China Approves Focus Media’s Purchase of Xinchao Media with Conditions
Published 12 October 2026
Xia Yu
On 10 October 2026, the State Administration for Market Regulation (“SAMR”) announced the conditional approval, subject to restrictive conditions, of the acquisition by Focus Media Information Technology Co., Ltd. (“Focus Media”) of equity interests in Chengdu Xinchao Media Group Co., Ltd. (“Xinchao Media”). This is the first concentration of undertakings in China’s advertising industry to be approved with conditions. At the methodological level, SAMR applied a two-step rule of “narrow market definition + external constraint discount” to conditionally approve a concentration with a market share as high as 55%–60%, providing a predictable analytical framework for future media mergers and acquisitions in similar scenarios.
Case Overview
Focus Media is a company established in Guangdong in 1997 and listed on the Shenzhen Stock Exchange, primarily engaged in the development and operation of outdoor advertising. Xinchao Media is a company established in Sichuan in 2007, primarily engaged in the development and operation of outdoor advertising. In April 2025, Focus Media and Xinchao Media signed an agreement whereby Focus Media intended to acquire equity interests in Xinchao Media by issuing shares and paying cash. After the transaction, Xinchao Media would be solely controlled by Focus Media.
On 16 May 2025, SAMR received the notification. After supplementary materials were provided, on 22 July it confirmed compliance and accepted the case, initiating the preliminary review; on 20 August it launched an additional review; on 17 November, with the consent of the notifying parties, it extended the review period; on 12 January 2026, it decided to suspend the calculation of the review period, and on 9 October it resumed the calculation and issued the conditional approval decision. At present, the review deadline for this case is 12 October 2026, and the decision was made three days before the deadline, demonstrating the prudence and urgency of the review.
Upon review, SAMR determined that the relevant product market is “elevator media advertising” and the geographic market is within China. Although elevator media advertising overlaps with other outdoor advertising in audience and shares common pricing, its closed, low-interference dissemination characteristics and significant differences in reach frequency, precision, and point acquisition mean that it does not constitute a close substitute. SAMR held that this concentration further consolidates Focus Media’s existing dominance with a market share of over half, will further increase the concentration of the elevator media advertising market in China, that other competitors cannot impose effective competitive constraints on the post-concentration entity, and that there are substantial barriers to market entry. Therefore, it determined that the concentration has or may have the effect of eliminating or restricting competition.
After multiple rounds of negotiations, SAMR, upon assessment, accepted the notifying parties’ commitment package and approved the concentration subject to six conditions. The six conditions are: continue to perform existing customer contracts and commercial terms; service levels not lower than before the transaction; absent justified reasons, the annual actual transaction price in each city shall not exceed the respective corresponding city transaction prices of the two parties in the 24 months prior to the effective date; provide services on fair, reasonable, and non-discriminatory principles, and shall not refuse to deal, tie, or attach unreasonable conditions; waive all rights under existing exclusive clauses, and newly signed or renewed points shall not contain exclusive clauses or automatic renewal clauses; establish and improve an antitrust compliance system. The conditions are valid for 5 years, with annual reports on performance, supervised by a monitoring trustee.
The Two-Step Rule of “Narrow Market Definition + External Constraint Discount”
According to different media, advertising can be divided into online advertising (internet advertising) and offline advertising. Offline advertising includes television advertising, radio advertising, newspaper advertising, outdoor advertising, etc. Elevator media advertising is a form of outdoor advertising, mainly using elevators in scenarios such as commercial office buildings and residential communities as carriers, relying on the internal and external spaces of elevators and pedestrian flow, and displaying advertising information to elevator passengers through video, framed posters, and other forms.
In this case, SAMR did not accept the broad claims of “outdoor advertising” or “all advertising”, but instead defined a narrow market based on the attention monopoly characteristics formed by the dissemination scenario (closed elevator space), while acknowledging competitive constraints from adjacent markets and treating them as factors mitigating harm. This two-step rule of “narrow market definition + external constraint discount” can be summarized as follows: In merger review, the enforcement authority first delineates the relevant market boundary through demand substitution analysis—elevator media advertising, due to the attention monopoly characteristics formed by its closed elevator scenario, differs significantly from other outdoor advertising in reach frequency, precision, and point acquisition channels, and thus independently constitutes a relevant product market. It does not adopt broad claims of “outdoor advertising” or “all advertising” based on general competitive indicators such as audience overlap and common pricing. Market share and concentration (based on the share ranges disclosed in the announcement, HHI approximately 2672→3644) are then measured within the narrow market; further, in the same decision, forces outside the market boundary are introduced to discount and correct the concentration harm—the budget diversion reflected in internet advertising’s over 85% share of publishing revenue, as well as constraints from other outdoor advertising categories in pricing and advertising effectiveness, lead to a finding that the concentration harm is “relatively weakened” but not eliminated, and conditional approval is ultimately granted on this basis. The core legal rationale is that the market definition stage examines “a sufficient degree of close substitution”, while the harm assessment stage examines the strength of constraint forces. The two have different standards and are progressive in hierarchy—the narrow market resolves the measurement of share and structure, while external constraints resolve the substantive judgment of anti-competitive effects, thereby providing a predictable analytical paradigm of “first defining scenario independence, then demonstrating cross-media constraints” for media mergers and acquisitions in similar scenarios such as gate barriers, cinemas, and commercial district large screens.
The two-step rule of “narrow market definition + external constraint discount” adopted in this case clarifies the hierarchical relationship between relevant market definition and competitive harm assessment, and through a clear analytical structure implements the hierarchical connection between quantitative indicators and substantive judgment in merger review: relevant market definition uses “close substitution” as the standard to resolve the measurement of share and concentration, while harm determination uses “constraint intensity” as the standard to introduce forces outside the boundary for substantive correction. The two are progressively connected rather than mutually substitutable. The establishment of this rule enables enforcement authorities to escape the binary dilemma of “broad definition means harmless, narrow definition means entirely harmful”, and to strike a delicate balance between the appearance of high share and real competitive constraints—in this case, the overwhelming diversion by internet advertising was not used to broaden the market or dilute indicators, but was positioned as a harm discount factor, thereby maintaining the measurability of market structure analysis while preserving the substantive assessment of cross-media competition in the digital economy context. Its reasoning structure fully corresponds to the assessment elements of the Horizontal Merger Review Guidelines [ https://www.gov.cn/zhengce/zhengceku/202412/content_6993767.htm ], providing a replicable methodological template for subsequent cases.
From a comparative law perspective, the European Commission, when reviewing media mergers (such as the JCDecaux case involving outdoor advertising [ https://ec.europa.eu/competition/mergers/cases1/202314/M_11023_9088451_197_3.pdf ]), similarly faces the analytical tension of “narrow market definition but significant external constraints”, and its approach is to introduce “competitive constraint assessment” as an independent harm analysis step; the U.S. FTC, when reviewing mergers in the advertising technology sector, tends to use quantitative tools such as “diversion ratios” to assess the degree of cross-media substitution. The two-step rule in this case converges functionally with the practices of the above jurisdictions, but its unique feature lies in explicitly positioning external constraints as a “harm discount” rather than a “market broadening” factor, a treatment that is more refined methodologically.
Conclusion
As the first case in the advertising industry to be approved with conditions, this case establishes a method for defining scenario-based media markets. Using “the attention monopoly characteristics formed by closed elevator spaces” as the core criterion, it rejects broad market claims based on audience overlap or common pricing, while positioning internet advertising’s budget diversion and other outdoor advertising’s pricing constraints as harm discount factors rather than market broadening bases. This approach enables enforcement authorities to escape the binary dilemma of “broad definition means harmless, narrow definition means entirely harmful”, and to strike a delicate balance between the appearance of high share and real competitive constraints, providing a predictable analytical path of “first demonstrating scenario independence, then assessing cross-media constraints” for media mergers and acquisitions in similar scenarios such as gate barrier advertising, cinema pre-roll advertising, and commercial district large-screen advertising.
Case Overview
Focus Media is a company established in Guangdong in 1997 and listed on the Shenzhen Stock Exchange, primarily engaged in the development and operation of outdoor advertising. Xinchao Media is a company established in Sichuan in 2007, primarily engaged in the development and operation of outdoor advertising. In April 2025, Focus Media and Xinchao Media signed an agreement whereby Focus Media intended to acquire equity interests in Xinchao Media by issuing shares and paying cash. After the transaction, Xinchao Media would be solely controlled by Focus Media.
On 16 May 2025, SAMR received the notification. After supplementary materials were provided, on 22 July it confirmed compliance and accepted the case, initiating the preliminary review; on 20 August it launched an additional review; on 17 November, with the consent of the notifying parties, it extended the review period; on 12 January 2026, it decided to suspend the calculation of the review period, and on 9 October it resumed the calculation and issued the conditional approval decision. At present, the review deadline for this case is 12 October 2026, and the decision was made three days before the deadline, demonstrating the prudence and urgency of the review.
Upon review, SAMR determined that the relevant product market is “elevator media advertising” and the geographic market is within China. Although elevator media advertising overlaps with other outdoor advertising in audience and shares common pricing, its closed, low-interference dissemination characteristics and significant differences in reach frequency, precision, and point acquisition mean that it does not constitute a close substitute. SAMR held that this concentration further consolidates Focus Media’s existing dominance with a market share of over half, will further increase the concentration of the elevator media advertising market in China, that other competitors cannot impose effective competitive constraints on the post-concentration entity, and that there are substantial barriers to market entry. Therefore, it determined that the concentration has or may have the effect of eliminating or restricting competition.
After multiple rounds of negotiations, SAMR, upon assessment, accepted the notifying parties’ commitment package and approved the concentration subject to six conditions. The six conditions are: continue to perform existing customer contracts and commercial terms; service levels not lower than before the transaction; absent justified reasons, the annual actual transaction price in each city shall not exceed the respective corresponding city transaction prices of the two parties in the 24 months prior to the effective date; provide services on fair, reasonable, and non-discriminatory principles, and shall not refuse to deal, tie, or attach unreasonable conditions; waive all rights under existing exclusive clauses, and newly signed or renewed points shall not contain exclusive clauses or automatic renewal clauses; establish and improve an antitrust compliance system. The conditions are valid for 5 years, with annual reports on performance, supervised by a monitoring trustee.
The Two-Step Rule of “Narrow Market Definition + External Constraint Discount”
According to different media, advertising can be divided into online advertising (internet advertising) and offline advertising. Offline advertising includes television advertising, radio advertising, newspaper advertising, outdoor advertising, etc. Elevator media advertising is a form of outdoor advertising, mainly using elevators in scenarios such as commercial office buildings and residential communities as carriers, relying on the internal and external spaces of elevators and pedestrian flow, and displaying advertising information to elevator passengers through video, framed posters, and other forms.
In this case, SAMR did not accept the broad claims of “outdoor advertising” or “all advertising”, but instead defined a narrow market based on the attention monopoly characteristics formed by the dissemination scenario (closed elevator space), while acknowledging competitive constraints from adjacent markets and treating them as factors mitigating harm. This two-step rule of “narrow market definition + external constraint discount” can be summarized as follows: In merger review, the enforcement authority first delineates the relevant market boundary through demand substitution analysis—elevator media advertising, due to the attention monopoly characteristics formed by its closed elevator scenario, differs significantly from other outdoor advertising in reach frequency, precision, and point acquisition channels, and thus independently constitutes a relevant product market. It does not adopt broad claims of “outdoor advertising” or “all advertising” based on general competitive indicators such as audience overlap and common pricing. Market share and concentration (based on the share ranges disclosed in the announcement, HHI approximately 2672→3644) are then measured within the narrow market; further, in the same decision, forces outside the market boundary are introduced to discount and correct the concentration harm—the budget diversion reflected in internet advertising’s over 85% share of publishing revenue, as well as constraints from other outdoor advertising categories in pricing and advertising effectiveness, lead to a finding that the concentration harm is “relatively weakened” but not eliminated, and conditional approval is ultimately granted on this basis. The core legal rationale is that the market definition stage examines “a sufficient degree of close substitution”, while the harm assessment stage examines the strength of constraint forces. The two have different standards and are progressive in hierarchy—the narrow market resolves the measurement of share and structure, while external constraints resolve the substantive judgment of anti-competitive effects, thereby providing a predictable analytical paradigm of “first defining scenario independence, then demonstrating cross-media constraints” for media mergers and acquisitions in similar scenarios such as gate barriers, cinemas, and commercial district large screens.
The two-step rule of “narrow market definition + external constraint discount” adopted in this case clarifies the hierarchical relationship between relevant market definition and competitive harm assessment, and through a clear analytical structure implements the hierarchical connection between quantitative indicators and substantive judgment in merger review: relevant market definition uses “close substitution” as the standard to resolve the measurement of share and concentration, while harm determination uses “constraint intensity” as the standard to introduce forces outside the boundary for substantive correction. The two are progressively connected rather than mutually substitutable. The establishment of this rule enables enforcement authorities to escape the binary dilemma of “broad definition means harmless, narrow definition means entirely harmful”, and to strike a delicate balance between the appearance of high share and real competitive constraints—in this case, the overwhelming diversion by internet advertising was not used to broaden the market or dilute indicators, but was positioned as a harm discount factor, thereby maintaining the measurability of market structure analysis while preserving the substantive assessment of cross-media competition in the digital economy context. Its reasoning structure fully corresponds to the assessment elements of the Horizontal Merger Review Guidelines [ https://www.gov.cn/zhengce/zhengceku/202412/content_6993767.htm ], providing a replicable methodological template for subsequent cases.
From a comparative law perspective, the European Commission, when reviewing media mergers (such as the JCDecaux case involving outdoor advertising [ https://ec.europa.eu/competition/mergers/cases1/202314/M_11023_9088451_197_3.pdf ]), similarly faces the analytical tension of “narrow market definition but significant external constraints”, and its approach is to introduce “competitive constraint assessment” as an independent harm analysis step; the U.S. FTC, when reviewing mergers in the advertising technology sector, tends to use quantitative tools such as “diversion ratios” to assess the degree of cross-media substitution. The two-step rule in this case converges functionally with the practices of the above jurisdictions, but its unique feature lies in explicitly positioning external constraints as a “harm discount” rather than a “market broadening” factor, a treatment that is more refined methodologically.
Conclusion
As the first case in the advertising industry to be approved with conditions, this case establishes a method for defining scenario-based media markets. Using “the attention monopoly characteristics formed by closed elevator spaces” as the core criterion, it rejects broad market claims based on audience overlap or common pricing, while positioning internet advertising’s budget diversion and other outdoor advertising’s pricing constraints as harm discount factors rather than market broadening bases. This approach enables enforcement authorities to escape the binary dilemma of “broad definition means harmless, narrow definition means entirely harmful”, and to strike a delicate balance between the appearance of high share and real competitive constraints, providing a predictable analytical path of “first demonstrating scenario independence, then assessing cross-media constraints” for media mergers and acquisitions in similar scenarios such as gate barrier advertising, cinema pre-roll advertising, and commercial district large-screen advertising.