Belt and Road and merger control reviews

With the advance of the Belt and Road initiative, more and more Chinese enterprises are “going out” and cross-border merger and acquisition (M&A), by taking this opportunity, has been enlarging its market size in China. The ever increase in the large-sized M&A transactions has, on the one hand, promoted the economic exchange among the countries along the Belt and Road and, on the other hand, increased the market concentration and posed potential threats to the order of competition in relevant markets. When bringing in foreign investment or making investment abroad through M&A or establishing joint ventures, Chinese enterprises need to pay special attention to the relevant provisions on the anti-monopoly review of concentration of undertakings.

The PRC Anti-Monopoly Law took effect on 1 August 2008, which started the anti-monopoly review of concentration of undertakings in China. According to the law, a concentration of undertakings that reaches the notification threshold should be filed by the concerned undertakings with the Ministry of Commerce (MOFCOM) in advance and such concentration cannot be implemented without MOFCOM’s approval. Subsequently, MOFCOM promulgated a series of supporting rules and normative documents and introduced in 2014 the simplified procedure, which has greatly improved MOFCOM’s work efficiency and, also, provided enterprises with the guidelines and operating specifications for notification of concentration. As a result, more and more enterprises began to attach importance to notification of concentration in China. As of 30 September 2017, MOFCOM has concluded more than 2,000 cases involving the notification of concentration, including more than 1,880 cases where the concentration is approved unconditionally, 30 cases where the concentration is approved with conditions attached, and two cases where the concentration is prohibited.

To adapt to the new normal of economy and provide further normalized and systemized legal guarantee for the implementation of the Belt and Road initiative, MOFCOM has been working on the amendments to relevant regulations and rules regarding concentration of undertakings in an active manner. The Measures for Reviewing Concentration of Undertakings (Draft for Comments), promulgated on 8 September 2017, has recently become the topic of most concern in the field of notification of concentration, and the focuses of attention are mainly on the interpretation of right of control and the calculation of turnover.

John Ren Yong is the managing partner of T&D Associates in Beijing. He can be contacted on +86 10 5867 8228 or by email at yongren@tdlawyers.com