China Issues Guidelines for Review of Non-Horizontal Concentrations between Undertakings
Published 19 December 2025
Xia Yu
On 16 December 2025, the State Administration for Market Regulation of China (“SAMR”) released the Guidelines for Review of Non-Horizontal Concentrations of Undertakings (“Non-Horizontal Concentration Guidelines”). Together with the Guidelines for Review of Horizontal Concentrations of Undertakings (“Horizontal Concentration Guidelines”) issued by the SAMR in December 2024, these documents constitute the core pillars of China’s classified review system for concentrations of undertakings, marking a critical step towards a more refined, transparent, and internationally-aligned antitrust review regime in China. For any domestic or foreign enterprises planning M&A transactions in the Chinese market, particularly those involving industrial chain integration, ecosystem expansion, or technological collaboration, a deep understanding and adherence to the review logic and rules set forth in the Non-Horizontal Concentration Guidelines have become a decisive factor for transaction feasibility and success.
Core Framework of the Non-Horizontal Concentration Guidelines: Structured Analysis Focusing on “Market Power Transmission”
The review framework of the Non-Horizontal Concentration Guidelines aligns with that of the Horizontal Concentration Guidelines, comprising nine chapters and eighty-two articles, and is supplemented by thirty-four specific cases to illustrate complex provisions. Its most significant institutional innovation lies in providing, for the first time, a systematic and independent analytical paradigm for Chinese enforcement agencies to assess vertical and conglomerate concentrations of undertakings.
As required for review, the Non-Horizontal Concentration Guidelines clearly define vertical and conglomerate concentrations as the primary forms of non-horizontal concentrations. For vertical concentrations, the participating undertakings are in an upstream-downstream relationship within the same industrial chain. The key to establishing this relationship is whether the goods procured by the downstream undertaking are used as specific productive inputs or for resale. Conglomerate concentrations primarily involve concentrations between undertakings with adjacent relationships (where goods share common customer groups and end-uses) or complementary relationships (where goods are used in combination).
The Non-Horizontal Concentration Guidelines establish clear-tiered preliminary screening criteria, initially assessing the competitive impact of a concentration based on the market shares of the participating undertakings in upstream/downstream markets or in markets with close connections such as adjacency or complementarity. Where the market share is above 50% in any such market, the concentration is generally presumed to have or likely have the effect of excluding or restricting competition, unless the undertaking(s) can prove otherwise. Where the market share is between 35% and 50%, there is a tendency to consider the concentration as having or likely having such effect, warranting focused analysis. For market shares between 25% and 35%, it is generally considered that the likelihood of such effects is low, but analysis based on the specific market conditions of the case is required. Where all relevant market shares are below 25%, the concentration is generally presumed not to have such effects. Notably, even if market shares are below 25%, the presence of “exceptional circumstances” (e.g., the transaction involves control over critical data/technology, cross-shareholdings exist, or the acquisition target is a “maverick” that could hinder market coordination) will still trigger in-depth review. This underscores China’s heightened sensitivity towards intangible assets like data, technology, and innovation.
The core logic of the Non-Horizontal Concentration Guidelines is to prevent “market power transmission”. and its analysis strictly follows the classic assessment framework of ability, incentive, and ultimate competitive effects. For vertical concentrations, the focus is on reviewing input foreclosure (leveraging upstream market power to raise costs for downstream competitors) and customer foreclosure (leveraging downstream market power to squeeze upstream competitors). Here, the definition of “input” is broad, encompassing new production factors such as data, algorithms, key technologies, and intellectual property rights. For conglomerate concentrations, the focus is on reviewing the transmission of market power from one market to an adjacent or complementary market through tying, bundling, reducing interoperability, etc., thereby foreclosing competitors. The Guidelines specifically note that in the platform economy, such transmission may be exacerbated via network effects, data concentration, etc. The assessment sequence is to first examine whether the post-concentration entity could implement foreclosure, then whether it has the economic incentive to do so, and finally whether this would ultimately produce effects that exclude or restrict competition. If the ability is absent, further review is typically not pursued, providing a clear compliance justification path for certain transactions.
If a non-horizontal concentration is determined to have or likely have the effect of excluding or restricting competition, the undertaking(s) may raise defenses, primarily including efficiency gains and failing firm defense. When assessing the impact of a non-horizontal concentration on economic efficiency, national economic development, social public interest, and analyzing factors related to the failing firm defense, the relevant considerations and analytical assessments may refer to the Horizontal Concentration Guidelines. The Non-Horizontal Concentration Guidelines highlight potential efficiency improvements from such concentrations, including: cost savings from economies of scale and scope; prevention of free-riding; elimination of double marginalization; reduction of transaction costs and assurance of stable supply for important inputs; optimization of production and management processes; promotion of increased investment and product variety; enhancement of transaction convenience; and innovation efficiencies from promoting technological progress and product iteration.
Comparison with Relevant EU and US Merger Guidelines: Convergence with Chinese Characteristics
The Non-Horizontal Concentration Guidelines show a high degree of convergence with the Guidelines on the Assessment of Non‑horizontal Mergers under the Council Regulation on the Control of Concentrations between Undertakings [ https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:265:0006:0025:en:PDF ] (“EU Guidelines”) published by the European Commission on 18 October 2008 in terms of theories of competitive harm and analytical frameworks but incorporate distinct Chinese characteristics in specific rule design. The EU Guidelines assess non-horizontal mergers based on whether they would significantly impede effective competition, particularly focusing on whether they create or strengthen a dominant position. The Non-Horizontal Concentration Guidelines reference or draw upon relevant provisions of the EU Guidelines regarding theories of harm, assessment frameworks, efficiency defenses, and safe harbors.
On 18 December 2023, the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) jointly issued the Merger Guidelines [ https://www.justice.gov/d9/2023-12/2023%20Merger%20Guidelines.pdf ] (“US Guidelines”), outlining the analytical methods used by both agencies in merger review, including for non-horizontal mergers. The US Guidelines assess mergers based on whether they “substantially lessen competition or tend to create a monopoly”, treat market concentration as a key metric, and significantly lower the structural presumption thresholds triggering merger review. The US Guidelines set forth eleven core principles of review, including principles relevant to vertical and conglomerate mergers covering foreclosure (input/customer), coordinated effects risks via information exchange, and the cumulative effect of a series of acquisitions.
Regarding emerging areas like digital platforms, the US Guidelines establish independent review principles for multi-sided platforms, serial acquisitions, and labor markets. Using multi-sided platforms as an example, the US Guidelines analyze competition between platforms, competition on a platform, and competition to replace the platform, and caution against potential “conflicts of interest” where a merger between a platform operator and a platform participant could lead the operator to favor its own products/services over those of other participants. The Non-Horizontal Concentration Guidelines explicitly list emerging issues as factors or circumstances to be considered in chapters such as “Competitive Impact of Conglomerate Concentrations” and “Relevant Market”. For instance, when defining relevant markets and assessing foreclosure effects and market power, the Guidelines mention considering the characteristics of the platform economy and evaluating an ecosystem operator’s ability and incentive to exclude/restrict competition. Regarding emerging technologies and innovation, the Guidelines primarily cover potentially innovative transactions through broad definitions of “adjacent/complementary relationships”, “technology markets”, and “R&D activities”.
While absorbing and referencing relevant merger guidelines like the EU’s, the Non-Horizontal Concentration Guidelines, based on China’s own economic development stage, market structure, and policy objectives, exhibit a review strategy with Chinese characteristics in areas such as safe harbor thresholds, definitions of adjacency/complementarity, and industrial policy orientation. The Non-Horizontal Concentration Guidelines explicitly stipulate a 25% market share safe harbor threshold and, through enumeration, specify seven categories of “exceptional circumstances” warranting focused review even below this threshold—such as existence of cross-shareholdings, control over critical assets, involvement of a technologically advanced “maverick” that could hinder market coordination, etc. Therefore, for the Chinese market, relevant enterprises can first conduct rapid market share screening and exceptional circumstance screening. If a transaction involves data, key technologies, innovation platforms, or occurs in industries with complex ownership structures, the risk of triggering in-depth review is relatively higher even with low market shares.
The Non-Horizontal Concentration Guidelines concretely define “upstream-downstream”, “adjacent”, and “complementary” relationships through several cases (e.g., optical lenses & frames, warehousing & freight). An upstream-downstream relationship exists where downstream undertaking purchases goods from an upstream undertaking for use as specific productive inputs or for resale. According to Case 1, warehousing services are upstream to freight services. An adjacent relationship exists where the goods provided by the participating undertakings share common customer groups and end-uses. A complementary relationship is a special type of adjacent relationship where the goods not only share common customer groups and end-uses but also complement each other and are typically used in combination. According to Case 3, an optical lens manufacturer and a sunglasses manufacturer constitute an adjacent relationship. By using case examples, the Guidelines reduce conceptual ambiguity and enhance the operability for enterprises in determining their transaction type. Accurately identifying the business relationships involved in a transaction directly affects which review rules apply. Determining the applicable review rules is the starting point for preparing filing arguments.
The Non-Horizontal Concentration Guidelines exhibit a strong orientation towards the digital economy and industrial policy. The Guidelines repeatedly and explicitly refer to internet platforms, data, algorithms, key technologies, and innovation/R&D. They are not only treated as potential “inputs” subject to foreclosure but are also considered in assessing market power, requiring evaluation of platform-economy-specific factors like “data interface control capability” and “ecosystem expansion capability”. Compared to EU and US guidelines, the Non-Horizontal Concentration Guidelines integrate these elements more deeply and systematically into the general M&A review framework. Consequently, for the Chinese market, any M&A involving data integration, platform function extension, or ecosystem expansion will automatically fall under heightened review scrutiny, regardless of the parties’ financial scale.
Key Action Recommendations for Enterprises
The issuance of the Non-Horizontal Concentration Guidelines requires enterprises to comprehensively elevate their antitrust compliance strategy for M&A transactions. In the early planning stages of a transaction, enterprises should strictly characterize the transaction according to the “non-horizontal relationship” definitions in the Guidelines and conduct precise preliminary competition risk screening based on the market share thresholds and the “exceptional circumstances” checklist. For transactions involving the digital economy or technology integration, self-assessment must be exceptionally prudent.
When preparing filing materials and defense arguments, enterprises should closely align with the three-step analytical framework of “ability—incentive—effects”. Particularly when arguing the absence of foreclosure “ability”, strong justifications should be provided based on market conditions, availability of alternative suppliers, openness of technology, etc. For potential efficiencies (e.g., eliminating “double marginalization”, promoting innovation), concrete, verifiable evidence demonstrating pass-on to consumers must be prepared.
For complex transactions, it is advisable to engage in informal consultations with Chinese antitrust enforcement agencies prior to formal filing to understand regulatory concerns. If competition concerns are foreseen, proactively design remedies centered around behavioral commitments (e.g., open interfaces, data portability, non-discrimination clauses), as such remedies are often more effective than structural divestitures in resolving non-horizontal competition issues.
The implementation of the Non-Horizontal Concentration Guidelines signifies the beginning of dynamic regulation in China. Enterprises should establish long-term monitoring and adaptation mechanisms, continuously track developments in relevant laws, administrative orders, and enforcement cases, constantly recalibrate their understanding and anticipation of Chinese regulatory dynamics, and deeply embed competition compliance into their long-term corporate development strategies.
Conclusion
The introduction of the Non-Horizontal Concentration Guidelines is not only a sign of the maturation of China’s antitrust legal system but also a clear signal to market participants: in the new stage of high-quality development, any M&A activity that may potentially exclude or restrict competition through the transmission of market power will face scientific, rigorous, and professional scrutiny. The Guidelines are legally binding in China and command judicial deference. For multinational corporations, successfully navigating China’s new M&A review landscape requires going beyond simple textual comparison of legal provisions to deeply understand the underlying economic logic of protecting the “competitive process” and the policy intent of serving the construction of a “unified national market”. Only by deeply integrating forward-looking antitrust compliance into business strategy can enterprises operate steadily and sustainably in the Chinese market.
Core Framework of the Non-Horizontal Concentration Guidelines: Structured Analysis Focusing on “Market Power Transmission”
The review framework of the Non-Horizontal Concentration Guidelines aligns with that of the Horizontal Concentration Guidelines, comprising nine chapters and eighty-two articles, and is supplemented by thirty-four specific cases to illustrate complex provisions. Its most significant institutional innovation lies in providing, for the first time, a systematic and independent analytical paradigm for Chinese enforcement agencies to assess vertical and conglomerate concentrations of undertakings.
As required for review, the Non-Horizontal Concentration Guidelines clearly define vertical and conglomerate concentrations as the primary forms of non-horizontal concentrations. For vertical concentrations, the participating undertakings are in an upstream-downstream relationship within the same industrial chain. The key to establishing this relationship is whether the goods procured by the downstream undertaking are used as specific productive inputs or for resale. Conglomerate concentrations primarily involve concentrations between undertakings with adjacent relationships (where goods share common customer groups and end-uses) or complementary relationships (where goods are used in combination).
The Non-Horizontal Concentration Guidelines establish clear-tiered preliminary screening criteria, initially assessing the competitive impact of a concentration based on the market shares of the participating undertakings in upstream/downstream markets or in markets with close connections such as adjacency or complementarity. Where the market share is above 50% in any such market, the concentration is generally presumed to have or likely have the effect of excluding or restricting competition, unless the undertaking(s) can prove otherwise. Where the market share is between 35% and 50%, there is a tendency to consider the concentration as having or likely having such effect, warranting focused analysis. For market shares between 25% and 35%, it is generally considered that the likelihood of such effects is low, but analysis based on the specific market conditions of the case is required. Where all relevant market shares are below 25%, the concentration is generally presumed not to have such effects. Notably, even if market shares are below 25%, the presence of “exceptional circumstances” (e.g., the transaction involves control over critical data/technology, cross-shareholdings exist, or the acquisition target is a “maverick” that could hinder market coordination) will still trigger in-depth review. This underscores China’s heightened sensitivity towards intangible assets like data, technology, and innovation.
The core logic of the Non-Horizontal Concentration Guidelines is to prevent “market power transmission”. and its analysis strictly follows the classic assessment framework of ability, incentive, and ultimate competitive effects. For vertical concentrations, the focus is on reviewing input foreclosure (leveraging upstream market power to raise costs for downstream competitors) and customer foreclosure (leveraging downstream market power to squeeze upstream competitors). Here, the definition of “input” is broad, encompassing new production factors such as data, algorithms, key technologies, and intellectual property rights. For conglomerate concentrations, the focus is on reviewing the transmission of market power from one market to an adjacent or complementary market through tying, bundling, reducing interoperability, etc., thereby foreclosing competitors. The Guidelines specifically note that in the platform economy, such transmission may be exacerbated via network effects, data concentration, etc. The assessment sequence is to first examine whether the post-concentration entity could implement foreclosure, then whether it has the economic incentive to do so, and finally whether this would ultimately produce effects that exclude or restrict competition. If the ability is absent, further review is typically not pursued, providing a clear compliance justification path for certain transactions.
If a non-horizontal concentration is determined to have or likely have the effect of excluding or restricting competition, the undertaking(s) may raise defenses, primarily including efficiency gains and failing firm defense. When assessing the impact of a non-horizontal concentration on economic efficiency, national economic development, social public interest, and analyzing factors related to the failing firm defense, the relevant considerations and analytical assessments may refer to the Horizontal Concentration Guidelines. The Non-Horizontal Concentration Guidelines highlight potential efficiency improvements from such concentrations, including: cost savings from economies of scale and scope; prevention of free-riding; elimination of double marginalization; reduction of transaction costs and assurance of stable supply for important inputs; optimization of production and management processes; promotion of increased investment and product variety; enhancement of transaction convenience; and innovation efficiencies from promoting technological progress and product iteration.
Comparison with Relevant EU and US Merger Guidelines: Convergence with Chinese Characteristics
The Non-Horizontal Concentration Guidelines show a high degree of convergence with the Guidelines on the Assessment of Non‑horizontal Mergers under the Council Regulation on the Control of Concentrations between Undertakings [ https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:265:0006:0025:en:PDF ] (“EU Guidelines”) published by the European Commission on 18 October 2008 in terms of theories of competitive harm and analytical frameworks but incorporate distinct Chinese characteristics in specific rule design. The EU Guidelines assess non-horizontal mergers based on whether they would significantly impede effective competition, particularly focusing on whether they create or strengthen a dominant position. The Non-Horizontal Concentration Guidelines reference or draw upon relevant provisions of the EU Guidelines regarding theories of harm, assessment frameworks, efficiency defenses, and safe harbors.
On 18 December 2023, the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) jointly issued the Merger Guidelines [ https://www.justice.gov/d9/2023-12/2023%20Merger%20Guidelines.pdf ] (“US Guidelines”), outlining the analytical methods used by both agencies in merger review, including for non-horizontal mergers. The US Guidelines assess mergers based on whether they “substantially lessen competition or tend to create a monopoly”, treat market concentration as a key metric, and significantly lower the structural presumption thresholds triggering merger review. The US Guidelines set forth eleven core principles of review, including principles relevant to vertical and conglomerate mergers covering foreclosure (input/customer), coordinated effects risks via information exchange, and the cumulative effect of a series of acquisitions.
Regarding emerging areas like digital platforms, the US Guidelines establish independent review principles for multi-sided platforms, serial acquisitions, and labor markets. Using multi-sided platforms as an example, the US Guidelines analyze competition between platforms, competition on a platform, and competition to replace the platform, and caution against potential “conflicts of interest” where a merger between a platform operator and a platform participant could lead the operator to favor its own products/services over those of other participants. The Non-Horizontal Concentration Guidelines explicitly list emerging issues as factors or circumstances to be considered in chapters such as “Competitive Impact of Conglomerate Concentrations” and “Relevant Market”. For instance, when defining relevant markets and assessing foreclosure effects and market power, the Guidelines mention considering the characteristics of the platform economy and evaluating an ecosystem operator’s ability and incentive to exclude/restrict competition. Regarding emerging technologies and innovation, the Guidelines primarily cover potentially innovative transactions through broad definitions of “adjacent/complementary relationships”, “technology markets”, and “R&D activities”.
While absorbing and referencing relevant merger guidelines like the EU’s, the Non-Horizontal Concentration Guidelines, based on China’s own economic development stage, market structure, and policy objectives, exhibit a review strategy with Chinese characteristics in areas such as safe harbor thresholds, definitions of adjacency/complementarity, and industrial policy orientation. The Non-Horizontal Concentration Guidelines explicitly stipulate a 25% market share safe harbor threshold and, through enumeration, specify seven categories of “exceptional circumstances” warranting focused review even below this threshold—such as existence of cross-shareholdings, control over critical assets, involvement of a technologically advanced “maverick” that could hinder market coordination, etc. Therefore, for the Chinese market, relevant enterprises can first conduct rapid market share screening and exceptional circumstance screening. If a transaction involves data, key technologies, innovation platforms, or occurs in industries with complex ownership structures, the risk of triggering in-depth review is relatively higher even with low market shares.
The Non-Horizontal Concentration Guidelines concretely define “upstream-downstream”, “adjacent”, and “complementary” relationships through several cases (e.g., optical lenses & frames, warehousing & freight). An upstream-downstream relationship exists where downstream undertaking purchases goods from an upstream undertaking for use as specific productive inputs or for resale. According to Case 1, warehousing services are upstream to freight services. An adjacent relationship exists where the goods provided by the participating undertakings share common customer groups and end-uses. A complementary relationship is a special type of adjacent relationship where the goods not only share common customer groups and end-uses but also complement each other and are typically used in combination. According to Case 3, an optical lens manufacturer and a sunglasses manufacturer constitute an adjacent relationship. By using case examples, the Guidelines reduce conceptual ambiguity and enhance the operability for enterprises in determining their transaction type. Accurately identifying the business relationships involved in a transaction directly affects which review rules apply. Determining the applicable review rules is the starting point for preparing filing arguments.
The Non-Horizontal Concentration Guidelines exhibit a strong orientation towards the digital economy and industrial policy. The Guidelines repeatedly and explicitly refer to internet platforms, data, algorithms, key technologies, and innovation/R&D. They are not only treated as potential “inputs” subject to foreclosure but are also considered in assessing market power, requiring evaluation of platform-economy-specific factors like “data interface control capability” and “ecosystem expansion capability”. Compared to EU and US guidelines, the Non-Horizontal Concentration Guidelines integrate these elements more deeply and systematically into the general M&A review framework. Consequently, for the Chinese market, any M&A involving data integration, platform function extension, or ecosystem expansion will automatically fall under heightened review scrutiny, regardless of the parties’ financial scale.
Key Action Recommendations for Enterprises
The issuance of the Non-Horizontal Concentration Guidelines requires enterprises to comprehensively elevate their antitrust compliance strategy for M&A transactions. In the early planning stages of a transaction, enterprises should strictly characterize the transaction according to the “non-horizontal relationship” definitions in the Guidelines and conduct precise preliminary competition risk screening based on the market share thresholds and the “exceptional circumstances” checklist. For transactions involving the digital economy or technology integration, self-assessment must be exceptionally prudent.
When preparing filing materials and defense arguments, enterprises should closely align with the three-step analytical framework of “ability—incentive—effects”. Particularly when arguing the absence of foreclosure “ability”, strong justifications should be provided based on market conditions, availability of alternative suppliers, openness of technology, etc. For potential efficiencies (e.g., eliminating “double marginalization”, promoting innovation), concrete, verifiable evidence demonstrating pass-on to consumers must be prepared.
For complex transactions, it is advisable to engage in informal consultations with Chinese antitrust enforcement agencies prior to formal filing to understand regulatory concerns. If competition concerns are foreseen, proactively design remedies centered around behavioral commitments (e.g., open interfaces, data portability, non-discrimination clauses), as such remedies are often more effective than structural divestitures in resolving non-horizontal competition issues.
The implementation of the Non-Horizontal Concentration Guidelines signifies the beginning of dynamic regulation in China. Enterprises should establish long-term monitoring and adaptation mechanisms, continuously track developments in relevant laws, administrative orders, and enforcement cases, constantly recalibrate their understanding and anticipation of Chinese regulatory dynamics, and deeply embed competition compliance into their long-term corporate development strategies.
Conclusion
The introduction of the Non-Horizontal Concentration Guidelines is not only a sign of the maturation of China’s antitrust legal system but also a clear signal to market participants: in the new stage of high-quality development, any M&A activity that may potentially exclude or restrict competition through the transmission of market power will face scientific, rigorous, and professional scrutiny. The Guidelines are legally binding in China and command judicial deference. For multinational corporations, successfully navigating China’s new M&A review landscape requires going beyond simple textual comparison of legal provisions to deeply understand the underlying economic logic of protecting the “competitive process” and the policy intent of serving the construction of a “unified national market”. Only by deeply integrating forward-looking antitrust compliance into business strategy can enterprises operate steadily and sustainably in the Chinese market.