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Perspective | Anti-Monopoly Compliance for Concentrations of Operators: Legal Framework, Case Insights, and Practical Approaches

Published:

2025-12-16

The newly revised “Anti-Monopoly Law of the People’s Republic of China” enacted in 2022 has brought about significant changes to the penalties imposed on concentrations of business operators. The enhanced severity of these penalties has substantially increased the costs of violating the law by failing to file a required notification. Under these circumstances, businesses now face even stricter compliance requirements. Since 2023, the legal and regulatory framework governing concentrations of business operators has been steadily refined, including documents such as the “Guidelines for Review of Horizontal Concentrations,” the “Regulations of the State Council on Standards for Filing Concentrations of Business Operators,” the “Regulations on the Review of Concentrations of Business Operators,” and the “Benchmark for Discretionary Powers in Administrative Penalties for Illegally Implemented Concentrations (Trial).” This article analyzes the framework for reviewing concentrations of business operators in the antitrust field, taking into account the new developments and regulatory trends reflected in the aforementioned legal documents, and explores insights and pathways for enterprises to effectively implement compliance management.

Preface: The newly revised “Anti-Monopoly Law of the People’s Republic of China” enacted in 2022 has brought about significant changes to the penalties imposed on concentrations of business operators. The enhanced severity of these penalties has substantially increased the costs of violating the law by failing to file a required notification. Under these circumstances, businesses now face even stricter compliance requirements. Since 2023, the legal and regulatory framework governing concentrations of business operators has been steadily refined, including documents such as the “Guidelines for Review of Horizontal Concentrations,” the “Regulations of the State Council on Standards for Filing Concentrations of Business Operators,” the “Regulations on the Review of Concentrations of Business Operators,” and the “Benchmark for Discretionary Administrative Penalties for Illegally Implemented Concentrations (Trial).” This article analyzes the framework for reviewing concentrations of business operators in the antitrust field, drawing on the new developments and regulatory trends reflected in the aforementioned legal documents, and explores insights and pathways for enterprises to effectively implement compliance management.

I. The Legal Framework for Anti-Monopoly Compliance in Business Operator Concentrations

(1) Dual Reporting Standards

1. Formal Declaration Standards (New Regulations for 2024)

According to the "Regulations of the State Council on the Standards for Filing of Concentrations of Operators (Revised 2024)," the filing threshold has been adjusted as follows:

(1) Global total revenue ≥ 12 billion yuan + revenue within China from at least two parties ≥ 800 million yuan;

(2) Total domestic turnover ≥ 4 billion yuan + at least two domestic parties each with a turnover of ≥ 800 million yuan.

The new regulations, by raising the threshold, achieve a “focus on major cases while letting minor ones go,” but they also strengthen the authority to scrutinize transactions that fall short of the standards yet still have anti-competitive effects.

2. Substantive Review Logic

In addition to the aforementioned turnover-based criteria, Article 26 of the “Anti-Monopoly Law of the People’s Republic of China (Revised in 2022)” establishes a supplementary review mechanism for cases that “do not meet the reporting threshold but have exclusionary or restrictive effects on competition.”

With regard to whether to exclude or restrict competitive effects, the following review dimensions shall be adopted:

(1) Market Structure Indicators

Article 28 of the “Guidelines for Reviewing Horizontal Concentrations” issued by the State Administration for Market Regulation in 2024 clearly states that antitrust enforcement agencies typically use the following two indicators to measure market concentration:

① Herfindahl-Hirschman Index ( HHI Index ), which is the sum of the squares of each operator’s market share in the relevant market, multiplied by 100;

② The combined market share of the top n operators in the industry ( CRn index ), which is the sum of the market shares of the top n operators in the relevant market.

It is generally believed that, compared to the CRn index, the HHI index assigns greater weight to operators with higher market shares, thereby more accurately reflecting... Market competition structure Therefore, it has been adopted more frequently and extensively in enforcement practice. When using the HHI index, antitrust enforcement agencies consider both the post-merger HHI level and the increase in the HHI index resulting from the merger (ΔHHI). The HHI level can indicate the competitive pressure faced by firms in the relevant market, while ΔHHI effectively measures the extent to which the merger has altered and affected market concentration.

(2) Competition Harm Dimension

Article 26, paragraph 2 of the “Anti-Monopoly Law of the People’s Republic of China (Revised in 2022)” directly identifies the “possibility of harm to competition” as the core basis for supplementary review.

Article 31 of the “Regulations on the Review of Concentrations of Operators” specifies the review factors that should be taken into account when reviewing concentrations of operators:

(1) The market shares of the undertakings involved in the concentration and their degree of control over the market;

(2) Market concentration in the relevant market;

(3) The impact of concentration among operators on market entry and technological progress;

(4) The impact of the concentration of operators on consumers and other relevant operators;

(5) The impact of concentration of operators on the development of the national economy;

(6) Other factors that should be considered and that may affect market competition.

(2) Confirmation of Legal Liability

II. Compliance Insights from Typical Cases

(1) Centralized Review for Cases Below the Reporting Threshold: Use the Tongyi Pharmaceutical Case

The case involves two parties whose combined turnover did not meet the formal reporting threshold of 800 million yuan. However, through the acquisition, they established a vertical monopoly spanning active pharmaceutical ingredients and finished dosage forms, leading to a substantial increase in prices. This marks the first-ever retrospective review conducted six years after the fact, as well as the first case requiring restoration of the pre-merger status (transfer of equity + termination of exclusive agency agreements).

Compliance Insights: In industries with high concentration, such as pharmaceuticals and technology, even if they haven't yet met the reporting thresholds, companies are required to conduct a “self-assessment of competitive impact,” with a particular focus on evaluating market share and supply-chain control capabilities to prevent the emergence of substantial competitive effects.

(2) Multi-jurisdictional Compliance in Cross-Border Transactions: The Qualcomm Acquisition of Autotalks Case

In this case, Qualcomm completed its acquisition of Autotalks, a leading company in V2X chip technology, without filing the required notification, allegedly engaging in “front-running” and excluding competitors. According to Article 58 of the Anti-Monopoly Law of the People’s Republic of China, this conduct constitutes an illegal act and could result in a fine of up to 10% of the entity’s annual sales revenue.

Compliance Insights: Cross-border M&A transactions require the establishment of a dual-filing mechanism—“China + Target Country”—with particular attention paid to the review risks associated with technology-monopoly-type transactions.

(3) Review Orientation Focused on Key Industries

III. A Pathway for Compliance Practices Across the Entire Process

(1) Pre-event: Establish and improve the assessment system.

1. Revenue-based accounting

Strictly calculate turnover in advance according to the standards of the 2024 new regulations to determine whether the threshold for mandatory reporting has been met. This includes consolidating turnover figures from affiliated enterprises to prevent “splitting transactions” aimed at evading reporting obligations.

2. Substantive Assessment of Market Competition

Entrust a third-party agency to calculate the HHI index and market shares, and proactively assess risks in cases where standards are not met but competition could still be affected. At the same time, identify the status of control over “key assets” (such as active pharmaceutical ingredients and core patents), and anticipate potential risks of vertical concentration.

3. Cross-border transaction preparation

Initiate multi-jurisdictional notification and assessment ahead of time, with a particular focus on the U.S. HSR Act (transaction amounts ≥ $126.4 million) and the EU Merger Regulation (threshold for notification based on the sustained transfer of control).

(2) During the process: Preventing both procedural and substantive risks

1. Compliance with the application procedure

In accordance with Article 28 of the Anti-Monopoly Law of the People’s Republic of China (as amended in 2022), operators intending to file a notification of concentration with the anti-monopoly enforcement authority under the State Council shall submit the following documents and materials:

(1) Application form;

(2) A description of the impact on the competitive landscape of the relevant market;

(3) Centralized Agreement;

(4) The financial accounting reports for the previous fiscal year, audited by an accounting firm, of the undertakings participating in the concentration;

(5) Other documents and materials prescribed by the anti-monopoly enforcement agency of the State Council.

The application shall specify the names, addresses, business scopes of the operators involved in the concentration, the scheduled date for implementing the concentration, and other matters prescribed by the anti-monopoly enforcement agency under the State Council.

In addition, voluntary declaration is required and subject to compliance with “ Quiescent phase “Concentrations shall not be implemented without prior declaration or approval after declaration.”

2. Substantive standard control

The review shall focus on the examination factors specified in Article 31 of the “Regulations on the Review of Concentrations of Undertakings.” Except where it can be demonstrated that the concentration has significantly more favorable effects than adverse effects on competition or that it serves the public interest, strict scrutiny must be applied to determine whether the concentration actually has or is likely to have the effect of eliminating or restricting competition.

(3) Post-event: Establish compliance incentives and risk-response mechanisms.

1. Respond to the investigation

Cooperate with law enforcement agencies by providing truthful information and avoid “providing false information” (which would aggravate the penalty); proactively offer remedial measures (such as asset divestiture or opening up technology licenses).

2. Compliance-based exemptions

If circumstances such as “first-time violation, voluntary supplementary reporting, and establishment of a compliance system” are present, you may apply for a reduction or exemption of the fine in accordance with Article 9 of the “Benchmark for Administrative Discretion in Imposing Administrative Penalties for Illegally Implemented Concentrations of Operators (Trial)” (with a maximum reduction of 60%).

3. Long-term compliance:

(1) Establish an antitrust compliance committee and integrate it into the merger and acquisition project initiation process.

(2) Conduct compliance training on a regular basis (with a particular focus on senior executives, legal departments, and investment divisions);

(3) Establish a “post-transaction competition impact monitoring mechanism” (lasting 2–3 years).

IV. Conclusion

With the implementation of the “Guidelines for Review of Horizontal Concentrations of Operators” and the introduction of the “Benchmark for Administrative Discretionary Powers in Imposing Administrative Penalties for Illegal Implementations of Operator Concentrations (Trial),” China’s antitrust regulation of operator concentrations has entered a stage characterized by precision and stringent penalties. Enterprises need to proactively respond to this trend and place great importance on compliance assessment thinking. Particularly in key sectors such as pharmaceuticals, technology, and the platform economy, compliance requirements should be integrated into every stage of the merger and acquisition process. By adopting a closed-loop compliance management approach—comprising “pre-event assessment, in-process prevention and control, and post-event optimization”—companies can strike a balance between commercial interests and legal risks.

【Regulatory Briefing】

Regulations of the State Council on the Standards for Filing Concentrations of Undertakings (Revised in 2024)

Article 3 　If a business operator’s concentration reaches any of the following standards, the operator shall, prior to implementation, submit a notification to the anti-monopoly enforcement agency under the State Council; failure to submit such a notification shall result in the concentration being prohibited from being implemented:

(1) The combined global turnover of all undertakings participating in the concentration for the preceding fiscal year exceeds RMB 12 billion, and at least two of these undertakings each had a turnover within China exceeding RMB 800 million for the preceding fiscal year.

(2) The combined turnover of all operators participating in the concentration in China for the previous fiscal year exceeds RMB 4 billion, and at least two of these operators each had a turnover exceeding RMB 800 million in China for the previous fiscal year.

The calculation of turnover shall take into account the actual conditions of special industries and sectors such as banking, insurance, securities, and futures. Specific measures shall be formulated jointly by the anti-monopoly enforcement agency under the State Council and relevant departments of the State Council.

Article 26 　If a business operator’s concentration reaches the reporting threshold prescribed by the State Council, the operator shall submit a prior notification to the anti-monopoly enforcement agency of the State Council. Any concentration that has not been reported shall not be implemented.

If a concentration of operators does not meet the filing standards prescribed by the State Council but there is evidence indicating that such concentration has or may have the effect of excluding or restricting competition, the anti-monopoly enforcement agency of the State Council may require the operators to file a declaration.

If an operator fails to make the declaration as required in the preceding two paragraphs, the anti-monopoly enforcement agency of the State Council shall conduct an investigation in accordance with the law.

Anti-Monopoly Law of the People’s Republic of China (Revised in 2022)

Article 28 　An operator submitting a notification of a concentration to the State Council’s antitrust enforcement agency shall submit the following documents and materials:

(1) Application form;

(2) A description of the impact on the competitive landscape of the relevant market;

(3) Centralized Agreement;

(4) The financial accounting reports for the previous fiscal year, audited by an accounting firm, of the undertakings participating in the concentration;

(5) Other documents and materials prescribed by the anti-monopoly enforcement agency of the State Council.

Regulations on the Review of Concentrations of Operators

Article 31 　When reviewing concentrations of business operators, the following factors should be taken into consideration:

(1) The market shares of the undertakings involved in the concentration and their degree of control over the market;

(2) Market concentration in the relevant market;

(3) The impact of concentration among operators on market entry and technological progress;

(4) The impact of the concentration of operators on consumers and other relevant operators;

(5) The impact of concentration of operators on the development of the national economy;

(6) Other factors that should be considered and that may affect market competition.

Benchmark for Administrative Discretion in Imposing Administrative Penalties for Illegal Concentrations of Operators (Trial)

Article 9 　If the operator has engaged in an illegal concentration under any of the following circumstances, the State Administration for Market Regulation may reduce the initial fine amount:

(1) The entity, after being consolidated, has not yet commenced operations; or, having commenced operations, has not yet started production; or, having acquired equity, assets, or business, has not yet actually exercised control.

(2) Those who receive an administrative penalty for the first time for illegally implementing a concentration of operators;

(3) Actively cooperate with the investigation conducted by the State Administration for Market Regulation, truthfully state the facts of the violation, and promptly provide important evidence materials.

(4) Actively rectifying after discovering facts of violations, and establishing or improving an antitrust compliance management system and effectively implementing it;

(5) Where the concentration of business operators meets the reporting thresholds prescribed by the State Council, but the operators’ turnover within China in the previous fiscal year did not reach RMB 800 million, and they actively cooperate with the investigation;

(6) The State Administration for Market Regulation determines other circumstances under which the amount of the fine may be reduced.

The downward adjustments stipulated in the preceding paragraph may be accumulated, with each adjustment amounting to 10%. The minimum total fine after accumulation shall not be less than 40% of the initial fine amount.

If a circumstance described above has already been considered as a mitigating factor when determining the initial amount of the fine, the fine amount shall no longer be reduced based on that same circumstance.

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