CHINA Law and Practice Contributed by: Jeff Liu, Jeanette Wang, Yulong Lai and Yun Bi, Shihui Partners
2. Regulatory Architecture 2.1 Main Sources of Law and Policy The main statutes, regulations and policy instruments are as follows: • Merger control: The core framework is the Anti- Monopoly Law (AML) and the supporting Regu - lation of Review of Concentration of Business Operators (“Merger Review Regulation”), along with other regulations and guidelines on merger notification, review procedures and remedies pub - lished by the SAMR. • FDI and national security: Foreign investment is mainly governed by the National Security Law, the Foreign Investment Law (FIL), the Special Admin - istrative Measures for Foreign Investment Access (“Negative List”) and the Measures for National Security Review of Foreign Investment (“NSR Measures”). • Sector-specific approvals: M&A in regulated industries are subject to industry-specific laws and regulations. • Data and technology: The Cybersecurity Law, Data Security Law and Personal Information Pro - tection Law increasingly affect technology- and data-driven transactions. • M&A litigation: Challenges and disputes are governed by the Administrative Litigation Law, the Civil Procedure Law and Supreme People’s Court judicial interpretations. 2.2 Competent Authorities The main authorities and their powers are as follows: • Merger control: The SAMR and its delegated five provincial authorities in Beijing, Shanghai, Shanxi, Chongqing and Guangdong review transactions for competition issues, can approve, condition or block deals, and consult sector regulators as needed. • FDI and national security: The Ministry of Com - merce (MOFCOM) handles foreign investment filings under the Negative List, while the Office of the NSR Working Mechanism (“NSR Office”) under the National Development and Reform Commis - sion (NDRC) reviews deals in critical sectors (tech, infrastructure, data) for security risks.
below-threshold deals, with particular attention to technology, platforms, energy and other concen - trated or strategic sectors. • Procedural developments: Review processes for straightforward cases have become faster and more predictable through simplified filings and internal timelines. Complex transactions face more detailed information requests and co-ordination with sector regulators. • FDI and national security: General foreign invest - ment access continues to liberalise, but NSR has become routine and decisive in M&A planning for transactions involving data, critical technologies, infrastructure or supply chains. • Sectoral regulation: Industry-specific approvals remain key drivers of timing and risk, with height - ened scrutiny in financial services, telecoms, healthcare, energy and data-related businesses. Outcomes are closely tied to industrial and security policy priorities. • Enforcement and compliance: Penalties for non- compliance (eg, failure to notify or gun jumping) remain strong deterrents, prompting parties to address antitrust, FDI and sectoral regulatory risks earlier and more systematically in deal structuring. 1.3 Key Industries M&A regulatory scrutiny in China has concentrated on the following key sectors: • Technology, semiconductors and data: These sectors face the heaviest merger control and national security scrutiny, driven by concerns over market concentration, control of critical technolo - gies and data security. • Pharmaceuticals and healthcare: Transactions are closely reviewed for consolidation and innovation impacts, with frequent antitrust intervention. • Energy, infrastructure and utilities: Deals attract heightened review due to natural monopoly issues, state involvement and security sensitivities. • Financial services and platforms: Financial institu - tions and large digital platforms remain subject to layered regulatory approvals and ongoing antitrust enforcement.
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