The exemption from examination by MOFTEC and the SAIC may be applied for only in the event that the acquisition by the foreign investor can improve the conditions for fair market competition, reorganize loss-making enterprises and guarantee employment, introduce advanced technology, bring in management talent and enhance the international competitiveness of the enterprise, or improve the environment.

Anti-trust Laws

China has not yet enacted a formal anti-trust law. So far, there are only some rules and regulations concerning restriction of competition in specific fields, such as the Restriction of Competition of Utility Enterprises Provisions and the PRC Pricing Law. In the latter, monopoly pricing determined through negotiations between enterprises or trade associations is regarded as a violation of law. Generally speaking, the legal framework to regulate monopoly activities in M&A by foreign investors has not been established. In our opinion it is vital that China enacts a formal anti-trust law as soon as possible to regulate issues on anti-trust in relation to M&A by foreign investors, especially given China's accession to WTO and the national treatment conditions for foreign investors that must be met.