CHINA Law and Practice Contributed by: Liu Cheng and Li Yumeng (Audrey), King & Wood Mallesons
Merger Review Guidelines”), issued by SAMR and effective as of 10 December 2024; and • Benchmark for Discretion over Administra - tive Sanctions for the Illegal Implementation of Concentrations of Undertakings (for Trial Implementation) (“Trial Discretion Bench - mark”), issued by SAMR and effective as of 19 February 2025. Besides the merger-specific regulations and guidelines, SAMR has also issued a series of specialised guidelines in which it provides guid - ance for merger control filing and review with respect to specific matters or sectors, includ - ing, among others, the Anti-Monopoly Compli - ance Guide for Undertakings, the Anti-Monopoly Guidelines for Standard Essential Patents, and the Anti-Monopoly Guidelines for the Pharma - ceutical Sector. 1.2 Legislation Relating to Particular Sectors The AML (along with its accompanying regula - tions) is the only legislation on merger control for foreign transactions. China also has various laws to regulate foreign investment, eg, the for - eign direct investment (FDI) regime and national security review (NSR) when foreign investments The primary law governing foreign investment in China is the Foreign Investment Law (FIL), which was promulgated on 15 March 2019 and came into effect on 1 January 2020. Based on the FIL, China has adopted a “negative list” mechanism, setting out the industry sectors in which foreign investment is prohibited or restricted. Foreign investors may not invest in any field prohibit - ed by the negative list for foreign investment, and must meet certain investment conditions (eg, shareholding limits or senior management are involved. FDI Regime
requirements) stipulated under the negative list in order to invest in the fields where foreign investments are restricted. For industries not on the negative list, foreign investors must be treat - ed on a par with their domestic counterparts. The negative list is released and updated yearly by or upon approval by the State Council. The current Negative List (2024 edition) is available here . NSR Regime The Measures for the Security Review of Foreign Investments (“NSR Measures”) issued by the National Development and Reform Commission and the Ministry of Commerce (MOFCOM) on 19 December 2020 and effective as of 18 Janu - ary 2021 set out the foreign investments that fall within the scope of NSR review. Briefly, foreign investments involving a specific business sec - tor may not close the deal until NSR approval is granted. For a detailed introduction to the NSR regime, see 9. Foreign Direct Investment/Subsidies Review . 1.3 Enforcement Authorities Currently, SAMR is responsible for the overall enforcement of the AML in China. SAMR con - sists of three divisions: • Division I, whose major duty is enforcement against monopolistic conducts, including monopoly agreements and abuse of market dominance; • Division II, whose major duties are merger control review and investigations into instanc - es of failure to notify before closing; and • Division for Co-ordination of Competi - tion Policy, whose major duties are drafting
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