China's Merger Control Regime in the Face of Global Integration: Features and Implications

Abstract

Since China’s merger control regime under the Anti-Monopoly Law (AML) was established in 2008, the enforcement record has given rise to growing concern that the system is inherently biased against foreign multinationals. This article conducts an analysis of the evolution of China’s merger review system to assess this charge and its implications. China’s steady economic development fueled by foreign investment has led to a domestic market featuring strong foreign presence. Foreign-domestic competition figured as an important issue for the policymakers, especially in anticipation of China’s entry into the WTO. This concern precipitated the establishment in 2003 of the country’s first merger review system, which only applied to M&As by and between foreign companies. Although the AML on its face applies generally to both foreign and Chinese firms, enforcement authorities have only intervened in foreign takeovers. China’s merger control regime is different from that of mature market economies and has significant implications for itself as well as foreign investors.

Keywords: China’s Antimonopoly Law, merger control, global integration, foreign-domestic competition

JEL Classification: K21