CHINA Law and Practice Contributed by: Jeff Liu, Jeanette Wang, Yulong Lai and Yun Bi, Shihui Partners
• Sector-specific approvals: Industrial regulators control licences and operational consents, eg, the National Financial Regulatory Administration (NFRA) (banking/insurance), the China Securities Regulatory Commission (CSRC) (securities), the Ministry of Industry and Information Technology (MIIT) (telecoms/IT), the National Health Commis - sion (NHC) (healthcare) and energy/environment regulators. 2.3 Scope and Extraterritorial Reach In China, both merger control and FDI/national secu - rity rules can apply to foreign-to-foreign deals if they affect the Chinese market or Chinese interests. The SAMR reviews foreign mergers when parties’ sales or assets in China meet thresholds or the transaction could restrict competition domestically. NSR applies if the deal involves Chinese entities, critical infrastruc - ture, data or technology, even if the parties are foreign. Deals entirely outside China with no link to China are generally not covered. 2.4 Relationship Between Regimes In China, merger control, FDI/national security and sector-specific approvals are separate but co-ordinat - ed. The SAMR reviews competition issues, the MOF - COM handles foreign investment filings, and the NSR Office reviews security-sensitive deals, while sector regulators oversee licences and operational consents. Authorities consult each other and share information. Most significant deals require a layered, integrated approach to satisfy all requirements before closing. 3. Merger Control – Jurisdiction and Filing 3.1 Transactions Subject to Merger Control In China, the following types of transactions may con - stitute a concentration of undertakings subject to the merger control regime: • a merger of undertakings; • acquiring control over one or more undertakings through acquisition of equity or assets; and • acquiring control or exercising decisive influence over one or more undertakings via contract or other means.
Joint ventures may be caught if two or more under - takings will jointly control the joint venture entity after the transaction. Minority acquisitions may be caught if the acquirer obtains control or exercises decisive influence over the target, but pure financial invest - ment without obtaining any “control” rights will not be caught. Internal restructuring or reorganisations are generally not caught if they are controlled by the same undertaking pre- and post-transaction. 3.2 Notification Thresholds The current jurisdictional thresholds of merger control in China are based on turnover, as follows: • the combined worldwide turnover of all undertak - ings concerned in the preceding financial year exceeds CNY12 billion, and the nationwide turno - ver within Mainland China of each of at least two undertakings concerned in the preceding financial year exceeds CNY800 million; or • the combined nationwide turnover within China of all undertakings concerned in the preceding finan - cial year exceeds CNY4 billion, and the nationwide turnover within Mainland China of each of at least two undertakings concerned in the preceding financial year exceeds CNY800 million. The jurisdictional thresholds currently do not include the factors of asset value, transaction value or market share. However, a transaction not meeting either of the above jurisdictional thresholds but potentially rais - ing substantial competition concerns may be called in by the SAMR. 3.3 Mandatory v Voluntary Filing Transactions meeting either of the jurisdictional thresholds noted in 3.2 Notification Thresholds must be notified before closing. If a transaction may raise substantial competition con - cerns, filing is strongly recommended even if not tech - nically required, as it may be called in by the SAMR, especially when it involves certain innovative markets that may not generate substantial turnover at an early stage.
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