Managing Merger Control Call-in Risk in China: Procedure, Enforcement, and Remedy

[co-author: Ken Dai]

Over the past six months, China has seen a notable surge in the enforcement of the merger control “call-in” regime. Most recently, on 22 January 2026, China’s antitrust authority, the State Administration for Market Regulation (“SAMR”), announced the prohibition of a below-threshold transaction involving five liquefied petroleum gas operators establishing a joint venture for gas sourcing, storage, and filling operations in Foshan.

Since the 2022 revision of China’s Anti-Monopoly Law (“AML”) formally introduced the call-in mechanism, SAMR has become increasingly active in this area. To date, at least five public cases have emerged, including Qualcomm/Autotalks², Keysight/Spirent³, Wuhan Yongtong/Huatai⁴, Synopsys/Ansys⁵, and the recent Foshan JV case. With the Qualcomm/Autotalks matter still under investigation, two of these cases have resulted in outright prohibition, while two others were cleared with restrictive conditions.

This recent enforcement pattern has significantly elevated the risk profile of below-threshold transactions in China. Against this background, this article examines the evolving enforcement practice, outlines the procedural framework of call-in reviews in China, and discusses the strategic and remedial implications for multinational companies.

1. Procedural Roadmap: How a Call-in Review Typically Starts and Unfolds

China’s legal basis for reviewing below-threshold transactions can be traced back to the 2008 Rules of the State Council on the Filing Thresholds for Concentrations of Undertakings⁶, which empowered the competition authority to investigate transactions falling below the thresholds where evidence indicated that they might eliminate or restrict competition. For more than a decade, however, this power remained largely dormant. There were no detailed procedural rules, and only two publicly known cases were ever treated as call-in matters in practice.⁷

This changed with the 2022 revision of the AML, elevated the call-in mechanism from administrative regulations to formal statutory law. The subsequently issued Provisions on the Review of Concentrations of Undertakings⁸ now provide a relatively clear procedural roadmap.

In essence, the process begins with SAMR forming the view that a below-threshold transaction may have anticompetitive effects and therefore requires notification. SAMR will issue a written notice to the parties (a “Call-in Notice”) requiring them to submit a filing. If the transaction has not yet been implemented, the parties are subject to a standstill obligation and must not implement the deal before clearing. If the transaction has already been implemented, the parties must submit a filing within 120 days of receipt of the Call-in Notice and take necessary measures to mitigate potential competitive harm, which may include suspending integration or implementation measures.

Once the case is formally taken in, it proceeds through the ordinary merger review procedure. In practice, this typically involves a review period of six months to one year, and sometimes longer in complex cases. Ultimately, the review may end in one of four outcomes: unconditional clearance, conditional clearance subject to remedies, prohibition, or the parties’ decision to abandon the transaction.

2. Enforcement Trends: Where the Risk Is Heading

Below-threshold merger control cases in China provide valuable insight into how SAMR approaches transactions that fall outside the formal notification regime. Recent practice reveals several clear enforcement signals regarding the types of transactions most likely to attract call-in scrutiny.

1. Structural Red Flags Remain the Most Straightforward Trigger

Traditional structural indicators continue to play a central role in SAMR’s enforcement calculus. Transactions that materially increase concentration in already concentrated markets - particularly in narrowly defined local markets - are most likely to be viewed as creating or strengthening market power. Recent cases demonstrate SAMR’s close attention to classic competition metrics such as market shares, HHI and ΔHHI, combined with structural features such as entry barriers arising from licensing regimes, land or capacity constraints, and weak buyer power.

This pattern is especially pronounced in local “livelihood” or public-interest markets, where demand is stable, customers are fragmented, and competitive entry or expansion is difficult. In such contexts, even transactions framed as “upstream integration” (for example, joint procurement, storage, or infrastructure joint ventures) may be assessed based on their practical effect of eliminating independent rivalry and reshaping competitive incentives in downstream sales.

2. “Bottleneck Control” as an Expanding Theory of Harm

Beyond classic horizontal overlap, SAMR has shown a growing willingness to intervene where a transaction confers or consolidates control over a competitive bottleneck. Two recurring scenarios stand out.

First, in regulated sectors such as pharmaceuticals, SAMR has focused on input foreclosure risks. Where an acquirer controls an indispensable upstream input - often reinforced by long-term exclusivity arrangements - and the target operates downstream, the authority has treated the transaction as increasing both the ability and the incentive to disadvantage rivals, raise their costs, or deny access altogether, especially where downstream alternatives are limited and entrance activities are slow.

Second, in technology markets characterized by complex toolchains and high switching costs, SAMR has increasingly relied on ecosystem leverage theories. These include concerns over degraded interoperability, tying or bundling across adjacent tools, and strategies that may lock customers into a closed technical stack. Taken together, these cases suggest that SAMR’s notion of “control” is expanding beyond traditional pricing power to encompass access, compatibility, and the ability to shape technical ecosystems.

3. Remedies Are Becoming More Muscular and Mixed

Remedy practice in below-threshold cases has become both more demanding and more nuanced. Several recent conditional clearances have relied on structural divestitures as the core remedy, supplemented by behavioral obligations designed to address ecosystem and foreclosure concerns—such as non-discrimination commitments, interoperability obligations, restrictions on tying and bundling, and guarantees of supply continuity and contract stability.

In certain regulated markets, remedies have gone even further, including the termination of exclusive supply arrangements, mandatory divestiture of in-development pipelines, and, in some instances, price-related undertakings tied to compliance milestones.

Two practical implications follow. First, SAMR is clearly ready to impose remedy packages comparable in scope and intensity to those seen in major notifiable transactions, even where the deal falls below the thresholds. Second, if parties fail to engage early and constructively on remedies - or do not submit workable proposals within the prescribed timeframes - the risk of outright prohibition becomes materially higher, particularly in concentrated or politically sensitive sectors.

4. Procedural Posture Matters: Call-in Risk is Also a Compliance and Closing Risk

Finally, the call-in mechanism is increasingly intertwined with enforcement against “gun-jumping” or unlawful implementation. Where SAMR has issued a Call-in Notice, closing the transaction without clearance may trigger separate enforcement exposure, including investigations for illegal implementation. This significantly raises the stakes of early risk assessment, internal escalation, and careful deal management. Below-threshold transactions - especially those likely to attract complaints from competitors or customers - should therefore be managed with the same rigor as notifiable deals in terms of timing, integration planning, and conditionality.

3. Remedies and Challenges: Can Parties Contest Call-in Notices and Final Decisions?

The expanding use of the call-in mechanism also raises important procedural questions. If a transaction does not meet the statutory thresholds but nevertheless receives a Call-in Notice, what options are available to the parties? Must they comply unconditionally, or is there room to challenge the notice itself? And can a Call-in Notice be contested through administrative reconsideration or litigation?

Under China’s Administrative Reconsideration Law⁹ and Administrative Litigation Law¹⁰, an administrative act is generally reviewable only if it constitutes a specific administrative act that has a real and substantive impact on the rights or legally protected interests of the affected party. There is little doubt that conditional approval and prohibition decisions are reviewable, as they impose concrete obligations and restrictions on the parties. In such cases, affected undertakings may apply for administrative reconsideration before SAMR and then either seek final adjudication by the State Council or bring an administrative lawsuit before the Beijing Intellectual Property Court. A State Council adjudication is final and not subject to appeal, whereas a court judgment may be appealed in accordance with the ordinary two-instance system.

Unconditional clearance decisions present a more complex picture. In China’s first antitrust administrative litigation, the Beijing Intellectual Property Court took the view that an unconditional clearance decision does not alter the rights and obligations of the parties and therefore does not give rise to a justiciable interest. Only conditional or prohibitive decisions, in the court’s view, are capable of affecting the parties’ legal interests and thus susceptible to judicial review.¹¹ This remains controversial, as a full review process - even if ending in unconditional clearance - may still cause significant delay and commercial harm.

The legal nature of a Call-in Notice is even more ambiguous. Under Chinese law, internal, preparatory, or purely procedural acts are, in principle, excluded from judicial review.¹² From a formal perspective, a Call-in Notice could be characterized as such a procedural act: it does not itself impose fines, prohibit the transaction, or order remedies, but merely requires the parties to submit a filing and submit to review.

However, this formal characterization is difficult to maintain once the practical effects are considered. A Call-in Notice immediately transforms a previously non-notifiable transaction into one subject to the full merger control regime. It triggers mandatory disclosure obligations, review timelines, regulatory delay, compliance costs, and exposure to the risk of conditional clearance or prohibition. In cases involving completed transactions, it may also open the door to retroactive scrutiny and structural remedies such as divestment or restoration of the pre-transaction state.

Judicial practice in this area remains at an early stage. To date, publicly known call-in cases have been handled almost exclusively within the administrative enforcement framework, and there are no reported cases in which courts have directly reviewed the legality of a Call-in Notice itself. As a result, the Call-in Notice occupies an ambiguous position: in theory potentially contestable, but in practice difficult to challenge. For most parties, compliance remains the only realistic option, even where there may be plausible grounds to question the factual or legal basis of the authority’s intervention.

4. Practical Takeaways

Recent enforcement makes clear that China is ready to call in cases below the filing thresholds. For foreign companies, merger control risk increasingly turns on substantive competitive effects rather than formal jurisdictional triggers. Transactions in highly concentrated or strategically sensitive sectors, or in livelihood-related markets, warrant early and careful competition assessment even where no notification obligation appears to arise.

Companies should also reassess the assumption that merger control risk fades over time. Call-in practice demonstrates that completed transactions may still be subject to retrospective review, particularly where market conditions evolve or enforcement priorities shift. Legacy transactions involving consolidation or vertical integration should therefore not be treated as immune from regulatory attention.

Finally, regulatory strategy must take procedural uncertainty into account. Although there are credible doctrinal arguments supporting the reviewability of Call-in Notices, judicial pathways remain unclear. In this environment, effective risk management depends less on immediate litigation and more on early regulatory engagement, timely identification and explanation of competitive concerns, and careful preservation of procedural records. Until clearer judicial guidance emerges, navigating China’s call-in regime requires a pragmatic balance between compliance and procedural vigilance.

References:

1. See https://www.samr.gov.cn/fldes/tzgg/ftj/art/2026/art_a4c4bf95e7664304a0ea54e89c82d5ba.html
2. See https://www.samr.gov.cn/xw/mtjj/art/2025/art_622a5788effe4ed9b37699f6445ed80e.html
3. See https://www.samr.gov.cn/fldes/tzgg/ftj/art/2025/art_716b7bd719da4370ac9a40f70571f665.html
4. See https://www.samr.gov.cn/fldes/tzgg/ftj/art/2025/art_7b2564ef1f144dbc9307b42471c38802.html
5. See https://www.samr.gov.cn/fldes/tzgg/ftj/art/2025/art_3a7b235d312840b5b19c538a6773af5f.html
6. Decree No. 529 of the State Council of the People's Republic of China, adopted at the 20th Executive Meeting of the State Council on 1 August 2008 and promulgated on 3 August 2028.
7. For one of such case, see https://www.samr.gov.cn/fldes/tzgg/ftj/art/2023/art_90a71deadd224689b026920807c0389c.html
8. Decree No.67 of the State Administration for Market Regulation, adopted at the 2nd executive meeting of the SAMR on February 20, 2023, are hereby promulgated, effective April 15, 2023.
9. Presidential Decree No. 9, promulgated on 1 September 2023, effective on 1 January 2024.
10. Promulgated on 27 June 2017, effective on 1 July 2017.
11. (2024) Jing 73 Xing Chu No. 5180
12. See Interpretation of the Supreme People’s Court on the Application of Administrative Procedure Law of the People’s Republic of China, Supreme People's Court Fa Shi [2018] No. 1, Promulgated on 6 February 2018, Effective on 8 February 2018.