The ‘Public Interest Exemption’ in China’s Merger Control Regime：A Critical Reflection

The Anti-monopoly Law in China allows the responsible authority for merger control to consider not only the competition interest but also other public interest reasons when it reviews a takeover or merger. Where the responsible authority considers that the benefits of a takeover or merger to the public interest outweigh the harm to competition, it may ‘exempt’ this transaction. This mechanism can be referred to as ‘public interest exemption’ in merger control.Since the introduction of the Anti-monopoly Law in 2008, this exemption mechanism has never been formally applied. . One explanation for this can be found in the ambiguity of the law: there are no legal provisions that clarify which public interest considerations need to be made by the responsible authority. A second explanation is that China did not establish a separate review procedure for this public interest exemption. In practice, therefore, some approval decisions made by the enforcement authority gave rise to confusion, as it was not made explicit whether the transactions were ‘exempted’ for public interest reasons or whether industrial policies (also) played a role in the decisions. This paper critically reflects on the role of the public interest exemption in China’s merger control regime. By drawing lessons from the past, and by examining the public interest exemption regime in Germany, this paper aims to provide suggestions for future reforms, against the background of the promulgation of the Draft Amendment to the Anti-monopoly Law and the newly establishment of the National Anti-monopoly Bureau.