A Study on the Anti-Monopoly Regulation of Concentration of Undertakings under the VIE Structure in China

Abstract

Against the backdrop of rapid digital economy growth, Chinese internet enterprises have widely adopted the Variable Interest Entity (VIE) structure to achieve cross-border financing and overseas listings. However, the separation of ownership and control, as well as the ambiguous legal validity of contractual arrangements, has posed significant challenges to China’s antitrust regulation in merger control. This study examines antitrust regulation of mergers under the VIE structure in China, tracing its institutional origins and features while analyzing deficiencies in current practice. These include the lack of explicit recognition of the VIE’s legal validity, reliance on a single turnover-based filing threshold, outdated methods of competitive effects assessment, insufficient transparency in enforcement, and overly general penalty mechanisms. Drawing on regulatory experiences from the United States and the European Union, the paper proposes improvements such as clarifying the validity of contractual control, adopting a dual filing standard combining turnover and transaction value, shifting from rigid market definition to effects-based analysis, enhancing transparency in decision-making, and refining penalty rules. The findings indicate that establishing clear rules for VIE-based mergers and strengthening procedural transparency would significantly enhance the effectiveness of China’s antitrust regulation in the internet sector. Theoretically, this research contributes to the literature on merger control in the digital economy, while practically, it offers policy recommendations to safeguard fair competition and improve governance of China’s digital markets.