objection with MOFCOM, and provide any relevant evidence during the announcement period. Where the Anti-monopoly Bureau finds a case should not be qualified for simplified procedures, it shall require the notifying party to withdraw the case and refile under normal procedures.

ii Waiting periods and time frames

There are broadly two review phases that a merger filing would have to go through with MOFCOM: the pre-acceptance phase and the formal review phase.

Pre-acceptance phase

When entities submit a merger filing to MOFCOM, a ‘pre-acceptance’ case handler within MOFCOM will determine whether MOFCOM is able to formally accept the filing. This case handler will review the filing for completeness, and may also seek clarifications or ask for more details in respect of the filing if certain aspects of the filing are unclear or need to be supplemented. From our experience, this pre-acceptance period generally takes six to eight weeks. In some cases (for instance, in the WD/Hitachi case), this phase may even ‘stretch’ to two or three months.

Formal review phase

Pursuant to the AML, there are two phases within the formal review phase: Phase I (the preliminary review period) and Phase II (the further review period).

Phase I lasts 30 calendar days. During this phase, MOFCOM will attempt to review the merger filing and make a decision as to whether the filing should be cleared.

Phase II lasts 90 calendar days. If MOFCOM has made a decision that a merger filing warrants further review, it will inform the parties (in writing) before or at the expiry of Phase I that the review period is being extended into Phase II.

Furthermore, MOFCOM may extend the Phase II period by another 60 calendar days at the most, provided that the merging parties agree to extend the time limit for the review; the documents submitted by the parties are inaccurate and require further verification; or the circumstances relating to the filing have significantly changed after notification by the parties.

If MOFCOM fails to make a decision upon the expiry of each set time period as stated above, the parties may execute the transaction.

The following table summarises the various waiting periods as described above and possible outcomes of the review (i.e., approved, approved with conditions or prohibited).



Possible results


Phase I (preliminary review)

30 days

Decision for further review


Decision for no further review

Attachment of restrictive conditions

Obtained conditionally

No restrictive conditions


No decision


Phase II (further review)

90 days (plus possibly 60 additional days)

Decision of prohibition


Decision of not prohibiting the transaction

Attachment restrictive conditions

Obtained conditionally

No restrictive conditions


No decision


iii Parties’ ability to accelerate the review procedure

Most mergers are time-sensitive, and as a result, most merging entities generally wish for the merger review period and procedures to be as swift as possible. To assist MOFCOM in clearing merger filings smoothly and efficiently, we recommend the following approach: first, articulate why the merger is time-sensitive (e.g., one entity is a failing firm); second, ensure that the merger filing report is complete (according to the MOFCOM requirements) and accurate; and third, if MOFCOM asks any supplementary questions or asks for clarifications, respond to these further questions swiftly.

iv Third-party access to the file and rights to challenge mergers

Third parties do not possess a statutory right to access merger control files, but they do possess a right to challenge mergers in the process of review.

In its review process, MOFCOM may seek opinions from third parties (including government agencies, industry associations and other entities) in respect of the proposed acquisition, and third parties may voice their opinions through these consultations.

In addition, pursuant to Articles 6 to 8 of MOFCOM’s Measures for Inspecting Concentration of Business Operators, third parties may be involved in the merger control review process if MOFCOM decides to conduct hearings. Participants in these hearings may include entities involved in the filing; competitors; representatives of upstream and downstream entities (and other related entities); experts; representatives of industry associations; representatives of relevant government authorities; and consumers. Third parties may therefore express their opinions on the proposed merger or acquisition through these hearings.

v Resolution of authorities’ competition concerns, administrative reconsiderations and judicial review

Pursuant to Article 29 of the AML, MOFCOM has the right to impose conditions in respect of mergers to alleviate the negative impact of a merger on competition. This gives MOFCOM wide discretion to impose a variety of conditions, including structural and behavioural conditions.

Further, according to the Provisions on Imposing Restrictive Conditions, the notifying party can propose restrictive conditions either before or after competition concerns are raised by MOFCOM. MOFCOM will then consult with the notifying parties in respect of such restrictive conditions, seeking relevant opinions and conducting an evaluation before making a decision.

Pursuant to Article 53 of the AML, entities that are not satisfied with a MOFCOM decision in respect of merger control may seek a review of the decision (i.e., administrative reconsideration). We understand that this review process and decision will be undertaken by the Treaty and Law Department of MOFCOM.

Entities who are dissatisfied with the decision of the Treaty and Law Department of MOFCOM may then seek a further review of the Treaty and Law Department’s decision by the State Council of the People’s Republic of China, or bring administrative proceedings before the courts (i.e., judicial review). In the former case, the administrative decision of the State Council will be the final and binding decision.

Entities may only seek a review of MOFCOM’s decisions based on an error of law (including because administrative procedures are in violation of the law, administrative discretionary power has been abused or the result of the merger control review is unjust).

vi Effect of regulatory review

MOFCOM is the sole authority formally in charge of reviewing mergers. Therefore, it is not obligated by law to consult with or seek the opinions of other authorities or regulators.

However, MOFCOM does consult with other government agencies on certain mergers. For instance, MOFCOM may consult with the State Administration of Radio, Film and Television (SARFT) and obtain SARFT’s opinions in respect of a merger within the broadcasting industry; with respect to a merger within the semiconductor industry, MOFCOM may consult the Ministry of Industry and Information Technology for its opinions. Such consultation procedures will take time, and this is a factor that entities must consider when submitting a merger filing. MOFCOM may consider that such consultations are important, and a merger filing may therefore lapse into Phase II if MOFCOM is awaiting responses from other government agencies.


i Coordinating with other jurisdictions

In recent years, MOFOM has enhanced its cooperation with antitrust authorities in other jurisdictions.

On 27 July 2011, MOFCOM signed an antitrust memorandum of understanding (MoU) with its US counterparts (i.e., the US Federal Trade Commission and Department of Justice). The MoU lists several specific areas for cooperation, including exchanging experiences on competition law enforcement, when appropriate; and seeking information or advice from one another regarding matters of competition law enforcement and policy.

Since 2008, MOFCOM has also signed antitrust MoUs with competition authorities in the EU, the UK, Korea, Russia, Australia and Kenya.

We understand that MOFCOM regularly consults with the competition authorities from more experienced jurisdictions such as the United States and European Union. The competition authorities from these jurisdictions also conduct capacity building or technical assistance programmes for MOFCOM officials.

In practice (in the context of multi-jurisdictional filings), MOFCOM monitors the progress of merger control reviews in other jurisdictions closely. MOFCOM may also ask the entities involved in the proposed transaction to provide information on the status of their filings in other jurisdictions.

ii Special situations
Financial distress and insolvency

Previously, foreign entities that wished to purchase domestic entities in financial distress or insolvency could apply to MOFCOM for an exemption (in respect of notification or review).5 Despite the fact that there are no statutory exemptions (pursuant to the AML or in related regulations and rules) in respect of acquiring entities in financial distress or insolvency, MOFCOM will take this factor into consideration when undertaking the merger review (in particular, in terms of allocating a time frame for the review). In accordance with Article 12 of the Interim Provisions on Assessment of the Impact of Business Operator Concentration on Competition, whether the business operator concerned is an enterprise on the brink of bankruptcy is one of the factors to be considered in assessing the impact of concentration.

Hostile transactions

The AML (nor its related regulations or rules) does not clearly address the manner in which a hostile transaction shall be reviewed. The acquiring party may be faced with some practical problems. First, most of the parties do not sign any formal transaction agreements in the case of public tenders, which are normally required by MOFCOM to be part of the filing materials. However, in recent practice, MOFCOM may accept the public tender offer in lieu of signed transaction agreement pursuant to Article 14 of the Guiding Opinions. Secondly, in a hostile transaction, the acquired target may not be cooperative in providing the information required in the filing, meaning that some non-public information, including the market data of the acquired target, may be difficult to obtain without the cooperation of the target. Even though Article 13 of the Guiding Opinions has provided that the acquired target shall have the obligation to assist with the acquirer’s filing, there are no specific rules about the legal liabilities for breaching such obligation to assist. As a possible solution, based on our experience, the acquiring party may apply for pre-notification consultation with MOFCOM under such circumstances, and MOFCOM would take a case-by-case approach to reviewing the notification.

Minority ownership interests

There are no provisions under the AML or in its related regulations and rules that address the acquisition of minority ownership interests. However, acquisition of minority interests may also give rise to a notifiable transaction, depending on whether such acquisition may confer ‘control’ of the target company on the acquirer.

MOFCOM may also consider minority ownership interests in the substantive review process. For instance, in MOFCOM’s decision regarding the acquisition by Penelope of Savio, MOFCOM mainly raised competition concerns about Uster Technologies Co, Ltd (Uster) and Loff Brothers Co, Ltd (Loff), which were the only two manufacturers of electronic yarn cleaners for automatic winders in the world. Loff was a wholly owned subsidiary of Savio, the target company. However, Alpha Private Equity Fund V (Alpha V), as the parent company of the acquiring party, Penelope, only held a 27.9 per cent stake in Uster. Even so, MOFCOM held that it cannot ‘rule out the possibility that Alpha V may get involved or influence the business operations of Uster’.


i Pending legislation

The following measures are still in draft form:

  • a Tentative Measures for Investigation and Handling of Concentration of Business Operators Not Satisfying Notification Thresholds But Involving Alleged Monopoly Acts;
  • b Tentative Measures for Collection of Evidences on Concentration of Business Operators Not Satisfying Notification Thresholds But Involving Alleged Monopoly Acts;
  • c Merger Review Procedure (revision in process); and
  • d Measure for Examination of Concentration of Undertakings.
ii Unresolved issues

It would be useful if MOFCOM clarified matters pertaining to companies with variable interest entities (VIE) structure. As the legality of the VIE structure is still unclear under Chinese law, normally MOFCOM would not accept notifications of concentrations involving companies with VIE structures. It remains unclear how MOFCOM will deal with this issue in the future.

In addition, it would be helpful if MOFCOM issued merger clearance decisions with more details (such as proposed market definition and a summary of its competition analysis). MOFCOM currently publishes its decisions for cases that it has approved with conditions or prohibited, and a brief summary of cases under simplified procedures for the purposes of public announcement. However, for unconditionally approved decisions, it only publishes the name of the transactions without mentioning any substantive details. If MOFCOM disclosed more details of its unconditionally approved decisions, it would be useful for building jurisprudence and improving the transparency of the merger clearance process.


1 Susan Ning is a senior partner and Hazel Yin is a partner at King & Wood Mallesons. The authors would also like to recognise Gong Ting (associate) for her contribution to this chapter.

2 The Merger Remedy Trustee Template applies where MOFCOM imposes structural and behavioural conditions and was published by MOFCOM to facilitate MOFCOM to entrust a third party carrying out the supervision.

3 The Guiding Opinions set forth unified titles of cases that undertakings shall use on the concentration of undertakings in declaration materials.

4 The Provisions on Imposing Restrictive Conditions set forth the determination, implementation and supervision regime for restrictive conditions.

5 Under Article 54(2) of the now-repealed Acquisition of Domestic Enterprises by Foreign Investors Provisions.