The State Administration for Market Regulation (SAMR) is a Chinese governmental authority department. It is responsible for regulating the following areas
- drug safety supervision
- quality inspection
- fair competition and commercial bribery
- issuance of business registration
- certification and accreditation
- management of intellectual property rights
- comprehensive supervision and management of the market order
This restructuring has been viewed as the most comprehensive Chinese government overhaul since the 1970’s. For more details, please see State Administration for Market Regulation glossary entry.
SAMR in Practice
The motivations and final decisions of the State Administration for Market Regulation are notoriously difficult to forecast. The review policy is not as transparent as most western countries, such as the UK’s CMA, so tracking the deal is almost impossible. The relative newness of the organisation also makes it difficult to judge as procedures and guidelines are reviewed and altered making deal review comparison difficult.
On top of this there are the constant Geo-political intrusions into the process. Mergers and Acquisitions is sometimes used as a political tool to exert influence over the actions of others and protect domestic industries and companies. In the US, the recommendations of CFIUS for example are just that. Recommendations. The ultimate decision lies with the President and is sometimes seen as a counterweight to the SAMR.
The Qualcom takeover of NXP Semiconductors (NXPI) was an example of how the SAMR can exert its influence. Although not actually rejecting the deal, the administration simply delayed a decision until after the drop dead date had passed. Thus putting the responsibility on the acquirer. A decision which was widely seen as being politically motivated, but technically not actually so.
In light of this, traders are advised to practice a great deal of caution when investing in stocks which are subject to SAMR authorization. Although these merger arbitrage spreads are generally wider, and offer superior trading profits, the risks are there for all to plainly see.
