Guidelines for the Review of Non-Horizontal Concentrations Released
ISSUING AUTHORITY:
State Administration for Market Regulation
DATE OF ISSUANCE:
December 15, 2025
EFFECTIVE DATE:
December 15, 2025
In order to further standardize the review of non-horizontal concentrations, enhance the transparency of the work of reviewing concentrations, and improve the expectations of undertakings regarding the assessment by the anti-monopoly enforcement agency of the State Council (the “Anti-monopoly Enforcement Agency”) of the competitive effects of concentrations, the Guidelines for the Review of Non-Horizontal Concentrations (the “Guidelines”) are formulated in accordance with the Anti-Monopoly Law of the People’ s Republic of China, the Provisions of the State Council on the Notification Thresholds for Concentrations of Undertakings, and the Provisions on the Review of Concentrations of Undertakings. The Guidelines took effect as of December 15, 2025.
The "non-horizontal concentration" referred to in the Guidelines means that the participating operators in the concentration have a non-horizontal relationship, that is, the operators involved in the concentration conduct business in different relevant markets. To determine whether the participating operators are in different relevant markets, both the relevant product or service markets and the relevant geographical markets should be taken into consideration.
Non-horizontal business concentration mainly includes vertical business concentration and conglomerate concentration. Compared with horizontal business concentration, the types of non-horizontal business concentration are more diverse, and it is more difficult to determine the relationship between business operators in practice. The Guidelines have described the main types of non-horizontal business concentration, provided multiple cases for explanation, and attempted to provide clear responses to the frequently encountered problems in law enforcement practice.
Vertical concentration refers to the situation where the participating operators are located at different levels within the same industrial chain and form an upstream-downstream relationship. The upstream-downstream relationship only exists when the downstream operator purchases goods from the upstream operator for specific productive use or for resale. At the same time, in light of the issues of concern in the review process, the Guidelines use the example of power supply to clarify through case studies that if it does not fall under a specific productive use in a certain industry, it does not constitute an upstream-downstream relationship.
Conglomerate concentration of business entities involves various scenarios, including the concentration of entities that have adjacent or complementary relationships, as well as pure conglomerate concentration between entities without any business connection. Adjacent relationship refers to the situation where the goods provided by the entities involved in the concentration share a common customer base and final use. Complementary relationship means that the goods provided by the entities involved in the concentration not only share a common customer base and final use, but also have complementarity, usually requiring combination for use.
The Guidelines adopt a combination of provisions and cases, with a total of 9 chapters and 82 articles, and 34 cases:
Chapter 1: General Provisions;
Chapter 2: Evidence Materials;
Chapter 3: Relevant Markets;
Chapter 4: Market Share and Market Concentration;
Chapter 5: Competitive Impact of Vertical Concentration;
Chapter 6: Competitive Impact of concentration;
Chapter 7: Market Entry, Buyer Power and Efficiency;
Chapter 8: Other Factors; and,
Chapter 9: Supplementary Provisions.
Just like in the case of horizontal concentration, once the Anti-monopoly Enforcement Agency determines that a non-horizontal concentration has or may have the effect of excluding or restricting competition, the operator can raise a defense. This is a consensus in the merger review systems of major anti-monopoly judicial jurisdictions around the world. The generally recognized defense reasons mainly include efficiency, bankruptcy, etc.
Considering that non-horizontal business concentration is more likely to enhance economic efficiency compared to horizontal business concentration, and has a positive impact on competition and consumer interests, the Guidelines have provided key explanations in Article 73 and Article 74 regarding the potential efficiency gains from non-horizontal business concentration, including: cost savings through economies of scale and scope; prevention of free-riding; elimination of double pricing; reduction of transaction costs to ensure the stability of supply of essential raw materials; optimization of production and management processes; promoting increased investment, enriching product varieties; enhancing transaction convenience; promoting technological progress and product renewal and iteration, etc., which bring about innovation efficiency.
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