The Public Competition Enforcement Review: China


The year 2021 saw continuing momentum in China's drive to strengthen anti-monopoly enforcement and prevent the 'disorderly expansion of capital' in line with its overall economic planning. The State Administration for Market Regulation (SAMR) demonstrated its professional competence and strict approach during several high-profile monopoly investigations in which it issued unprecedented penalties. In 2021, the SAMR published 26 penalty decisions on alleged monopoly agreements and abuses of market dominance and concluded 727 merger review cases. In 2021, the SAMR issued over 23.5 billion yuan in fines, which is a record amount in Chinese antitrust enforcement history.

As for legislative work, the Standing Committee of the National People's Congress of the People's Republic of China (NPC) released the revised draft of the Anti-monopoly Law (the Revised Draft) in October 2021. If passed, the Revised Draft will be the first major revision to China's Anti-Monopoly Law (AML) since it was adopted in 2007. The Revised Draft expressly strengthens anti-monopoly enforcement and significantly increases fines for antitrust law violations. It is also notable that the Revised Draft would establish a safe-harbour rule for monopoly agreements at the legislative level for the first time. Although the finalisation of the Revised Draft is subject to further discussion among various government agencies and must be approved by the NPC, it signals the SAMR's enforcement priorities and indicates legislative trends that will have a profound impact on antitrust enforcement in China.

Also, the Anti-monopoly Commission of the State Council (the Anti-monopoly Commission) published the Anti-monopoly Guidelines in the Field of Active Pharmaceutical Ingredients (the Anti-monopoly Guidelines for APIs) and the Anti-monopoly Guidelines for Platform Economy Industry (the Platform Economy Guidelines) in 2021.

As for antitrust behaviour investigations, the SAMR maintained its rigorous approach. In 2021, the SAMR published penalty decisions in which it issued record fines. Some of these decisions related to cases in which massive penalties were imposed on platform operators and pharmaceutical companies and have aroused widespread concern throughout society.

As for merger control reviews, the SAMR's overall case handling efficiency improved, as evidenced by a huge increase in the total number of cases concluded and a slight reduction in the average duration for a case review. Overall, the SAMR completed 727 case reviews. Notably, the SAMR prohibited a merger between two online game streaming companies, which is a vivid example of it strictly supervising the disorderly expansion of capital. As for conditionally approved cases, the 2021 number is relatively stable (four cases) compared with the previous year (four cases). In addition, the SAMR investigated more non-filing cases than in any previous year since the implementation of the AML – a number that soared from 13 in 2020 to 107 in 2021.

Prioritisation and resource allocation of enforcement authorities

In November 2021, the National Anti-monopoly Bureau was established in the same building as the SAMR. The new bureau has taken over the role of the SAMR's Anti-monopoly Bureau and consists of three divisions: (1) the Competition Policy Coordination Division, which aims to promote the implementation of competition policies and coordination of antitrust-related work; (2) the Anti-monopoly Enforcement Division I, which is in charge of matters relating to supervising and investigating monopoly agreements, abuses of market dominance, and abuses of intellectual property rights to eliminate and restrict competition; and (3) the Anti-monopoly Enforcement Division II, which is responsible for merger control filings. According to China's government hierarchy, the administrative level of the National Anti-monopoly Bureau is higher than that of the SAMR Anti-monopoly Bureau. Notably, the director-general of the National Anti-monopoly Bureau is also a SAMR vice minister. The establishment of the National Anti-monopoly Bureau signifies that China is determined to strengthen antitrust enforcement. Furthermore, we understand that the new bureau has started expanding its human resources to facilitate more rigorous antitrust enforcement.

Revision of the AML

On 23 October 2021, the Standing Committee of the NPC published the Revised Draft of the AML.2 In essence, the Revised Draft closely follows the AML framework currently in force while making notable amendments to meet the changing demands of enforcement practice. For instance, the Revised Draft adds relevant provisions on hub-and-spoke agreements, clarifies the identification of dominant undertakings in the internet sector and introduces potential criminal liability for monopolistic behaviour. Also, the Revised Draft significantly strengthens the legal penalties available for AML violators. The Revised Draft also establishes a safe-harbour rule for monopoly agreements. In addition, the Revised Draft introduces an enforcement mechanism that would allow people's procuratorates to initiate public interest litigation for antitrust matters. Where a concentration of undertakings fails to make a regulatory filing in accordance with the law and has or might exclude or restrict competition, Article 58 of the Revised Draft prescribes penalties of up to 10 per cent of a non-filer's annual turnover for the previous year – currently, the maximum penalty is merely 500,000 yuan. According to Article 63, if the violation is particularly serious, with a particularly bad impact or causes particularly serious consequences, a fine of two to five times the penalty prescribed in Article 58 of the Revised Draft may be imposed. For example, if an enterprise is fined 10 per cent of its annual sales for monopolistic practices, a multiplier of five times would result in an astronomical total penalty of 50 per cent of the turnover.

The revision of the AML would pave the way for further improvements in lawmaking and enforcement. The Revised Draft of the AML is expected to be adopted in 2022.

Release of the Platform Economy Guidelines

On 7 February 2021, the Anti-monopoly Commission released the world's first antitrust guidelines that specifically focus on the platform economy: the Platform Economy Guidelines.3 The Platform Economy Guidelines give specified guidance regarding monopoly agreements, abuse of dominance, the concentration of undertakings and other areas of concern in the context of internet platforms.

Notably, the Platform Economy Guidelines clarify that transactions involving variable interest entities (VIEs) are subject to merger control if the merger notification obligation is triggered. The Platform Economy Guidelines further state that transactions involving start-ups, emerging platforms or free service models below the turnover thresholds for mandatory notification may be subject to merger control if the transactions might result in the elimination or restriction of competition.

Release of the Anti-monopoly Guidelines for APIs

On 18 November 2021, the Anti-monopoly Commission released the Anti-monopoly Guidelines for APIs4 to strengthen anti-monopoly regulation in the API field. The introduction of the Anti-monopoly Guidelines for APIs further improves the anti-monopoly regulatory system and enhances the predictability of anti-monopoly enforcement for APIs.

Enforcement agenda

In 2021, the platform economy was one of the key areas of anti-monopoly enforcement. In December 2020, the SAMR launched an investigation into Alibaba Group Holdings (Alibaba) for suspected monopolistic conduct (i.e., a 'choose-one-from-two' behaviour – prohibiting some of its platform merchants from opening stores as well as participating in promotional activities on competing platforms.) On 10 April 2021, the SAMR imposed a fine of 18.23 billion yuan on Alibaba for abuse of dominance, which amounted to 4 per cent of Alibaba's sales revenue in 2019. At the time of writing, the 18.23 billion yuan fine is the largest ever antitrust fine in Chinese history. Soon after the Alibaba penalty decision announcement, Meituan, another internet giant in China, was also penalised for engaging in a similar choose-one-from-two scheme.

In 2021, the SAMR and local agencies concluded and published 13 cartel cases, an increase compared with 10 cases in 2020. Six out of the 13 cartel cases involved industry associations that were fined for arranging monopoly agreements. The industry associations involved included the ready-mixed cement association, the cement association, the fire protection association, the used-car industry association, the insurance industry association and the tourism industry association. Industries affecting people's livelihoods, such as the pharmaceutical industry, have always been the focus of regulators. We believe that enterprises in industries affecting people's livelihoods should always be vigilant and conduct self-inspections of their compliance systems to avoid severe penalties for violating the AML and to ensure normal business operations.


In 2021, the SAMR and local agencies concluded and published 13 cartel cases. Compared with 10 cases in 2020, cartel cases in 2021 increased by 30 per cent. Six of the 13 cartel cases involved industry associations. The published penalty cases involved a variety of industries, such as building materials, pharmaceuticals, tourism, fire protection and insurance. Penalties totalled 1,636 million yuan, which is significantly higher than in previous years.

i Significant cases

Tianjin Tianyao pharmaceuticals cartel

On 30 April 2021, the Tianjin Administration for Market Regulation published a decision fining Tianjin Tianyao Pharmaceuticals (Tianyao) 44.02 million yuan for entering into a horizontal monopoly agreement.5

According to the penalty decision, Tianyao reached and implemented a monopoly agreement with other two competitors separately (i.e., Tianjin Pacific Chemical Pharmaceutical Co Ltd and Shenzhen Fuhaitong Pharmaceutical). Tianyao and the other two competitors divided the sales market for the API fluocinolone acetonide, and revised and fixed prices three times between 2017 and 2018.

The market division and price-fixing conduct of Tianyao violated Article 13 of the AML, which prohibits market participants from reaching an agreement with rivals to divide the sales market. Tianyao was fined four per cent of its 2018 annual turnover, while the other two companies involved were fined three per cent and two per cent of their 2018 annual turnover respectively. The penalties totalled 50.78 million yuan.

Fengcheng City Premixed Concrete Association cartel

On 19 August 2021, the Jiangxi Administration for Market Regulation (Jiangxi AMR) published a decision to fine Fengcheng City Premixed Concrete Association (the Association) and its eight member firms 286 million yuan for entering into a horizontal monopoly agreement.6

According to the penalty decision, the Association organised its eight member firms to collude, enter into a joint operating agreement in September 2013 and divide the premixed concrete sales market in Fengcheng City.

Specifically, the eight member companies fixed or changed the prices of premixed concrete products, restricted the production output of premixed concrete, divided the sales and raw material procurement markets, and jointly boycotted relevant transaction parties.

The market division and price-fixing of the Association and its eight member firms violated Article 13 of the AML, which prohibits market participants from reaching an agreement with rivals to divide markets.

Six of the eight companies involved in the case were fined eight per cent of their 2018 annual turnover because of the seriousness of their behaviour. The other two companies were fined three per cent of their 2018 annual turnover on account of mitigating circumstances, such as being coerced to enter the monopoly agreement and relatively short-term participation. In addition, the enforcement authorities imposed a maximum fine of 500,000 yuan on the Association and recommended that the local civil affairs bureau revoke the Association's registration as a social organisation with legal personality, which is the most severe punishment available for an industry association for violation of the AML.

ii Trends, developments and strategies

Among the 13 cartel cases the SAMR and local agencies concluded in 2021, fines range from a penalty exemption (zero per cent) to a maximum penalty of 8 per cent of the previous year's turnover. However, most cases involved penalties of less than 3 per cent of the previous year's turnover. In the Jiaxing Used Car Industry Association and the Shanghai Tourism Industry Association cases, the two parties involved were granted fine exemptions because they were the first to report monopoly agreements and provide important evidence to regulators during the investigations.

iii Outlook

The key industries for antitrust enforcement in 2021 were those closely related to people's daily lives, especially those relating to building materials and pharmaceuticals. In particular, four out of 13 cases related to the building materials industry and two out of 13 cases related to pharmaceuticals. This signals that the SAMR will continue to focus its antitrust concerns on industries closely related to the livelihoods of individuals.

Antitrust: restrictive agreements and dominance

In 2021, the SAMR and its local agencies concluded 11 abuse of dominance cases. Of those cases, three involved the pharmaceutical industry, five involved public utilities and three involved internet companies. The penalties totalled 21.85 billion yuan.

The most significant dominance case concluded in 2021 was the Alibaba case, in which the SAMR imposed a fine on Alibaba of 18.23 billion yuan – four per cent of Alibaba's turnover in China in 2019.

i Significant cases

The Yangtze River Pharmaceutical (Group) Co, Ltd

On 15 April 2021, the SAMR issued a penalty decision to fine Yangtze River Pharmaceutical (Group) Co, Ltd (Yangtze River) 760 million yuan for engaging in resale price maintenance (RPM).7

As one of the leading pharmaceutical manufacturers in China, Yangtze River occupies an important position in the domestic pharmaceutical field. Yangtze River's illegal conduct mainly involved vertical price restrictions. The SAMR found that between 2015 and 2019, Yangtze River reached agreements with drug wholesalers, retail pharmacies and other downstream entities to fix the resale prices of medicines and set minimum resale prices for its products across the country.

The SAMR concluded that Yangtze River's conduct had the effect of excluding and restricting competition, and breached Article 14 of the AML. Yangtze River argued that it did not implement monopoly agreements because it did not impose any punitive measures. However, the SAMR rejected the company's argument for the following reasons:

  1. the company set various punitive measures for transaction counterparties at each level of drug sales for failing to implement price-fixing and restrictive rules;
  2. the company did impose punitive measures such as oral warnings or cessation of supply; and
  3. the investigation showed that Yangtze River's monopoly agreements were effectively implemented, implying that punitive measures had a deterrent effect and required no actual implementation.

Yangtze River applied for exemption from the penalties on the following grounds:

  1. short-term resale price restrictions fall under the exemption rules stipulated under Article 15 of the AML. The company's conduct was intended to promote the successful release of new drugs and give consumers more choice; and
  2. it prevented low-price competition between distributors and pharmacies, thereby encouraging investment in the distribution channels to ensure the quality of drugs.

The SAMR dismissed Yangtze River's application for exemption for the following reasons:

  1. Yangtze River's conduct continued for an extended period and had nothing to do with a new product release;
  2. Yangtze River failed to prove that its conduct invigorated distributors and improved its ability to increase investment in distribution channels; and
  3. Yangtze River failed to establish that its behaviour would not severely restrict competition in the relevant market.

In this case, the SAMR emphasised the 'principle of prohibition plus exceptional exemption' and presumed RPM agreements to be anticompetitive. We note, however, that the courts still seem to adopt the rule-of-reason approach. Also, this case suggests that antitrust enforcement actions have been extended from APIs to the wider pharmaceutical sector.

Bull Group

On 27 September 2021, China's Zhejiang Administration for Market Regulation (the Zhejiang AMR) published a decision fining the Bull Group 294.81 million yuan for engaging in RPM.8 The fine is equivalent to approximately three per cent of the Bull Group's annual turnover in 2020.

Bull Group is a company engaged in producing and selling converters, wall switch sockets and other electrical products. The Zhejiang AMR found that, between 2014 and 2020, the Bull Group entered into contracts with its distributors, whereby distributors had to abide by the company's price management system (e.g., fixed product resale prices and minimum resale prices). Moreover, Bull Group was found to have entrusted third parties to monitor its distributors' retail prices, and any distributor that failed to comply with its price instructions was penalised by Bull Group.

Both Yangtze River and Bull Group engaged in typical RPM, which continues to be an antitrust enforcement focus for the SAMR. However, it is notable that Yangtze River and Bull Goup were each subject to a fine of only three per cent of their annual turnover in the previous year, mainly because of their active cooperation with the antitrust investigation.


On 10 April 2021, the SAMR issued a penalty decision fining Alibaba 18.23 billion yuan for abuse of dominance.9 Alibaba operates the largest online retail platform in China.

The SAMR defined the relevant market as online retail in China. In finding that Alibaba is a dominant online retail platform in China, the SAMR considered the following factors: (1) the market share of Alibaba is over 50 per cent in the relevant product market; (2) the competitiveness of the market; (3) Alibaba's ability to control the market; (4) Alibaba's research and development advantages; (5) the dependence of merchants on Alibaba; and (6) the high entry barrier.

The SAMR found that Alibaba had abused its dominant position by prohibiting some of its platform's merchants from opening stores and participating in promotional activities on competing platforms; and by implementing a reward and penalty framework for merchants, for compliance and non-compliance respectively.

For this abuse of dominance, the SAMR imposed a fine on Alibaba of 18.23 billion yuan – four per cent of Alibaba's turnover in China in 2019. The 18.23 billion-yuan fine is the largest antitrust fine in Chinese history.

In circumstances similar to the Alibaba case, the SAMR issued a penalty decision fining Meituan 3.44 billion yuan on 8 October 2021. Meituan is a major Chinese online delivery platform operator, which also implemented a choose-one-from-two requirement. In addition to the fine imposed on Meituan, the company was also asked to comprehensively rectify matters and make its business operations compliant with laws and regulations. Moreover, the SAMR asked Meituan to refund the exclusive cooperation deposits of 1.29 billion yuan to the merchants on its platform.


In April 2021, the Shanghai Administration of Market Regulation (the Shanghai AMR) fined online food delivery platform Sherpa's approximately 11.69 million yuan for abuse of market dominance, amounting to three per cent of the company's annual turnover in 2018.10 Sherpa's had implemented a choose-one-from-two requirement and entered service agreements with all cooperating restaurants on terms that gave Sherpa's the exclusive right to deliver food for participating restaurants between January 2017 and October 2019. Sherpa's also implemented an 'exclusive meal delivery plan' and required the cooperating restaurants to terminate cooperation with Sherpa's competitors. Sherpa's would remove restaurants from its platform if they refused to agree to Sherpa's terms. With the exclusive meal delivery plan, Sherpa's forced many restaurants to withdraw from competing platforms, resulting in a sudden decrease in orders flowing to its rivals, the loss of users and sales on competing platforms, and competitors' inability to stay in business. The Shanghai AMR concluded that the company's conduct seriously weakened the competitiveness of rival platforms and that Sherpa's conduct eliminated and restricted competition in the relevant market without any reasonable justification, which constituted an abuse of market dominance to restrict transactions, in breach of Paragraph 1(4) of Article 17 of the AML.

Based on the nature and functions of the platform's operations, the regulator considered the substitutability of online food delivery and dine-in services, online food delivery platforms and restaurants' self-operated online delivery services, and English-language and Chinese-language online food delivery platforms. In its analysis, the Shanghai AMR defined a very narrow market as the relevant market (i.e., the market for English-language online food-delivery platform services in Shanghai).

In this case, the Shanghai AMR used the hypothetical monopolist or 'small but significant non-transitory increase in price' test, which focuses on the business model of in-platform operators and the impact on market demand arising from an operator's increase in fees for providing its core services.

ii Trends, developments and strategies

The year 2021 marked the beginning of China's anti-monopoly enforcement activity in relation to the platform economy. The three choose-one-from-two cases result in a total of 21.67 billion yuan in fines, representing almost 92 per cent of all fines rendered in 2021 by the SAMR for monopoly cases.

Because the API sector is highly concentrated, closely related to people's health and produces things in urgent demand, API monopolies have long been considered an enforcement priority.

Enforcement agencies announced 17 API monopolies and punished dozens of enterprises from 2008 to 2021. In addition to monopoly agreements, API companies are often penalised for abusing their dominant market position. API manufacturers or distributors are more likely to be found to have a dominant market position because (1) there are usually only a handful of companies in the market that produce a particular API, so the downstream companies tend to be highly dependent on the API manufacturers; and (2) because of strict production certification requirements, the relevant market has very high barriers to entry, which leads to fewer competitors in the market.

However, API companies are not necessarily penalised simply for having a dominant position. The AML only prohibits an enterprise from abusing its dominant position to harm competition. Nevertheless, legal compliance risks are higher for API companies in circumstances where they: (1) refuse to transact with trading counterparts without a valid reason; (2) increase sales prices; (3) bundle sales; and (4) impose unreasonable transaction terms.

iii Outlook

Since October 2020, there have been growing indications from the Chinese Communist Party that it will strengthen antitrust enforcement and encourage more proactive antitrust enforcement. This can be observed in the SAMR's increased efforts to provide guidance, make disclosures, improve transparency in relation to its enforcement procedures (e.g., the announcements of its investigations into Alibaba and Yangzte River Pharmaceutical Group) and provide reasoning for its formal decisions (e.g., its penalty decisions in respect of three online platform operators).

In parallel with stricter supervision and enforcement by the SAMR, penalised undertakings are now more inclined to appeal decisions. Although it is difficult for a plaintiff to achieve a successful appeal, appeals increase scrutiny of the SAMR's work and might prompt it to further improve its investigative procedures and clarify its reasons for imposing penalties.

Merger review

The SAMR concluded 727 merger review cases in 2021. Among them, one case was prohibited, four were conditionally approved and the remainder were unconditionally approved.

With regard to simple cases, a total of 641 were concluded in 2021 and accounted for 88 per cent of all cases. The proportion of simple cases increased significantly compared with 2020, when the number of simple cases accounted for around 77 per cent of all cases. On average, simple cases took 13.69 days to conclude, which was slightly longer than in 2020 (12.81 days).

In 2021, 631 cases were concluded in the first stage within 30 days, accounting for 97.83 per cent of all cases. Compared with 2020, when 80.6 per cent of cases were concluded in the first stage, the speed of conclusion has significantly increased.

Furthermore, the SAMR has taken a tougher approach against non-filers. The SAMR published an unprecedented 107 non-filing cases in 2021, which is seven times the number of such cases in 2020.

i Significant cases

Non-filing penalties

In 2021, the SAMR published 107 non-filing cases. This represents a significant increase in the number of cases in 2021 compared with the 13 non-filing cases in 2020, indicating that the SAMR is still greatly concerned about non-filing cases in mergers and acquisitions, and continues to strengthen its supervision of non-filing parties.

Among the 107 published non-filing cases in 2021, the average case duration (from filing to decision) was 113.46 days. Of these cases, 21 were concluded within 50 days, accounting for 19.6 per cent of all cases heard, and 68 were concluded within 100 days, accounting for 63.55 per cent of all cases. Compared with the average duration of 250 days in 2020, the time scale for non-filing cases has shortened and the efficiency of the anti-monopoly enforcement agencies has improved markedly.

Continued strengthening of platform economy regulation

The non-filing cases in 2020 involved penalties against entities in various industries, such as building materials, pharmaceuticals, logistics and retail. Unlike in 2020, however, the internet industry accounted for an absolute majority of non-filing cases in 2021. Of the 107 published cases, 97 involved the internet sector and accounted for 90.65 per cent of all cases.

The high-profile antitrust enforcement actions in the internet sector in China have been noteworthy. For example, Tencent was involved in 30 cases in 2021 and received penalties totalling 15 million yuan, and Alibaba was involved in 18 cases and received penalties totalling 9 million yuan.

China's regulation of the internet industry and other new economic fields will continue to be tough. Platform enterprises, including those focused on specific market segments, need to be alert to possible monopoly risks and current regulatory winds.

Increased percentage of cases involving maximum penalties

Of the 107 penalty cases in 2021, regulators imposed the maximum penalty of 500,000 yuan in 99, representing 92.52 per cent of all cases concluded. Compared with 2020, this means a continued strengthening of anti-monopoly enforcement.

Innovative punishment in non-filing cases

On 24 July 2021, the SAMR published its penalty decision against Tencent Holdings Ltd (Tencent)11 for its failure to notify the SAMR of its acquisition of China Music Group. This case was the first time that the SAMR imposed restrictive conditions in a non-filing case. In addition to issuing a fine of 500,000 yuan against Tencent, the SAMR ordered Tencent and its affiliates to take a series of measures (e.g., termination of its exclusive copyright licensing agreement with key label companies) to restore competition in the relevant market.

This is the first case since the AML came into effect in 2008 in which necessary measures have been ordered to restore market competition conditions in response to the illegal implementation of a notifiable merger. As a result of this case, the possibility of the SAMR attaching conditions to penalties in non-filing cases has increased.

Downward trend in the proportion of equity interests with controlling rights

Among the non-filing cases in 2021, there were 10 cases in which the parties acquired no more than 10 per cent of target company equity yet were deemed to have acquired joint control. In previous years, the relevant shareholding percentage threshold in a minority equity acquisition transaction was usually more than 30 per cent. That is to say, the percentage of a shareholding alone is no longer a sufficient determinant of whether control rights have been obtained.

In addition, when considering whether or not a transaction needs to be declared, enterprises should consider not only the percentage of equity interests but also the company's articles of association and, pursuant to Article 4 of the Interim Provisions on the Review of Concentration of Undertakings, the provisions on corporate governance systems in the relevant transaction documents, such as the existence of a voting trust, voting matters and voting mechanisms.

In light of the recent developments in regulatory practices, we recommend that if an acquisition would result in an equity interest close to or greater than 10 per cent, the relevant party should carefully assess whether it might acquire control of the target company.

Prohibited case

On 10 July 2021, the SAMR prohibited the proposed acquisition of DouYu by Huya.12 The parties are two of the largest online game live-streaming platforms in China. Huya is solely controlled by Tencent.

The combined market share of the two parties would be over 70 per cent after the proposed merger. Moreover, the merger would strengthen Tencent's market power and remove its closest competitor from the market. Furthermore, the entry barriers are high because of copyrights, capital investment and streaming resources. Thus, it is difficult for new competitors to enter this arena in the short term.

The proposed merger would give Tencent two-way blocking capabilities, in both the upstream and the downstream markets (respectively the Chinese markets for online game operation services and for online game live-streaming), which could eliminate and restrict competition. In light of the above, the SAMR concluded that the proposed merger would eliminate and restrict competition in the online game live-streaming market. This case is the third blocked merger decision since the AML came into force. Also, it is the first case blocked in the internet sector since the SAMR's establishment in 2008. This case shows that the SAMR has become more stringent in reviewing concentrations involving the digital economy.

Conditionally cleared cases

In 2021, the SAMR conditionally approved four cases. All the conditional cases cover the high-tech manufacturing industry. This is a key area of antitrust enforcement. For example, the relevant product markets are solid-state memory disks in the semiconductor industry in two cases; hydraulics products in one case; and material testing equipment in the remaining case. For various reasons, these cases could not be cleared during the normal statutory review period (180 calendar days). Therefore, all the notifying parties in the four conditional cases withdrew and resubmitted their notifications. From the first submission of filing materials to the case being concluded conditionally, the review process for the four cases lasted for a minimum of 211 days, a maximum of 391 days, and an average of 286.75 days. There are many reasons for such lengthy review processes, including:

  1. in the absence of a 'stop-the-clock' clause in the Anti-monopoly Law, the process of preparing supplementary materials and negotiating restrictive conditions is included in the review period. Therefore, the review for complex cases may exceed the statutory merger review period;
  2. the transaction structures and the products concerned are complicated;
  3. the relevant market is highly technical and complicated; and
  4. the SAMR has become more cautious in analysing the impact on competition in these cases.

Cisco acquisition of Acacia

On 19 January 2021, the SAMR approved the proposed acquisition by Cisco Systems Inc (Cisco) of Acacia Communications Inc (Acacia) with behavioural conditions.13 Cisco is a listed American technology company engaged in selling networking hardware, software, telecommunications equipment and other high-technology services and products. Acacia is a company that designs, develops, manufactures and markets communication equipment.

The SAMR found that the proposed acquisition would restrict competition for the following reasons: (1) Acacia is the No.1 supplier of coherent digital signal processors (DSP) with a global market share of 45–50 per cent and a share of 40–45 per cent in China; (2) given that coherent DSPs serve core components in an optical transmission system, suppliers of optical transmission systems' switching costs for coherent DSPs are high; and (3) the entry barriers to supply coherent DSPs are high and thus it is difficult for new competitors to enter into this area in the short term.

To address these concerns, the SAMR imposed the following conditions, requiring the combined entity to: (1) continue to perform its existing contracts without termination unless otherwise requested by customers; (2) continue to supply coherent DSPs to Chinese customers on FRAND terms; (3) not impose unreasonable trading terms when supplying coherent DSPs; and (4) hold training sessions for management and employees to ensure compliance with the commitments.

Danfoss acquisition of Eaton

On 7 June 2021, the SAMR conditionally approved Danfoss's acquisition of Eaton's hydraulic business.14 Danfoss is a Danish company engaged in the research and development (R&D), manufacturing and engineering of heating and hydraulics products. Eaton is a company based in Ireland that produces hydraulic components and systems.

The SAMR found that the proposed acquisition would restrict competition for the following reasons: (1) Danfoss and Eaton are the two largest orbital motor market participants in China and they would have a combined market share of 50–55 per cent after the proposed transaction; (2) Danfoss and Eaton are the two closest competitor in the relevant market and thus the proposed acquisition would remove competitive restraints; (3) as the two companies have existing advantages, such as brand image, high-quality products and R&D strengths, the proposed acquisition would raise entry barriers by reinforcing these strengths; and (4) because of the limited availability of substitutes, the bargaining power of customers would be further eroded.

To address the competition concerns, Danfoss was required to divest the orbital motor business of Danfoss Power System (Jiangsu) Co, Ltd, including all tangible and intangible assets, agreements, leasing contracts, commitments, client orders and personnel.

Structural remedies are relatively rare in China and the SAMR usually prefers behavioural commitments; however, in this case, the SAMR imposed structural remedies requiring Danfoss to divest the orbital motor business of Danfoss Power System (Jiangsu) Co, Ltd.

SK Hynix acquisition of Intel memory and storage business

On 22 December 2021, the SAMR conditionally approved SK Hynix's acquisition of Intel's memory and storage business.15 SK Hynix is a listed South Korean semiconductor company engaged in memory, solid-state disk (SSD) and imaging sensor businesses. Intel is a leading semiconductor chip manufacturer. The proposed transaction would enable SY Hynix to acquire Intel's entire NAND memory and storage business.

The SAMR found that SK Hynix and the memory and storage business of Intel overlap in four areas: (1) consumer-class SSDs; (2) peripheral component interconnect express (PCIe) enterprise-class SSDs; (3) serial advanced technology attachment (SATA) enterprise-class SSDs; (4) NAND flash memory (all four areas collectively, the relevant markets). The SAMR held that the proposed acquisition would be likely to give rise to competition concerns in PCIe enterprise-class SSD and SATA enterprise-class SSD markets for the following reasons: (1) the combined market share of the two companies would be over 80 per cent after the proposed acquisition; (2) given that the customers have extremely strict requirements for product quality and stability and it is difficult for new competitors to enter into the relevant markets in the short term, the proposed acquisition would remove the competitive restraints between the two companies. The SAMR held that the proposed transaction would be likely to eliminate or restrict competition.

To address the competition concerns, the SAMR imposed the following conditions and required SK Hynix to: (1) maintain product prices at no higher than the average price of the same products in the past two years; (2) continue to expand the quantity of production of PCIe and SATA enterprise-class SSDs; (3) continue to supply all products in China; (4) refrain from exclusive dealing when supplying products in China; and (5) assist an independent competitor in China in entering the PCIe and SATA enterprise-class SSD markets.

Notably, in this case, the SAMR required the merged entity to assist an independent competitor in China to enter the PCIe and SATA enterprise-class SSD markets. Although it is a behavioural condition, it may have the effect of reducing the negative impact of competition similarly to a structural condition.

ii Trends, developments and strategies

In 2021, the SAMR maintained its rigorous approach towards merger control reviews. The SAMR took aggressive enforcement actions to investigate failures to file transactions, which contributed to a dramatic increase in the number of non-filing cases published in 2021. As to conditional cases, the SAMR has imposed various conditions based on the characteristics of relevant products and the competition and innovation conditions in the relevant market to eliminate the possible adverse effects of concentrations. The SAMR has also clarified its attitudes towards transactions in the internet sector involving VIE structures.

Enterprises in relevant industries should pay attention to the new trends and features of the SAMR, whether this is the trend of scrutinising transactions involving VIE structures and the non-filing of minority stake investments by funds or the trend of conducting intensive competition analyses in innovative markets.

iii Outlook

The SAMR usually maintains consistency between cases when conducting merger control reviews, especially for market definitions and certain factual issues. Furthermore, high-quality notification materials are now required by the SAMR to facilitate efficiency. Therefore, enterprises are advised to focus on antitrust enforcement trends and the AML revision process. In particular, enterprises should understand merger control review regulations correctly and actively fulfil their filing obligations; they should also work closely with external experts to avoid delays in closing transactions, which would, in turn, affect their business plans. Furthermore, we expect the SAMR to continue strengthening the investigation of and penalties for non-filing of cases in 2022.


On 18 November 2021, the National Anti-Monopoly Bureau was officially inaugurated. The new agency reflects a trend for increasingly stricter anti-monopoly enforcement in China. In 2022, we expect the Revised Draft of the AML to be adopted and more guidelines to be issued, leading to more professionalised and refined anti-monopoly enforcement in China. This will promote the establishment and development of a relatively mature and complete anti-monopoly law system with Chinese characteristics.

The SAMR or the newly established National Anti-Monopoly Bureau will take an even more active and aggressive approach in supervising and penalising monopolistic behaviour. In particular, the digital economy, the financial industry, and healthcare and other sectors related to people's daily lives, such as automobiles and consumer products, will remain a major enforcement priority. Enterprises need to continually monitor regulatory developments in the antitrust field to optimise their business models in line with compliance requirements. Furthermore, the Chinese competition authorities are well prepared to handle complicated antitrust cases, such as intellectual property right abuses, big-data-related monopolies and various types of exclusive dealing.


1 Michael Gu is a founding partner at AnJie Law Firm. The author would like to thank associate Scarlett Huang for her contributions to this chapter.

2 Original Chinese version available on the SAMR website:

3 Press release available on the SAMR website:

4 Press release available on the SAMR website:

5 Original Chinese version available on the SAMR website:

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15 Press release available on the SAMR website:

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