China's competition authority has significantly expanded its enforcement activity. The Guojia Shichang Jiandu Guanliju (State Administration for Market Regulation. Alternatively. SAMR) is pursuing a more aggressive posture across all three pillars of Chinese competition law: cartel investigations, market dominance abuse cases, and merger notification controls. International companies operating through wholly foreign-owned enterprises or joint ventures in China face a materially higher risk of investigation than at any point in the past decade.
China's competition enforcement regime, administered by SAMR under the authority of the State Council, has entered a period of intensified scrutiny for both domestic and foreign businesses. The primary compliance pressure falls on companies with significant China revenues, those involved in recent mergers, and any business that coordinates pricing or market conduct with competitors. Companies that fail to notify qualifying transactions or that cannot demonstrate internal compliance structures face penalties calculated as a proportion of the prior year's China-market turnover.
This alert covers the key enforcement developments, the business categories most exposed, and the immediate actions international companies should take now.
What has changed: enforcement escalation and new penalty thresholds
SAMR has materially widened the scope of its investigations. Enforcement activity now targets sectors well beyond the technology and platform economy that dominated earlier cycles. Pharmaceuticals, automotive supply chains, consumer goods distribution, and financial services have all seen enforcement actions in the current period.
Three structural shifts define the current enforcement environment. First, SAMR has begun applying its merger notification rules more strictly to foreign-to-foreign transactions that meet China-market revenue thresholds. A transaction structured entirely outside China is still subject to notification if the parties' revenues from Chinese operations cross the applicable thresholds. Failure to notify – or closing a transaction before clearance is granted – exposes parties to unwinding orders and substantial fines.
Second, investigations into alleged market dominance abuse have extended to intermediary platforms, exclusive dealing arrangements, and refusal-to-deal scenarios. Companies holding a dominant position under Chinese competition legislation are prohibited from engaging in a defined list of conduct. SAMR has demonstrated willingness to impose fines representing a significant share of a company's annual China-market revenues in confirmed abuse cases.
Third, cartel enforcement has been strengthened by SAMR's expanded use of the leniency programme. The kuanshong zhidu (leniency programme) under Chinese competition legislation offers reduced penalties to the first party to self-report a cartel and cooperate fully with the investigation. The programme now creates a race-to-report dynamic within cartel structures: any participant that suspects others may be approaching SAMR faces the risk of losing leniency protection entirely.
For companies involved in corporate disputes in China, an active SAMR investigation can intersect directly with shareholder claims or contractual enforcement proceedings – creating compounded exposure that requires coordinated legal strategy.
Who is affected: threshold criteria and business categories at risk
The following categories of international business carry the highest current exposure under China's competition legislation.
- Foreign acquirers with China-market revenues must assess merger notification obligations before signing, not after closing. The relevant thresholds are calculated by reference to the combined global and China-specific turnover of all parties.
- Multinational distributors and manufacturers in sectors with concentrated market structures – particularly where a small number of participants set prices or divide customers – face heightened cartel investigation risk.
- Digital platform operators and data-intensive businesses remain under sustained SAMR scrutiny for both dominance abuse and algorithm-based coordination.
- Companies operating through a wholly foreign-owned enterprise (WFOE) that coordinate pricing or market conduct with affiliated entities in China must ensure those arrangements are reviewed against Chinese competition legislation, not only against home-jurisdiction rules.
- Joint venture parties whose JV agreements contain exclusivity, non-compete, or price-setting clauses should treat those provisions as subject to SAMR review, regardless of whether the JV was structured offshore.
Compliance deadlines are transaction-specific for merger filings: notification must be submitted and clearance obtained before closing. For ongoing conduct investigations, SAMR can open a file at any time. There is no advance warning. The absence of a formal compliance programme is treated by SAMR as an aggravating factor when calculating penalties.
For a full assessment of how Chinese competition legislation applies to your business structure, contact our team at ferrazwhitmore.com/services/competition-law/china/ or reach out directly at info@ferrazwhitmore.com.
Immediate actions for international companies
Companies with material China operations should treat the current enforcement environment as an active compliance risk, not a background concern. The following five actions are appropriate now.
- Audit merger notification obligations. Any transaction signed or closed in the past 24 months that involved China-market revenues should be reviewed against SAMR notification thresholds. Late filings carry penalties, but voluntary disclosure before SAMR initiates a review is treated more favourably than a discovered failure to notify.
- Review distribution and pricing agreements. Agreements that fix resale prices, set minimum pricing floors, or allocate customers or territories between competitors require immediate legal review. These arrangements are among the most frequently investigated under Chinese competition legislation.
- Assess dominance exposure. Companies with significant market share in any defined Chinese product or geographic market should map their conduct against the prohibited categories under the market dominance provisions of Chinese competition legislation. Self-assessment is not sufficient – independent legal review is required.
- Establish or update a leniency protocol. If your company participates in any industry association, price-setting forum, or information-sharing arrangement, you should have a clear internal protocol for assessing whether to approach SAMR under the leniency programme before a competitor does.
- Document your compliance programme. SAMR treats the existence of a credible, functioning compliance programme as a mitigating factor. Programmes that exist only on paper provide no mitigation. Ensure your China compliance documentation is current, training records are maintained, and internal reporting channels are operational.
Disputes arising from SAMR investigations – including challenges to penalty decisions before the China International Economic and Trade Arbitration Commission (CIETAC) or before the specialised IP and commercial courts – require separate procedural strategy. For context on the broader dispute resolution environment, our alert on competition enforcement developments in the UAE illustrates how regional enforcement trends are converging across major emerging-market jurisdictions.
To receive an expert assessment of your competition law exposure in China, contact us at info@ferrazwhitmore.com.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our competition law practice covers enforcement risk assessment, merger notification, cartel defence, and dominance analysis for international companies operating in China and across Asia-Pacific markets. We work alongside in-house legal teams and C-suite advisers who need a law firm in China-adjacent matters with both civil law depth and common law enforcement experience. Our team includes practitioners with experience in cross-border competition proceedings and has advised on SAMR-related matters affecting WFOEs, joint ventures, and foreign acquirers with China-market exposure across 15 practice areas. Engaging a lawyer in China or a firm with deep China competition expertise at the earliest stage of a transaction or investigation materially affects the range of available options. To discuss how the current enforcement environment affects your business, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.