Assessing the AML as it relates to M&A and joint ventures

The substantive merger control rules in the PRC are contained in the Anti-Monopoly Law (AML), promulgated on 30 August 2007 and effective as of 1 August 2008.

As the first comprehensive competition law in the PRC, the AML introduces a new merger control regime that is designed to meet international standards, and treats foreign enterprises and Chinese enterprises equally. Another piece of important legislation is the Provisions on the Thresholds of Prior Notification of Concentrations of Business Operators (notification threshold provisions) which was promulgated by the State Council on 3 August 2008, and came into force on the same day. Two alternative turnover thresholds are defined in the notification threshold provisions. The Anti-Monopoly Bureau, which is affiliated with the Ministry of Commerce, is in charge of the enforcement of merger control. All concentrations that trigger the notification thresholds must be notified to the Anti-Monopoly Bureau.

AML on mergers and acquisitions

With reference to international practice, the AML introduced the concept of “concentration” to describe the transactions that are subject to merger control in the PRC. “Concentration” is defined in the AML as:

1. a merger of business operators;

2. acquisition of control over another business operator by way of equity or assets acquisition; or

3. acquisition of control over another business operator, or of the ability to exercise a decisive influence over another business operator, by way of contract or other means.