In March 2025, the Beijing Intellectual Property Court issued a landmark ruling—the first case in which a filing party challenged a merger decision by the State Administration for Market Regulation (“SAMR”) through judicial proceedings. The case also marked the first instance of a below-threshold transaction being voluntarily filed and conditionally approved. This ruling filled a longstanding gap in China’s antitrust judicial practice and established several groundbreaking benchmarks for the judicial review of merger cases.
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Case Overview
The case concerns Simcere Pharmaceutical Group, a Hong Kong-listed pharmaceutical company, and its acquisition of Beijing Tobishi. Tobishi is the sole manufacturer of batroxobin injections in China, while Simcere is the sole developer of the product and the exclusive distributor of its raw ingredient.
Simcere first attempted to buy Tobishi in July 2017, but the transaction was delayed due to arbitration and court proceedings over the original shareholder’s failure to transfer all Tobishi shares. Simcere later cut off the ingredient supply to pressure Tobishi into agreeing, which led to a RMB 100.7 million (approx. USD 13.9 million) abuse-of-dominance fine imposed by SAMR in 2021.
To oppose the hostile takeover, Tobishi voluntarily submitted the below-threshold transaction to the SAMR in 2022. Shortly thereafter, Simcere also filed the transaction. Contrary to Tobishi’s expectations, SAMR did not block the deal outright but granted conditional approval in 2023 after securing a package of commitments from Simcere.
Tobishi subsequently filed a request for administrative reconsideration, which was denied by SAMR. In March 2024, Tobishi brought the case before the Beijing Intellectual Property Court. Nine months later, the court ruled against Tobishi. As no appeal was filed, the court ruling has now taken legal effect.
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Groundbreaking Merger Control Benchmarks Established
This case not only marked two notable firsts in China’s merger control practice—it was the first court challenge to a merger decision and the first conditionally approved below-threshold filing—but also established groundbreaking merger control benchmarks as follows.
(1) Only Prohibitions and Conditional Approvals Can Be Challenged in Court
The ruling clarifies the threshold for bringing legal challenges in China’s merger control. Specifically, the court noted that unconditional clearance by SAMR does not alter the rights or obligations of the merging parties and therefore do not give rise to standing. In contrast, prohibitions or conditional clearance materially affect the parties’ legal interests and shall justify judicial review. On this basis, Tobishi was deemed a qualified plaintiff, as its interests were directly impacted.
(2) SAMR Can Intervene in Potentially Anticompetitive Below-Threshold Mergers
The court, citing the Anti-Monopoly Law and its supporting rules, confirmed that for mergers falling below the filing thresholds but that have, or may have, the effect of eliminating or restricting competition, SAMR may either proactively require the parties to file or initiate a review based on a voluntary filing. In practice, in 2024 alone, SAMR required the parties to file two below-threshold transactions deemed potentially anticompetitive. Notably, in one of these cases, the parties ultimately abandoned the transaction after engaging with the regulator.
(3) Prohibition Is Not the Default Remedy and Should Be Reserved for Exceptional Cases
Tobishi argued that the merger should have been directly prohibited, citing the parties’ dominance in both upstream and downstream markets and claiming that the Anti-Monopoly Law treats prohibition as the preferred remedy. The court disagreed, holding that prohibition is an exceptional intervention rather than the default approach. For mergers that may harm competition, the preferred method is to explore whether restrictive conditions can effectively address the risks. Only when other remedies are insufficient should prohibition be imposed. This reflects China's overarching support for legitimate mergers and acquisitions. In practice, among over 6,000 merger cases reviewed, only 3 have been blocked outright.
(4) Previous Penalties Should Not Prejudice Merger Review
In addressing Tobishi’s argument that a prior penalty imposed by SAMR suggested Simcere might engage in supply manipulation, the court emphasized that antitrust penalties and merger reviews are two fundamentally distinct types of administrative action. Merger review should focus on the competition concerns arising from the transaction itself, not on prior penalties. As the ruling states: "Whether the pharmaceutical company Simcere is found to have engaged in abuse of market dominance by refusing transactions is unrelated to the merger review in question, and cannot justify directly prohibiting the merger".
(5) Remedies Should Be Evaluated Based on Effectiveness, Feasibility, and Timeliness
The court held that restrictive conditions attached to merger approvals should be assessed from three perspectives: whether they can address the competition concerns (effectiveness), whether they can be implemented in practice (feasibility), and whether they can be executed in a timely manner (timeliness). In this case, the commitments proposed by Simcere and accepted by SAMR—including termination of the exclusive supply agreement, divestiture of pipeline assets, and price reductions, among others—were found to meet all three criteria. The court thus upheld the approval as justified.
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Conclusion: A Landmark in Merger Review Jurisprudence
In conclusion, this case fills a longstanding gap in the judicial practice of merger control in China and sets several groundbreaking benchmarks. It reflects China’s overall policy orientation of supporting legitimate concentrations while safeguarding competition.
The case also offers a rare, comprehensive insight into the SAMR merger review process, contributing to greater transparency and predictability in enforcement. As the analytical framework aligns closely with international norms, the ruling is expected to further enhance regulatory clarity and foster investor confidence in the Chinese market.
