On 16 January 2026, the State Administration for Market Regulation of China (“SAMR”) issued an announcement regarding its antitrust review decision to conditionally approve the acquisition of equity in Dowlais Group plc (“Dowlais”) by American Axle & Manufacturing Holdings, Inc. (“AAM”) (“Announcement”). In this case, through precise market definition and data-driven structural analysis, the SAMR ultimately decided to grant approval subject to restrictive conditions. This case provides insight into the SAMR’s antitrust review logic within the automotive components sector, offering guidance for compliance strategies in similar future transactions.
Transaction Overview
AAM is a company incorporated in the United States in 1998, listed on the New York Stock Exchange (NYSE: AXL), headquartered in Michigan, USA. It is a global manufacturer of automotive components, primarily engaged in the production and sales of driveline products and other automotive parts. The SAMR determined that the company has a dispersed shareholding structure with no ultimate controller. Dowlais is a company incorporated in the United Kingdom in 2023, listed on the London Stock Exchange (LON: DWL). Its core businesses comprise GKN Automotive and GKN Powder Metallurgy, with main products including automotive driveline systems, sintered metal products, and metal powders. The SAMR determined that the company has a dispersed shareholding structure with no ultimate controller. In January 2025, AAM and Dowlais (“Parties”) announced that AAM intended to make a voluntary conditional offer to acquire all ordinary shares of Dowlais. Upon completion of the transaction, Dowlais would become a wholly-owned and solely controlled subsidiary of AAM.
AAM has joint ventures or wholly-owned entities in China through which it conducts business. Dowlais conducts business in China through joint ventures, such as Shanghai GKN HUAYU Driveline Systems Co., Ltd (“Shanghai GKN”). It has significant turnover in the relevant Chinese markets. According to the Announcement, the SAMR received the Parties’ antitrust notification for this concentration of undertakings on 11 April 2025. The SAMR found that this concentration has or may have the effect of eliminating or restricting competition in the markets for power take-off units and rear-drive modules within China.
Review Process
Under the Anti-monopoly Law of China (“Anti-monopoly Law”), the SAMR is responsible for the unified enforcement of the Anti-monopoly Law. The SAMR has three departments overseeing different antitrust functions. Among them, the Second Antimonopoly Enforcement Department is directly responsible for the antitrust review of concentrations of undertakings, including the review of cross-border M&A cases such as this one. Article 26 of the Anti-monopoly Law stipulates that concentrations meeting the notification thresholds must be notified in advance. According to the Provisions of the State Council on Thresholds for Notification of Concentration of Undertakings, the notification thresholds for a concentration of undertakings are: 1) the total global turnover of all undertakings participating in the concentration in the preceding financial year exceeds RMB 12 billion (equivalent to approximately US$ 1.7244 billion), or the total turnover within China of all undertakings participating in the concentration in the preceding financial year exceeds RMB 4 billion (equivalent to approximately US$ 574.8 million); and 2) the turnover within China of each of at least two of the undertakings participating in the concentration in the preceding financial year exceeds RMB 800 million (equivalent to approximately US$ 114.96 million).
The turnover of the Parties in this case presumably exceeded the statutory notification thresholds for concentrations in China. According to their 2024 Annual Reports, AAM ended 2024 with sales of US$ 6.1 billion. Dowlais reported revenue of approximately USD 6.6378 billion. According to corporate information, AAM’s Asia Headquarters & Engineering Center is located in Shanghai, China. Furthermore, AAM has four other entities in China, including manufacturing facilities in Changshu, Jiangsu province, producing precision engineered driveline systems, and a plant in Suzhou specializing in the production of powertrain components, including engine products and aluminum die cast valve bodies, among others. Dowlais’s businesses, such as GKN Automotive, have a significant presence in China. For instance, it conducts important operations through joint ventures like Shanghai GKN. According to Shanghai GKN’s website, GKN is a major shareholder of the company, which reports annual operating revenue exceeding RMB 10 billion (equivalent to approximately US$ 1.435 billion).
The SAMR received the Parties’ antitrust notification for this concentration on 11 April 2025. As the submitted materials were incomplete, supplementation was requested. On 3 July, the SAMR confirmed that the supplemented notification materials complied with the requirements, accepted the notification, and initiated a preliminary review. On 31 July, the SAMR decided to conduct a further review. On 27 October, the decision was made to extend the period for the further review. On 3 December 2025, the SAMR decided to suspend the calculation of the review timeline, resuming the count on 5 January 2026, with the review period set to conclude on 26 January.
During the review process, the SAMR promptly informed the Parties of its preliminary finding that the concentration has or may have the effect of eliminating or restricting competition. Multiple rounds of discussions were held with the Parties regarding measures to mitigate the adverse effects of the concentration on competition. On 5 January 2026, the Parties submitted to the SAMR a proposal for commitments containing restrictive conditions (“Commitments Proposal”) regarding the concentration. The SAMR evaluated the proposal, focusing on the effectiveness, feasibility, and timeliness of the proposed restrictive conditions. Following assessment, the SAMR determined that the proposal could effectively reduce the adverse effects of the concentration on competition.
Competitive Analysis
The products supplied by the Parties include power take-off units and rear-drive modules primarily used in all-wheel-drive internal combustion engine vehicles, as well as differentials, drive shafts, and side shafts applicable to various drivetrain types of internal combustion engine vehicles. Applying a demand substitutability analysis, the SAMR extensively identified the following nine relevant product markets by demonstrating that each of the Parties’ products serves a unique and non-substitutable function within the automotive driveline system or the vehicle as a whole:
1. Power Take-off Units: This product serves the specific function of transmitting power from the transmission to the rear axle in all-wheel-drive internal combustion engine vehicles with a transverse engine layout, and cannot be substituted.
2. Rear-drive Modules: This product serves as the auxiliary rear drive axle for all-wheel-drive internal combustion engine vehicles, engaging only when necessary to transmit part of the engine’s torque to the rear wheels. Its primary function is to provide auxiliary traction under specific driving conditions such as slippery surfaces or acceleration. It serves a specific function within all-wheel-drive internal combustion engine vehicles and cannot be substituted.
3. Differentials: This product serves the unique function within the vehicle’s driveline system of allowing two drive wheels on the same axle to rotate at different speeds, and cannot be substituted.
4. Drive Shafts: This product serves the specific function of longitudinally transmitting power between powertrain components and cannot be effectively substituted.
5. Side Shafts: This product serves the unique and non-effectively-substitutable functions of transmitting power from the differential to the wheels in vehicles with independent suspension, and partially isolating noise and vibration from the driveline or road surface, thereby enhancing passenger comfort.
6. Metal Powders: Through powder metallurgy processes such as mixing, pressing, and sintering, this product can be used to manufacture industrial components (including automotive parts) with specific shapes, mechanical properties, and functional characteristics. It features advantages such as easy shaping, light weight, and high material utilization rate. Other forms of metal cannot effectively substitute it.
7. Connecting Rods: The core function of this product is to convert the linear motion of pistons into the rotational motion of the crankshaft. It is a key component in engine operation, and other automotive parts cannot effectively substitute it.
8. Actuator Components: This product acts as the bridge between electronic control signals and physical command execution in automotive electronic control systems, converting electronic instructions into precise mechanical actions. It plays a crucial role in the operation of key automotive systems such as engine management, suspension, steering, and braking, and cannot be effectively substituted.
9. Guide Rails: Guide rails serve the unique function of providing stable tracks or paths for relevant movable parts in vehicles, such as seat sliders, window regulators, and sliding doors, ensuring precision, safety, and reliability in part movement, and cannot be substituted.
The SAMR defined the relevant geographic market for power take-off units, rear-drive modules, differentials, drive shafts, side shafts, metal powders, connecting rods, actuator components, and guide rails as the territory of China.
The SAMR identified non-horizontal competitive relationships between the Parties. Both Parties are engaged in the businesses of power take-off units, rear-drive modules, and differentials, constituting horizontal overlaps. The metal powders produced by Dowlais serve as raw materials for AAM’s production of connecting rods, actuator components, and guide rails, constituting a vertical relationship. Power take-off units and rear-drive modules are primarily used in the driveline systems of all-wheel-drive internal combustion engine vehicles and in most cases need to be used together, constituting a complementary relationship. The drive shafts and side shafts produced by Dowlais, along with the differentials produced by both Parties, can all be used in the driveline systems of various drivetrain types of internal combustion engine vehicles, constituting complementary relationships.
The SAMR analyzed the impact of this concentration on market competition from perspectives including the Parties’ market shares and their control over the markets, the concentration level of the relevant markets, and the impact of the concentration on downstream users and other relevant undertakings. The SAMR concluded that the concentration has or may have the effect of eliminating or restricting competition in the markets for power take-off units and rear-drive modules within China:
1. The concentration may eliminate or restrict competition in the market for power take-off units within China: The combined market share of the post-concentration entity would be as high as 65%-70%, with a ΔHHI (change in Herfindahl-Hirschman Index) of 2098. The number of major competitors with a domestic market share exceeding 5% would decrease from four to three, weakening downstream customers’ options and bargaining power. High technical validation costs and customer lock-in constitute high barriers to market entry, resulting in weak potential competitive constraint.
2. The concentration may eliminate or restrict competition in the market for rear-drive modules within China: The combined market share of the post-concentration entity would be 40%-45%, with a ΔHHI of 531. The number of major suppliers would decrease from four to three, further limiting downstream customers’ options. Should the post-concentration entity choose to raise prices, it would be difficult for downstream customers to switch to alternative suppliers. Market entry costs are high, with no new entrant achieving over a 5% market share in the past five years.
3. The concentration may create risks such as tying in the markets for power take-off units and rear-drive modules within China: Based on the complementary relationship requiring the combined use of power take-off units and rear-drive modules, the SAMR analyzed the post-concentration entity’s capability and incentive to engage in tying conduct, concluding that such conduct may have the effect of eliminating or restricting competition.
4. The SAMR acknowledged that factors such as potential declining demand for these products and the presence of certain buyer power among downstream customers could, to some extent, mitigate the adverse effects of the concentration on market competition. However, considering that the concentration significantly alters the market structure and the post-concentration entity would possess obvious market control power in the relevant markets, the SAMR maintained that the concentration, for a certain period, still has or may have the effect of eliminating or restricting competition in the markets for power take-off units and rear-drive modules within China. Approval Decision
Given that this concentration has or may have the effect of eliminating or restricting competition in the markets for power take-off units and rear-drive modules within China, and based on the Commitments Proposal submitted by the Parties, the SAMR decided to approve the concentration subject to restrictive conditions. The Parties and the post-concentration entity are required to fulfill the following obligations:
1. Continue to supply power take-off units and rear-drive modules, and provide development opportunities for these products, to Chinese customers on fair, reasonable, and non-discriminatory terms.
2. Continue to perform existing customer contracts unless the customer is in material breach or voluntarily terminates the contract.
3. Under equivalent transaction terms and conditions, not to increase the price for power take-off units or rear-drive modules sold to Chinese customers within China above the average contractual price for the same model (or a similarly designed model if the same model is unavailable) during the 12-month period prior to the effective date.
4. Not to refuse a customer’s reasonable request for renewal of an existing contract, provided the customer gives reasonable advance notice.
Commencing 15 January 2026, the Parties and the post-concentration entity must report annually to the SAMR on the fulfillment of the Commitments Proposal until all restrictive conditions terminate. The commitments made by the Parties are valid for five years. The SAMR has the authority to supervise the Parties’ fulfillment of these obligations either through a monitoring trustee or directly. Should the Parties fail to fulfill or violate these obligations, the SAMR will take action according to relevant provisions of the Anti-monopoly Law. Conclusion
This case represents a model of the SAMR’s review of a cross-border M&A transaction in the automotive components sector. The review employed demand substitutability analysis to define precisely nine segmented markets, focusing on the two highly overlapping markets for power take-off units and rear-drive modules. The review logic centered on a presumption of structural harm, based on the substantial increase in market share and the exceeding of HHI thresholds (ΔHHI of 2098 and 531, respectively) resulting from the merger, combined with high barriers to entry, leading to the finding of likely anti-competitive effects. Although mitigating factors such as the declining market for internal combustion engine vehicles were considered, greater weight was ultimately assigned to the immediate and certain structural harm. This case reveals a trend in China’s review practice toward increasing reliance on objective data and forward-looking assessment of non-horizontal risks.
Transaction Overview
AAM is a company incorporated in the United States in 1998, listed on the New York Stock Exchange (NYSE: AXL), headquartered in Michigan, USA. It is a global manufacturer of automotive components, primarily engaged in the production and sales of driveline products and other automotive parts. The SAMR determined that the company has a dispersed shareholding structure with no ultimate controller. Dowlais is a company incorporated in the United Kingdom in 2023, listed on the London Stock Exchange (LON: DWL). Its core businesses comprise GKN Automotive and GKN Powder Metallurgy, with main products including automotive driveline systems, sintered metal products, and metal powders. The SAMR determined that the company has a dispersed shareholding structure with no ultimate controller. In January 2025, AAM and Dowlais (“Parties”) announced that AAM intended to make a voluntary conditional offer to acquire all ordinary shares of Dowlais. Upon completion of the transaction, Dowlais would become a wholly-owned and solely controlled subsidiary of AAM.
AAM has joint ventures or wholly-owned entities in China through which it conducts business. Dowlais conducts business in China through joint ventures, such as Shanghai GKN HUAYU Driveline Systems Co., Ltd (“Shanghai GKN”). It has significant turnover in the relevant Chinese markets. According to the Announcement, the SAMR received the Parties’ antitrust notification for this concentration of undertakings on 11 April 2025. The SAMR found that this concentration has or may have the effect of eliminating or restricting competition in the markets for power take-off units and rear-drive modules within China.
Review Process
Under the Anti-monopoly Law of China (“Anti-monopoly Law”), the SAMR is responsible for the unified enforcement of the Anti-monopoly Law. The SAMR has three departments overseeing different antitrust functions. Among them, the Second Antimonopoly Enforcement Department is directly responsible for the antitrust review of concentrations of undertakings, including the review of cross-border M&A cases such as this one. Article 26 of the Anti-monopoly Law stipulates that concentrations meeting the notification thresholds must be notified in advance. According to the Provisions of the State Council on Thresholds for Notification of Concentration of Undertakings, the notification thresholds for a concentration of undertakings are: 1) the total global turnover of all undertakings participating in the concentration in the preceding financial year exceeds RMB 12 billion (equivalent to approximately US$ 1.7244 billion), or the total turnover within China of all undertakings participating in the concentration in the preceding financial year exceeds RMB 4 billion (equivalent to approximately US$ 574.8 million); and 2) the turnover within China of each of at least two of the undertakings participating in the concentration in the preceding financial year exceeds RMB 800 million (equivalent to approximately US$ 114.96 million).
The turnover of the Parties in this case presumably exceeded the statutory notification thresholds for concentrations in China. According to their 2024 Annual Reports, AAM ended 2024 with sales of US$ 6.1 billion. Dowlais reported revenue of approximately USD 6.6378 billion. According to corporate information, AAM’s Asia Headquarters & Engineering Center is located in Shanghai, China. Furthermore, AAM has four other entities in China, including manufacturing facilities in Changshu, Jiangsu province, producing precision engineered driveline systems, and a plant in Suzhou specializing in the production of powertrain components, including engine products and aluminum die cast valve bodies, among others. Dowlais’s businesses, such as GKN Automotive, have a significant presence in China. For instance, it conducts important operations through joint ventures like Shanghai GKN. According to Shanghai GKN’s website, GKN is a major shareholder of the company, which reports annual operating revenue exceeding RMB 10 billion (equivalent to approximately US$ 1.435 billion).
The SAMR received the Parties’ antitrust notification for this concentration on 11 April 2025. As the submitted materials were incomplete, supplementation was requested. On 3 July, the SAMR confirmed that the supplemented notification materials complied with the requirements, accepted the notification, and initiated a preliminary review. On 31 July, the SAMR decided to conduct a further review. On 27 October, the decision was made to extend the period for the further review. On 3 December 2025, the SAMR decided to suspend the calculation of the review timeline, resuming the count on 5 January 2026, with the review period set to conclude on 26 January.
During the review process, the SAMR promptly informed the Parties of its preliminary finding that the concentration has or may have the effect of eliminating or restricting competition. Multiple rounds of discussions were held with the Parties regarding measures to mitigate the adverse effects of the concentration on competition. On 5 January 2026, the Parties submitted to the SAMR a proposal for commitments containing restrictive conditions (“Commitments Proposal”) regarding the concentration. The SAMR evaluated the proposal, focusing on the effectiveness, feasibility, and timeliness of the proposed restrictive conditions. Following assessment, the SAMR determined that the proposal could effectively reduce the adverse effects of the concentration on competition.
Competitive Analysis
The products supplied by the Parties include power take-off units and rear-drive modules primarily used in all-wheel-drive internal combustion engine vehicles, as well as differentials, drive shafts, and side shafts applicable to various drivetrain types of internal combustion engine vehicles. Applying a demand substitutability analysis, the SAMR extensively identified the following nine relevant product markets by demonstrating that each of the Parties’ products serves a unique and non-substitutable function within the automotive driveline system or the vehicle as a whole:
1. Power Take-off Units: This product serves the specific function of transmitting power from the transmission to the rear axle in all-wheel-drive internal combustion engine vehicles with a transverse engine layout, and cannot be substituted.
2. Rear-drive Modules: This product serves as the auxiliary rear drive axle for all-wheel-drive internal combustion engine vehicles, engaging only when necessary to transmit part of the engine’s torque to the rear wheels. Its primary function is to provide auxiliary traction under specific driving conditions such as slippery surfaces or acceleration. It serves a specific function within all-wheel-drive internal combustion engine vehicles and cannot be substituted.
3. Differentials: This product serves the unique function within the vehicle’s driveline system of allowing two drive wheels on the same axle to rotate at different speeds, and cannot be substituted.
4. Drive Shafts: This product serves the specific function of longitudinally transmitting power between powertrain components and cannot be effectively substituted.
5. Side Shafts: This product serves the unique and non-effectively-substitutable functions of transmitting power from the differential to the wheels in vehicles with independent suspension, and partially isolating noise and vibration from the driveline or road surface, thereby enhancing passenger comfort.
6. Metal Powders: Through powder metallurgy processes such as mixing, pressing, and sintering, this product can be used to manufacture industrial components (including automotive parts) with specific shapes, mechanical properties, and functional characteristics. It features advantages such as easy shaping, light weight, and high material utilization rate. Other forms of metal cannot effectively substitute it.
7. Connecting Rods: The core function of this product is to convert the linear motion of pistons into the rotational motion of the crankshaft. It is a key component in engine operation, and other automotive parts cannot effectively substitute it.
8. Actuator Components: This product acts as the bridge between electronic control signals and physical command execution in automotive electronic control systems, converting electronic instructions into precise mechanical actions. It plays a crucial role in the operation of key automotive systems such as engine management, suspension, steering, and braking, and cannot be effectively substituted.
9. Guide Rails: Guide rails serve the unique function of providing stable tracks or paths for relevant movable parts in vehicles, such as seat sliders, window regulators, and sliding doors, ensuring precision, safety, and reliability in part movement, and cannot be substituted.
The SAMR defined the relevant geographic market for power take-off units, rear-drive modules, differentials, drive shafts, side shafts, metal powders, connecting rods, actuator components, and guide rails as the territory of China.
The SAMR identified non-horizontal competitive relationships between the Parties. Both Parties are engaged in the businesses of power take-off units, rear-drive modules, and differentials, constituting horizontal overlaps. The metal powders produced by Dowlais serve as raw materials for AAM’s production of connecting rods, actuator components, and guide rails, constituting a vertical relationship. Power take-off units and rear-drive modules are primarily used in the driveline systems of all-wheel-drive internal combustion engine vehicles and in most cases need to be used together, constituting a complementary relationship. The drive shafts and side shafts produced by Dowlais, along with the differentials produced by both Parties, can all be used in the driveline systems of various drivetrain types of internal combustion engine vehicles, constituting complementary relationships.
The SAMR analyzed the impact of this concentration on market competition from perspectives including the Parties’ market shares and their control over the markets, the concentration level of the relevant markets, and the impact of the concentration on downstream users and other relevant undertakings. The SAMR concluded that the concentration has or may have the effect of eliminating or restricting competition in the markets for power take-off units and rear-drive modules within China:
1. The concentration may eliminate or restrict competition in the market for power take-off units within China: The combined market share of the post-concentration entity would be as high as 65%-70%, with a ΔHHI (change in Herfindahl-Hirschman Index) of 2098. The number of major competitors with a domestic market share exceeding 5% would decrease from four to three, weakening downstream customers’ options and bargaining power. High technical validation costs and customer lock-in constitute high barriers to market entry, resulting in weak potential competitive constraint.
2. The concentration may eliminate or restrict competition in the market for rear-drive modules within China: The combined market share of the post-concentration entity would be 40%-45%, with a ΔHHI of 531. The number of major suppliers would decrease from four to three, further limiting downstream customers’ options. Should the post-concentration entity choose to raise prices, it would be difficult for downstream customers to switch to alternative suppliers. Market entry costs are high, with no new entrant achieving over a 5% market share in the past five years.
3. The concentration may create risks such as tying in the markets for power take-off units and rear-drive modules within China: Based on the complementary relationship requiring the combined use of power take-off units and rear-drive modules, the SAMR analyzed the post-concentration entity’s capability and incentive to engage in tying conduct, concluding that such conduct may have the effect of eliminating or restricting competition.
4. The SAMR acknowledged that factors such as potential declining demand for these products and the presence of certain buyer power among downstream customers could, to some extent, mitigate the adverse effects of the concentration on market competition. However, considering that the concentration significantly alters the market structure and the post-concentration entity would possess obvious market control power in the relevant markets, the SAMR maintained that the concentration, for a certain period, still has or may have the effect of eliminating or restricting competition in the markets for power take-off units and rear-drive modules within China. Approval Decision
Given that this concentration has or may have the effect of eliminating or restricting competition in the markets for power take-off units and rear-drive modules within China, and based on the Commitments Proposal submitted by the Parties, the SAMR decided to approve the concentration subject to restrictive conditions. The Parties and the post-concentration entity are required to fulfill the following obligations:
1. Continue to supply power take-off units and rear-drive modules, and provide development opportunities for these products, to Chinese customers on fair, reasonable, and non-discriminatory terms.
2. Continue to perform existing customer contracts unless the customer is in material breach or voluntarily terminates the contract.
3. Under equivalent transaction terms and conditions, not to increase the price for power take-off units or rear-drive modules sold to Chinese customers within China above the average contractual price for the same model (or a similarly designed model if the same model is unavailable) during the 12-month period prior to the effective date.
4. Not to refuse a customer’s reasonable request for renewal of an existing contract, provided the customer gives reasonable advance notice.
Commencing 15 January 2026, the Parties and the post-concentration entity must report annually to the SAMR on the fulfillment of the Commitments Proposal until all restrictive conditions terminate. The commitments made by the Parties are valid for five years. The SAMR has the authority to supervise the Parties’ fulfillment of these obligations either through a monitoring trustee or directly. Should the Parties fail to fulfill or violate these obligations, the SAMR will take action according to relevant provisions of the Anti-monopoly Law. Conclusion
This case represents a model of the SAMR’s review of a cross-border M&A transaction in the automotive components sector. The review employed demand substitutability analysis to define precisely nine segmented markets, focusing on the two highly overlapping markets for power take-off units and rear-drive modules. The review logic centered on a presumption of structural harm, based on the substantial increase in market share and the exceeding of HHI thresholds (ΔHHI of 2098 and 531, respectively) resulting from the merger, combined with high barriers to entry, leading to the finding of likely anti-competitive effects. Although mitigating factors such as the declining market for internal combustion engine vehicles were considered, greater weight was ultimately assigned to the immediate and certain structural harm. This case reveals a trend in China’s review practice toward increasing reliance on objective data and forward-looking assessment of non-horizontal risks.