By Bill H. Zhang

On July 7, 2009, the China’s Anti-Monopoly Commission under the State Council (“AMC”) published a Guideline on Definition of Relevant Market (“Guideline”) on its official website to guide the Anti-monopoly Enforcement Agencies (“AMEA”) to effectively define the “relevant market” in the monopolistic activities by business operators during their antitrust enforcement. The Guideline has clearly identified the definition of relevant market, the functions of the definition of relevant market, the basis and general methods for defining relevant market, and particularly, set forth the Hypothetical Monopolist Test for defining the relevant market. These rules and principles newly established by this Guideline will have a significant impact on the mergers and acquisitions of Chinese entities by foreign investors. Foreign investors intending to merge with and acquire Chinese entities, or enter into operating agreement in the nature of monopoly with their Chinese business partners shall closely watch and acquaint themselves with this Guideline so as to timely adjust their strategies for mergers and acquisitions in China. This article tries to address the basic rules specified by this Guideline for reference by foreign investors when merging and acquiring entities in China.

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