Michael Gu / Grace Wu / Vivian Wang [1]Introduction

The year 2020 is an unusual year. The outbreak of COVID-19 pandemic and continued international trade tensions posed challenges to Chinese antitrust law enforcement authority, the State Administration for Market Regulation (SAMR). Particularly, the SAMR was tested on their ability to address the impacts coming along with the crisis and to rapidly respond to new circumstances in the Chinese market. Despite the challenges, the SAMR maintained prudent in conducting the merger control review and even concluded more merger cases compared with the year 2019. In fact, the SAMR’s review process has become more efficient in 2020. On average, compared with 2019, it took less time for concluding a merger case review, especially for simple cases and normal cases with less competition impacts. According to the working report 2020 of the SAMR [2], the SAMR accepted filings of 481 cases and concluded the review of 473 cases. The figures represent an increase of 5% for accepted merger filings and 1.7% for concluded merger cases from 2019. The average time for case filing and conclusion fell by 27% and 14.5%, respectively.

As to conditionally-approved cases, the number is relatively stable in 2020 (four cases) compared with the previous year (five cases). Four cases were approved with behavioural conditions. Two of the four conditionally-approved cases in 2020 were withdrawn and resubmitted before the expiry of the first statutory merger review period (i.e., 180 days). This shows that the SAMR is still prudent in reviewing mega mergers which may raise competition concerns. Withdrawal of the filing also provides notifying parties with flexibility and sufficient time to communicate with the SAMR. From the first submission of filing materials to the case being conditionally concluded, the review process for the four cases above lasted for a minimum of 238 days [3] , a maximum of 358 days [4] , and an average of 291 days. There was no prohibition decision rendered by the SAMR in 2020.

Furthermore, the SAMR continued its tough stance against non-filers. The SAMR published 13 penalty decisions that failed to fulfil the notification obligations under Anti-monopoly Law.  In addition, the SAMR also clarified that the concentration involving variable interest entity (VIE) structure transactions [5] is within the scope of merger control review.


Release of The Interim Provisions for Merger Control Review

On 7 January 2020, the SAMR released a draft of the Interim Provisions for Merger Control Review (hereinafter “the Interim Provisions”) for public comment. The final version of the Interim Provisions was adopted in October 2020 [6] . The Interim Provisions consolidate all major regulations for merger control review into one coherent, comprehensive and easy-to-follow regulation, although no substantial changes have been proposed thereunder. However, it is notable that, pursuant to Article 2 of the Interim Provisions, the SAMR can authorize its provincial branches to take charge of merger control review. The decentralization of antitrust enforcement serves the purpose to better allocate the heavy workload undertook by the SAMR, by which it could focus on reviewing relatively complex cases. Therefore, we expect that the SAMR will continue to lead the review process of most cases in the near future. However, specific questions remained to be answered. For example, in what types of cases will the SAMR authorize its provincial branches? When exactly will the SAMR authorize? If authorized, what scope, i.e. to what extent, will the authorization be? These questions are expected to be answered through observation of SAMR practices.

Revision of The Anti-monopoly Law in Process

On 2 January 2020, the SAMR released a draft of revisions to the Anti-monopoly Law for public comment (hereinafter “the Revised AML”) [7] . Although the Revised AML follows the current Anti-monopoly Law’s basic framework, it significantly enhances the legal liability of Anti-monopoly Law violators. For example, in accordance with Article 55 of the Revised AML, the proposed penalty will be up to 10% of the non-filer’s annual sales in previous year instead of the maximum amount of fine RMB500,000 under the current Anti-monopoly Law, which is clearly insufficient for deterring non-filers. The Revised AML also clarifies practical issues such as ‘controlling rights’ for merger filing purposes. In addition, the Revised Draft introduces the so-called ‘stop-clock’ clause that specifies three conditions to discontinue the mandatory timelines for merger review:

  • on application or consent by the notifying parties;
  • supplementary submissions of documents and materials at the request of the antitrust authority; or
  • remedy discussions with the antitrust authority.

The revision of Anti-monopoly Law has been scheduled as key legislative work for 2021 [8] , and the new Anti-monopoly Law is expected to be adopted in the near future.

Enhanced Antitrust Scrutiny on E-commerce Platforms

On November 2020, the SAMR released “Antitrust Guidelines for the Platform Economic Industry” for public comment (hereinafter “Guidelines for Platform”). Just within three months, the final version of Guidelines for Platform was approved and implemented on 7 February 2021 [9] . The Guidelines for Platform provide a chapter of regulations, specifically obliging business operators in the platform economic industry to merger control review, including the filing standard, evaluation of competition concerns and restriction conditions. It is also notable that the Guidelines for Platform clarify that the concentration involving VIE structure transactions is within the scope of merger control review. The Guidelines further clarify that transactions involving start-ups, new types of platform or free business models with the possibility of eliminating or restricting competition cannot be exempted from merger filing, even though they do not meet the turnover standard.

Unconditionally cleared cases

The SAMR unconditionally approved 469 cases in 2020 – slightly more than the previous year (460 cases). With regard to simple cases, a total of 364 cases were concluded in 2020, accounting for 76.96 per cent of all cases. The proportion of simple cases increased compared with that of 2019 (the number of simple cases accounted for around 73.3 percent of total cases in 2019). On average, simple cases took 12.81 days to be concluded (among which 12.79 days for the first quarter, 12.59 days for the second, 13.35 days for the third, and 13.35 days for the fourth), which was slightly reduced from 15.37 days in 2019 (among which 15.12 days for the first quarter, 18.29 days for the second, 18.24 days for the third, and 13.37 days for the fourth). And in 2020, 27.47 per cent of those cases were unconditionally approved upon expiration of the 10-day publication period. This demonstrates that simple case procedure plays an active role in enhancing the efficiency of concentration review, particularly in the sense of reducing the reviewing time.

Based on statistics above and our experience, we reckon that since the fourth quarter in 2020, the SAMR has been exploring tailored approach of review to different types and structures of transactions, and accelerating its process for certain transaction types. Moreover, we notice that from the fourth quarter in 2020, the accelerating rate of the SAMR’s efficiency on simple case review has slowed down. Accordingly, we estimate that time spent before acceptance of the case, i.e. the time from the submission of filing materials to the acceptance notice of filing, will be longer, had the SAMR intended to further reduce the interval time between the public notification and that of case conclusion. Notably, for the first time, the SAMR disclosed that the time spent before acceptance of the case was 24 days on average in 2019, as provided in its Annual Report on the Enforcement of Anti-monopoly Law of China (2019) [10] .

Concluding from recent cases, it appears that the SAMR has a varying standard with its merger control review process depending on the nature and structure of the transaction. Firstly, horizontal mergers typically attract greater level of scrutiny compared to non-horizontal mergers; secondly, the SAMR also pays closer attention to transactions concerning industries with higher level of concentration; thirdly, for purely offshore transactions, that is, transactions that only involve joint ventures or companies with a small asset base in China that do not engage in substantial economic activities within China, the level of scrutiny is noticeably (and unsurprisingly) lower compared to transactions with a domestic implication; fourthly, transaction that involves the acquisition of an equity stake would be more closely reviewed compared to joint ventures; finally, complex transactions, such as multi-stage acquisition, privatization of a listed company, and red-chip model restructuring, would likely endure a more prolonged review process by the SAMR.

Mingcha Zhegang Case [11]

On 16 July 2020, the SAMR unconditionally approved the joint venture between Shanghai Mingcha Zhegang Management Consulting Co., Ltd. (‘Mingcha Zhegang’) and Huansheng Information Technology (Shanghai) Co., Ltd. (‘Huansheng’). Mingcha Zhegang provides data analysis and artificial intelligence solutions to enterprises in the catering industry, whereas Huansheng is a subsidiary of Yum China which in turn owns brands including KFC, Pizza Hut, and Taco Bell. The joint venture proposes to engage in information and network technology development in the catering industry. This is the first case reviewed by the SAMR where it officially acknowledged the presence of a VIE structure used by a party to the transaction. Here, the ultimate controlling party of Mingcha Zhegang is a Cayman-incorporated company, Leading Smart Holdings Limited. Since the SAMR’s publication of the simple case review on 20 April 2020, the case received widespread attention due to the uncertain result of merger control review involving VIE arrangements.

Despite the lengthy approval process (88 days), which is significantly longer than the average review period of unconditionally approved cases, taking up almost the entire duration allowed for in simple case review, the delay, contrary to public perception, may be unrelated to the presence of the VIE structure. Instead, the delay was more likely a result of the reasonable objections by related third parties, with regard to relevant market definition, market share of the notifying parties, etc., which in turn led to competition concerns to the SAMR. As the transaction was likely motivated by data consolidation between the two notifying parties, it was also alleged that this would raise issues relating to data monopolization. Ultimately, however, these issues did not appear to be detrimental to the result of merger control review, as the SAMR approved the transaction unconditionally.

Car Inc (Shenzhou Zuche) Case [12]

On 25 November 2020, the SAMR published the simple case summary that it would be reviewing MBK Partners’ proposed acquisition of Car Inc (Shenzhou Zuche). MBK Partners is a private equity firm predominantly focused on the North Asia region, and Shenzhou Zuche is China’s largest car rental company. Similar to the Mingcha Zhegang Case, this case also involves the use of a VIE structure, though this would almost certainly not be the focus of the SAMR’s review. Instead, the SAMR closely scrutinized this transaction for competition concerns, as this particular transaction involves financial and transportation industries, which have been the focus of regulatory attention in recent years. With MBK’s shares in the consortium that took eHi Car Services, China’s second largest car rental firm, private last year, such competition concerns would certainly be more pronounced. Beyond anti-competition issues, this transaction may also trigger foreign investment concern with the recent passage of Measures on Security of Foreign Investments [13] . Ultimately, the SAMR approved this case on 21 January 2021, which was a rather lengthy approval process (57 days).

As highlighted by these two cases, the SAMR has signaled its intention to review, with heightened scrutiny, cases which involve VIE structures. Putting aside any extrapolation from these decisions of the SAMR’s stance on the legality of the VIE structure, it is evident that at least within the anti-monopoly enforcement framework, it would be imprudent for companies which employ a VIE structure to ignore filing obligations. This is further evidenced with the introduction of the ‘Guidelines for Platform’, the penalties opposed on three tech companies for failing to comply with their filing obligations, and from recent statements made by the SAMR [14] . Given the SAMR’s approval in the Mingcha Zhegang Case and Car Inc (Shenzhou Zuche) Case, the consensus among practitioners is that transactions involving VIE structure would not be adversely affected. Companies should thus proactively assess their situation and ensure that they are compliant with the Anti-monopoly Law.

Conditionally cleared cases

In 2020, the SAMR conditionally approved four cases, a relatively stable number compared with 2019 (five cases). Figure 1 (below) illustrates the number of cases conditionally cleared from 2009 to 2020.

Figure 1

These conditional cases cover automobile, computer, electronic components, and pharmaceutical industries. They are the key areas of antitrust enforcement. The relevant products involved in these cases are not only related to people’s daily life but also high-tech driven. For example, the relevant product markets in ZF Friedrichshafen AG’s acquisition of WABCO Holdings case is related to automatic manual transmission (AMT) controllers; in Nvidia’s acquisition of Melox case is related to Ethernet adapters; and in Danaher’s acquisition of GE’s BioPharma case is related to microcarrier and other biological analysis instruments. Due to the relatively strong technical nature of the relevant market, the notifying parties in two of the four conditional cases withdrew and resubmitted the notifications. From the first submission of filing materials to the case being conditionally concluded, the review process for the four cases lasted for a minimum of 238 days, a maximum of 358 days, and an average of 291 days. There are many reasons for the lengthy review process, which may include the following.

  • In the absence of the ‘stop-clock’ clause in Anti-monopoly Law, the process of preparation for supplementary materials and negotiation for restrictive conditions are included in the reviewing period. Therefore, the review time for complex cases may exceed the statutory merger review period;
  • The transaction structures and the relevant products are complicated (e.g. in GE/Danaher case, Danaher and the target had horizontal overlaps in 25 products);
  • The relevant market is highly technical and complicated (e.g. Ethernet adapter and data center server in Melox/Nvidia case); and
  • The SAMR becomes more cautious in analyzing the competition impact of these cases.

Danaher’s acquisition of GE’s BioPharma Case [13]

On 28 February 2020, the SAMR conditionally approved Danaher’s acquisition of GE’s BioPharma unit, almost a year after the transaction’s initial merger filing. Danaher is an American diversified conglomerate involved in the healthcare and environmental industry. GE’s BioPharma unit, renamed Cytiva, provides both hardware and software used in biopharmaceutical research.

In addition to implicating a sensitive and strategically important industry, this case stands out for its complexity, involving 25 different product markets where the notifying parties had horizontal overlaps. In the SAMR’s analysis, the relevant geographical market for these product markets is defined as the worldwide market given that there were minimal trade barriers (as evinced by the low ratio of shipping cost to sales price) and minimal price differentiation across borders. The SAMR found that in many of the product markets, including the markets for microcarriers, chromatography systems, and hollow fiber filter modules, the transaction would have the effect of eliminating or restricting competition. For example, the SAMR found that, in the microcarriers market, the notifying parties would have a combined market share of nearly 70 per cent to 75 per cent worldwide. In addition to market share, the SAMR also appeared to be concerned with the impact of the transaction on innovation and R&D, particularly in the hollow fiber filter module market.

After several rounds of consultation, the SAMR accepted Danaher and GE’s proposal for structural remedies to salvage the transaction, concluding that the remedies would reduce the transaction’s adverse impact on competition. Danaher was to divest various businesses, such as the businesses in the aforementioned product markets which raised competitive concerns, including all its tangible and intangible asset and staff. Moreover, Danaher was to reach transitional agreement and share its relevant tangible assets and proprietary research of the ‘Emily Project’ to buyers of its divested businesses, aimed to encourage R&D and investment into new products. This last remedy stands out with the SAMR going beyond its traditional anti-competition toolbox to impose conditions that the agency believed would encourage innovation and facilitate greater product selection within the relevant market, instead of merely eliminating the negative impact raised.

We expect that the SAMR will continue to explore and deepen its anti-competition toolbox in major scientific research fields in life sciences and other high-end scientific research fields (for example, cutting-edge R&D involving biopharmaceuticals, or transactions involving innovative drugs for the treatment of critical diseases and rare diseases). The notifying parties should weigh and coordinate the filing strategies of various jurisdictions and carefully submit remedies based on the impact on the Chinese market to resolve the competition concerns of the SAMR.

Penalties on Non-filers

In recent years, the antitrust authorities have never relaxed their supervision of non-filing cases. In 2020, the SAMR significantly strengthened its supervision of and penalties on non-filing parties. The SAMR published 13 non-filing cases with a total fine of RMB5.65 million. The highest fine issued was RMB500,000, while the lowest was RMB300,000.

MBK Partners/Siyanli Industrial Case [16]

On 6 January 2020, the SAMR published its penalty decision against MBK Partners for its failure to notify its acquisition of a 23.53 per cent stake in Siyanli Industrial (‘Siyanli’). By failing to do so, the notifying parties breached Article 21 of the Anti-monopoly Law and was fined RMB350,000 accordingly.

This case also marks the first penalty decision relating to an investment fund acquiring a minority interest, suggesting that the SAMR has not only kept itself up to date of market movements, but that it is taking up a proactive role in policing this area. While the stake of 23.53 per cent prima facie appears to be a small proportion of the overall business, it is likely that the SAMR took a strict approach with its interpretation on ‘controlling rights’. The reason could be that this transaction is distinguished from most other PE/VC transactions where there is a greater difference in the proportion of equity stake between the fund investor and controlling party, and where the investment fund was largely kept away from the operations of the business.

Based on our experience, notifying parties holding a minority interest would have to assess their filing obligations under specific circumstances. Typical considerations include:

  • the voting right arrangement on major corporate decisions (such as whether financial investors had veto power), and
  • the presence of any special shareholder rights (such as preemptive rights, preferential rights, drag-along rights, buyback rights).

If an investor in a later financing round shares the same special shareholder rights to previous investors due to a most-favored-nation clause, this may also trigger filing obligations.

Intime Retail Case, New Classics Media Case & China Post Smart Delivery Case

On 14 December 2020, the SAMR published its penalty decisions against three non-filers, namely, (1) Alibaba for its acquisition of Intime Retail (Intime Retail Case) , (2) China Literature Limited for its acquisition of New Classics Media (New Classic Media Case) [18] , and (3) Hive Box Technology for its acquisition of China Post Smart Delivery (Hive Box Technology Case) [19] . The three cases all involve Internet companies using a VIE structure. It is the first time where the SAMR penalized concentration involving a VIE structure.

Among the three cases, the SAMR’s investigation into the Intime Retail Case and New Classics Media Case each took approximately 40 days, whereas the SAMR’s investigation into the China Post Smart Delivery Case took 174 days, significantly longer than the other two. It is further worth noting that the actual transaction of the first two cases took place in 2017 and 2018 respectively, whereas Hive Box Technology’s acquisition of China Post Smart Delivery was only recently completed in May 2020, implying that the SAMR had begun its investigation only a month after the deal’s conclusion. According to the SAMR’s subsequent press conference (Press Conference) [20] , the SAMR had conducted a comprehensive review of the transactions’ impact on market competition, examining the underlying market condition and the effect that the concentration would have. In the end, however, the SAMR concluded that the three transactions would not reduce or eliminate competition.

Dohia Case [21]

On 9 September 2020, the SAMR published their penalty decision against Zhejiang Construction Investment Group (‘ZCIGC’) for its failure to notify the agency of its 29.83% acquisition of Dohia Group (‘Dohia’). The transaction was conceived as a reverse merger whereby ZCIGC, a private company, would bypass the IPO process and become publicly listed through a complex arrangement with Dohia Group. The first phase involved ZCIGC acquiring a 29.83% of shares in Dohia. This was completed on 10 May 2019, where ZCIGC became Dohia’s largest shareholder. The second phase involved an asset swap between the two entities such that ZCIGC’s shareholders would become shareholders in Dohia.

Relevantly, ZCIGC had notified the SAMR when it was engaging in the second phase of its reverse merger in October 2019. However, the SAMR found that filing obligations would already have been triggered in the first phase of the transaction, handing out a penalty decision accordingly. Based on the penalty decision, it is likely that the SAMR made its decision based on the ownership concentration. With the SAMR specifically highlighting the 29.83% of shares, this suggests that the SAMR intended to create a deterrence effect, serving as a clear warning sign for other undertakings, as in the MBK Partners/Siyanli Industrial Case [22] . Therefore, companies engaging in asset restructuring, reverse mergers, and other multi-stage transactions should critically assess and determine the relevant stage of which filing obligations may be triggered. Moreover, publicly listed companies with a disperse shareholder base should also be mindful that a minority interest less than 30% may still be considered to be controlling interest. Any transaction that involves a change in ownership should be critically assessed as to whether the transaction triggers filing obligations.

Concluding from the non-filing cases as stated above, it is likely that the SAMR will continue its ex-post crackdown on previous transactions involving Internet companies using a VIE structure which have failed to comply with their filing obligations. Such companies shall remain vigilant and ensure that a robust compliance framework is in place. Strategic decisions, including the order of transaction to be reported and the supplementary material to be provided, shall consider all potential repercussions. The aforementioned cases are good precedents which shed light into the SAMR’s approach in defining the relevant market and in determining whether the conduct engaged would amount to monopolistic behavior.

Comments and Conclusion

In 2020, the SAMR maintained a consistently rigorous and prudent attitude towards merger control review. Despite the COVID-19, the time scale for filing and approval of merger control review (especially simple cases) has shortened compared to the previous year. As to conditional cases, the SAMR has imposed various conditions based on the characteristics of relevant products and the competition and innovation conditions of the relevant market, so as to eliminate the possible negative effects of concentration. In addition, 13 non-filing cases published in 2020 shows that the SAMR maintains its supervision of and penalties on non-filing parties. The SAMR has also clarified its attitudes towards transactions in the Internet sector involving a VIE structure.

The new trends and features of the SAMR should raise attention of enterprises in the relevant industries, whether it be the trend of scrutinizing transactions involving a VIE structure and the non-filing of minority stake investment by funds, or the trend of making intensive competition analysis of innovative markets. We expect that the SAMR will continue to accelerate the construction of antitrust enforcement system in 2021. When conducting the merger control review, the SAMR usually maintains the consistency between current and past cases, in particular, as to the market definition and certain factual issues. Meanwhile, to facilitate efficiency, high quality of notification materials will be required from the SAMR. Therefore, enterprises are advised to focus on the trends of antitrust enforcement and the revision process of the Anti-monopoly Law. In particular, enterprises shall understand the regulations of merger control review correctly, actively fulfill their filing obligations, and work closely with external experts to avoid delays in the closing of transaction, which would in turn affect their business plans. Furthermore, we expect that the SAMR will continue to strengthen the investigation and penalty of non-filing cases in 2021. Thus, before the revision of AML, enterprises shall consider to submit the post-consummation filing to the SAMR of such transactions.


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[1]Michael Gu is a partner of AnJie Law Firm based in Beijing. Michael specializes in competition law and M&A. Michael can be reached by email: michaelgu@anjielaw.com, or telephone at (86 10) 8567 5959. Grace Wu is an associate of AnJie Law Firm, and Vivian Wang is an intern of AnJie Law Firm.[2]The original Chinese version of the working report 2020 of the SAMR is available at the SAMR’s website:http://www.samr.gov.cn/xw/zj/202102/t20210205_325918.html

[3]Infineon’s acquisition of Cypress case, the announcement is available at the SAMR’s website


[5]Nvidia’s acquisition of Melox case, the announcement is available at the SAMR’s website


[5]A VIE structure is designed to allow foreign offshore investors to invest and control Chinese onshore business(es) through a series of contracts and agreements, overcoming foreign capital restrictions on particular sectors.

[6]The original Chinese version is available at the SAMR’s website:

http://gkml.samr.gov.cn/nsjg/fgs/20 2010/t20201027_322664.html

[7]The original Chinese version is available at the SAMR’s website:

www.samr.gov.cn/hd/zjdc/202001/ t20200102_310120.html.


[9]The original Chinese version is available at the SAMR’s website:


[10]The original Chinese version is available at the SAMR’s website:


[11]The announcement of unconditional approval is available at the SAMR’s website:


[12]The publication of simple case review is available at the SAMR’s website


[13]The original Chinese version is available at the NDRC’s website:


[14]The press conference of the SAMR is available at the SMAR’s website:


[15]The original Chinese version is available at the SAMR’s website:


[16]The original Chinese version is available at the SAMR’s website:


[17]The original Chinese penalty decision is available at the SAMR’s website:


[18]The original Chinese penalty decision is available at the SAMR’s website:


[19]The original Chinese penalty decision is available at the SAMR’s website:


[20]The press conference is available at the SAMR’s website:


[21]The original Chinese penalty decision is available at the SAMR’s website:


[22]The original Chinese penalty decision is available at the SAMR’s website: