Can SAMR Impose Interim Measures During an AML Investigation?

A critical yet often overlooked aspect of China’s competition law enforcement framework is the power of the State Administration for Market Regulation (SAMR) to impose interim measures during the pendency of an investigation under the Anti-Monopoly Law (AML). Interim measures are temporary orders issued before the conclusion of an investigation, designed to prevent serious and irreparable harm to competition, protect the public interest, or preserve the status quo pending a final decision. This FAQ examines the legal basis for SAMR’s interim measures power, the circumstances in which it may be exercised, procedural safeguards, practical implications for companies under investigation, and the strategic considerations that both companies and their legal counsel should be aware of.

Legal Basis: Article 50 of the AML

The power to impose interim measures is established in Article 50 of the AML (as amended in 2022). Article 50 provides that where the Anti-Monopoly Enforcement Authority (SAMR) suspects that an undertaking has engaged in monopolistic conduct, it may take interim measures, including orders:

1. To suspend the suspected monopolistic conduct;
2. To take other necessary measures to eliminate the impact of the conduct; or
3. To preserve evidence relevant to the investigation.

Article 50 further provides that interim measures may be imposed where: (a) there is preliminary evidence suggesting that a violation of the AML has occurred or is about to occur; (b) the suspected conduct is causing or is likely to cause serious and irreparable harm to competition or the public interest; and (c) the interim measures are necessary and proportionate to prevent such harm.

The 2022 AML amendments strengthened SAMR’s interim measures power in several respects. Prior to the amendments, the legal basis for interim measures was less explicit, appearing primarily in procedural regulations rather than in the AML itself. The amendments elevated the interim measures power to the statutory level, clarified the conditions for their imposition, and extended their scope to include orders to preserve evidence — a particularly important addition given the digital nature of much modern anti-competitive conduct and the ease with which electronic evidence can be altered or destroyed.

Conditions for Imposing Interim Measures

SAMR’s 2019 Interim Provisions on the Prohibition of Monopoly Agreements (updated through 2023) and the 2023 Procedural Rules for Anti-Monopoly Enforcement provide detailed guidance on the conditions for imposing interim measures. These conditions are cumulative — all must be satisfied:

Condition 1: Preliminary Evidence of a Violation

SAMR must have obtained preliminary evidence suggesting that the undertaking has engaged or is about to engage in conduct that violates the AML. The standard of proof at the interim measures stage is lower than the standard required for a final infringement decision. SAMR does not need to establish with certainty that the conduct is unlawful; rather, it must demonstrate a reasonable basis for suspecting a violation exists. Preliminary evidence may include: complaints from competitors or customers, results of dawn raids or market inspections, economic data suggesting anti-competitive effects, documentary evidence obtained in the course of an investigation, or information provided by leniency applicants.

Condition 2: Threat of Serious and Irreparable Harm

SAMR must demonstrate that the suspected conduct is causing or is likely to cause serious and irreparable harm to competition or the public interest before the investigation can be completed. Factors that SAMR considers in assessing irreparable harm include:

• Market structure effects: Whether the conduct is likely to result in permanent changes to market structure, such as the exit of competitors, irreversible loss of market share, or destruction of distribution networks.
• Consumer harm: Whether the conduct is likely to cause significant and ongoing harm to consumer welfare, including higher prices, reduced output, diminished quality, or reduced innovation.
• Public interest: Whether the conduct affects products or services that are critical to public health, safety, national security, or other public policy objectives.
• Irreversibility: Whether the harm is reversible if the conduct is later found to be lawful and the interim measures are lifted. If the harm is readily reversible, interim measures may not be justified.
• Urgency: Whether the timing of the harm requires immediate action that cannot await the conclusion of the investigation. If the investigation can be completed before material harm occurs, interim measures may not be necessary.

Condition 3: Necessity and Proportionality

SAMR must demonstrate that the interim measures are necessary — that no less restrictive alternative is available to prevent the harm — and that the measures are proportionate to the gravity of the suspected violation and the potential harm. The proportionality assessment involves balancing the harm that the interim measures seek to prevent against the burden they impose on the investigated undertaking.

Types of Interim Measures Available to SAMR

While Article 50 provides a general authorization, SAMR’s enforcement practice and procedural rules have identified several specific types of interim measures:

Suspension Orders

The most common form of interim measure is an order requiring the undertaking to suspend the suspected monopolistic conduct pending the outcome of the investigation. For example, if a dominant platform operator is suspected of imposing exclusive dealing requirements on its merchants, SAMR may order the suspension of those requirements while it investigates the full scope of the conduct. Suspension orders are typically the least intrusive form of interim measure and are intended to preserve the status quo.

Preservation Orders

SAMR may order the undertaking to take steps to preserve evidence relevant to the investigation. This may include orders requiring the undertaking to: preserve electronic communications, internal documents, and business records relevant to the suspected conduct; refrain from destroying, altering, or concealing evidence; provide access to data and systems for forensic examination; and appoint a designated person responsible for evidence preservation compliance. The 2022 amendments significantly strengthened SAMR’s evidence preservation powers by explicitly including preservation orders in the statutory framework.

Behavioral Conditions

In appropriate cases, SAMR may impose behavioral conditions that require the undertaking to take specified actions during the investigation. These may include: providing access to facilities, data, or intellectual property on a temporary basis; maintaining specified supply relationships; providing price, terms, or other information to SAMR on a regular basis; appointing a monitoring trustee to oversee compliance with interim measures; and refraining from specified conduct beyond the suspected violation (e.g., not acquiring competing businesses during the investigation).

Hold-Separate Orders in Merger Investigations

In merger control investigations, SAMR has the power under Article 33 of the AML to require the parties to hold their businesses separate pending the outcome of the merger review. This is a specific form of interim measure applicable only to transactions that are subject to mandatory notification but have been consummated before clearance, or where SAMR decides to review a consummated transaction below the notification thresholds. The hold-separate order requires the merged entity to maintain the acquired business as a separate, independently managed operation pending the review decision.

Procedural Requirements and Safeguards

The imposition of interim measures is subject to certain procedural requirements designed to protect the rights of the investigated undertaking:

• Written decision: SAMR must issue a written decision imposing interim measures, stating the legal basis, the factual grounds, the specific measures imposed, and the duration. The decision must be served on the undertaking promptly.
• Duration and review: Interim measures are temporary and must be reviewed periodically. SAMR must lift or modify the measures if the conditions justifying them no longer exist. The initial duration typically does not exceed 90 days, although extensions may be granted with justification.
• Right to be heard: The investigated undertaking has the right to make written submissions and present evidence challenging the imposition, scope, or duration of the interim measures. While in practice SAMR may impose interim measures before hearing the undertaking (where urgency requires immediate action), the undertaking must be given an opportunity to be heard promptly thereafter.
• Judicial review: Decisions to impose interim measures are subject to judicial review under the Administrative Litigation Law. An aggrieved undertaking may challenge the interim measures decision before the Intermediate People’s Court. The court may suspend, modify, or annul the interim measures if it finds that SAMR exceeded its authority, violated procedural requirements, or imposed disproportionate measures.

Practical Implications for Companies Facing a SAMR Investigation

Pre-Investigation Preparedness

The possibility of interim measures underscores the importance of being prepared for a SAMR investigation before it begins. Companies should:

• Develop an investigation response plan that includes protocols for handling SAMR dawn raids, preserving evidence (including electronic data), communicating with counsel, and managing public relations. The response plan should specifically address the steps the company will take if SAMR imposes interim measures, including identifying the personnel who will be responsible for compliance with specific measures.
• Conduct a pre-investigation legal audit of business practices that could attract AML scrutiny, with particular focus on practices that could be subject to interim measures. Where potential issues are identified, consider voluntarily modifying the practices before SAMR takes action, which may reduce the risk of interim measures being imposed.
• Establish a compliance governance structure with clearly defined roles and responsibilities for competition law compliance, including a compliance officer with direct access to senior management and the board. The compliance function should maintain documentation of the company’s competition law compliance program, training records, and audit results, as these may be relevant in any interim measures proceeding.

Responding to Interim Measures

If SAMR imposes interim measures, the company should take immediate and strategic action:

• Comply promptly and fully. Failure to comply with interim measures can result in significant penalties, including monetary sanctions under Article 55 of the AML (fines of up to 1 percent of the company’s prior-year turnover for failure to comply with interim measures) and potential criminal liability for obstruction of justice.
• Engage legal counsel experienced in SAMR investigations. Competition counsel with experience in AML investigations can advise on the scope of the interim measures, the company’s obligations, and the appropriate legal strategy for challenging or seeking modification of the measures.
• Document compliance efforts meticulously. The company should maintain detailed records of its compliance with each element of the interim measures, including the steps taken to suspend questioned practices, preserve evidence, and implement any other required measures. This documentation may be critical in demonstrating good faith cooperation and mitigating penalties in the final decision.
• Assess the strategic implications. Interim measures can have significant operational and financial implications, including disruption to distribution networks, loss of customer relationships, and reputational damage. The company should assess these implications and develop contingency plans. At the same time, the imposition of interim measures may signal that SAMR views the suspected violation as serious, and the company should consider whether settlement discussions or cooperation with the investigation are advisable.
• Consider challenging the measures. If the interim measures are disproportionate, unnecessary, or procedurally defective, the company may challenge them through administrative reconsideration or judicial review. However, challenging interim measures is a strategic decision that must be weighed against the risk of antagonizing the investigating authority and the potential implications for the substantive investigation.

Case Examples: Interim Measures in Practice

While SAMR’s use of interim measures is not always publicly disclosed, several notable cases illustrate their application:

• Alibaba Investigation (2020-2021): During the Alibaba investigation, SAMR imposed interim measures requiring Alibaba to cease its “either-or” exclusive dealing requirements immediately, months before the final decision was issued. Alibaba publicly announced its compliance with these measures and reported on its progress in implementing the required changes in its annual compliance report. The interim suspension order effectively restructured Alibaba’s merchant relationships before the investigation concluded, demonstrating the powerful impact of interim measures on business operations.
• Meituan Investigation (2021): Similar to the Alibaba case, SAMR imposed interim measures requiring Meituan to suspend exclusive dealing requirements with restaurants during the investigation. Meituan was also required to maintain evidence of its pricing algorithms and merchant management data for forensic examination.
• Pharmaceutical RPM Investigations (2022-2024): In multiple pharmaceutical sector RPM investigations, SAMR imposed interim measures ordering the investigated companies to suspend minimum resale price requirements and to preserve communications with distributors, including internal pricing guidance documents, meeting records, and electronic communications.
• Merger Hold-Separate Cases: SAMR has imposed hold-separate orders in several consummated M&A transactions that were discovered to require ex post merger review. These orders require the acquired entity to be operated as an independent business with separate management, separate financial accounts, and no exchange of competitively sensitive information pending the review outcome.

Strategic Considerations for Foreign Companies

Foreign companies under SAMR investigation face particular challenges when interim measures are imposed:

• Cross-border implications: Interim measures may require changes to global distribution arrangements, intellectual property licensing terms, or data management practices that extend beyond China. Companies should assess the global impact of interim measures and coordinate compliance across jurisdictions.
• Parent company liability: SAMR’s interim measures may extend to the parent company of a Chinese subsidiary, particularly where the parent was involved in the design or implementation of the suspected conduct. Foreign parent companies should be prepared to comply with interim measures even if their direct China operations are limited.
• Reputational and commercial impact: The imposition of interim measures may become public knowledge, potentially damaging the company’s reputation and customer relationships. Companies should prepare communication strategies for stakeholders, including customers, suppliers, and investors, while respecting the confidentiality of the ongoing investigation.
• Coordination with global antitrust investigations: If the same conduct is under investigation by competition authorities in multiple jurisdictions, interim measures imposed by SAMR may affect the strategy in other jurisdictions and vice versa. Companies should coordinate their responses across jurisdictions through a unified legal team.

Conclusion

SAMR possesses robust statutory authority to impose interim measures during AML investigations, a power that was significantly strengthened by the 2022 AML amendments. Interim measures — including suspension orders, preservation orders, behavioral conditions, and hold-separate orders — allow SAMR to act quickly to prevent irreparable harm to competition while it completes its investigation. Companies facing a SAMR investigation must take the prospect of interim measures seriously, prepare response plans in advance, and respond promptly and strategically if interim measures are imposed. The implications of interim measures can be as significant as the final penalty, and effective management of the interim measures process is critical to protecting the company’s operational, financial, and reputational interests during the pendency of an AML investigation.