[co-author: Ken Dai]
On March 4, 2025, CK Hutchison Holdings Limited (“CK Hutchison”),1 controlled by the Li Ka-Shing family, announced a significant transaction on the Hong Kong Stock Exchange: the proposed sale of 80% equity in its port business to a consortium led by U.S.-based BlackRock, Inc. (“BlackRock”), known as the BlackRock-TiL Consortium,2 for a consideration of $14.212 billion. This transaction covers port asset interests in 43 ports across 23 countries (excluding Mainland China and Hong Kong), including the strategically located Cristóbal and Balboa ports at the key node of the Panama Canal.
Cross-border commercial transactions are subject to legal regulations across multiple jurisdictions, including common antitrust reviews (also known as merger control or concentration of undertakings) and national security reviews (referred to as foreign investment/FDI reviews, known as CFIUS review in the United States). This transaction represents a major asset restructuring in the global shipping industry in recent years, not only reshaping the competitive landscape of the international port operation market but also sparking widespread public discussion due to its involvement in the strategically significant Panama Canal zone. Therefore, does China have jurisdiction over this transaction in terms of antitrust and national security reviews? In other words, will this transaction trigger the obligation for merger notification and national security notification in China?
I. Transaction Structure and Target Assets
According to the announcement released by CK Hutchison,3 the core targets of this transaction are two major port operating entities under CK Hutchison—Hutchison Port Holdings S.a.r.l. (“HPHS”) and Hutchison Port Group Holdings Limited (“HPGHL”), which collectively hold an 80% equity interest in Hutchison Port Group. The assets covered by the transaction include 43 ports in 23 countries, encompassing 199 berths across regions such as Europe (e.g., Rotterdam Port in the Netherlands and Genoa Port in Italy), Southeast Asia (e.g., Pasir Panjang Port in Singapore and Tanjung Pelepas Port in Malaysia), and the Americas. Notably, Hutchison Port Group holds a 90% equity stake in Panama Ports Company (“PPC”)4, which controls and operates two critical hubs at both ends of the Panama Canal–Port of Balboa and Port of Cristóbal. Upon completion of the transaction, CK Hutchison will divest the aforementioned assets but has explicitly retained its port operations in mainland China and Hong Kong.
According to the announcement, the total consideration for the transaction amounts to $22.8 billion, and the parties have reached an agreement on the core terms. The transaction involving PPC is subject to approval by the Panamanian government, and the final agreement is expected to be signed by April 2, 2025. However, the signing of the transaction agreement is only the first step, as the deal must still navigate legal and regulatory hurdles, including antitrust and national security reviews, before it can be completed.
II. Does the Transaction Trigger China’s Merger Notification Obligation?
Under China’s Anti-Monopoly Law (“AML”) and the practice of merger review, if an overseas transaction constitutes a “concentration of undertakings,” and the undertakings involved in the concentration have turnover within Mainland China that meets the notification thresholds, the transaction must be notified to the State Administration for Market Regulation (“SAMR”), China’s anti-monopoly enforcement authority. The transaction cannot be implemented until it has been reviewed and cleared by SAMR. In the context of this transaction:
A. Does the Transaction Constitute a "Concentration of Undertakings"?
Under China’s AML, a “concentration of undertakings” includes three scenarios: (i) mergers between undertakings, (ii) acquisition of control over other undertakings through the purchase of equity or assets, and (iii) acquisition of control or decisive influence over other undertakings through contracts or other means. This also includes the establishment of joint ventures.
In this case, the BlackRock-TiL Consortium, by acquiring the entirety of CK Hutchison's 80% ownership in HPHS and HPGHL (which collectively hold an 80% stake in Hutchison Port Group), will gain control over Hutchison Port Group and its underlying port assets. This falls under the scenario of “acquiring control over other undertakings through the purchase of equity or assets” and therefore constitutes a concentration of undertakings.
B. Identification of the Undertakings Involved in the Concentration
The parties directly involved in this transaction include the buyer (BlackRock-TiL Consortium), the seller (CK Hutchison), and the two target companies (HPHS and HPGHL). Additionally, under certain circumstances, other shareholders who hold the remaining 20% equity in the target companies may also be considered parties to the transaction if their consent is required for the sale of shares. However, for the purpose of determining whether the transaction triggers a merger notification obligation under the AML, the key focus is on the undertakings involved in the concentration (i.e., those that will contribute to the formation of market power or concentration post-transaction), rather than all parties involved in the transaction.
According to publicly available information, CK Hutchison holds an 80% stake in Hutchison Port Group through the target companies HPHS and HPGHL, while the remaining 20% stake is reportedly held by PSA International, a subsidiary of Temasek Holdings. However, there is insufficient information to determine whether PSA International and CK Hutchison jointly control the target companies. It is important to note that the concept of “control” or “joint control” under the AML is broader and more complex than under corporate or securities law.
In this case, the undertakings involved in the concentration include:
- If CK Hutchison solely controlled the two target companies prior to the transaction, the undertakings involved in the concentration would be the BlackRock-TiL Consortium and the two target companies.
- If PSA International and CK Hutchison jointly controlled the two target companies prior to the transaction, the undertakings involved in the concentration would include PSA International, the BlackRock-TiL Consortium, and the two target companies.
Since CK Hutchison intends to sell its entire stake in the target companies, it will lose all control over them post-transaction and will no longer be able to influence market concentration. Therefore, CK Hutchison is not considered an undertaking involved in the concentration. Although CK Hutchison and its ultimate controlling shareholder may have significant turnover in Mainland China, this is no longer relevant to determining whether the transaction triggers a merger notification obligation in China.
C. Does the Transaction Meet the Notification Thresholds?
According to the Provisions of the State Council on Notification Thresholds for Concentrations Between Undertakings (2024 Revision), a proposed concentration of undertakings must be notified to SAMR if it meets either of the following criteria:
- The combined global turnover of all undertakings involved in the concentration exceeded RMB 12 billion in the previous financial year, and at least two of the undertakings each had a turnover in China exceeding RMB 800 million; or
- The combined turnover in China of all undertakings involved in the concentration exceeded RMB 4 billion in the previous financial year, and at least two of the undertakings each had a turnover in China exceeding RMB 800 million.
Based on publicly available information, the undertakings involved in this concentration all have turnover in China. It is important to note that the calculation of turnover requires a “look-through” approach to the ultimate controlling entities, encompassing the entire group's revenue across all products/services (not limited to those related to the transaction).
- BlackRock-TiL Consortium: In 2023, BlackRock reported total revenue of $17.56 billion. The group has been accelerating its infrastructure investments in China (e.g., participating in China’s logistics real estate funds). Considering the business scale of BlackRock’s Chinese subsidiaries and its previous merger notification cases in China (e.g., the 2022 acquisition of Tata Power Renewable Energy Limited5), it is reasonable to infer that BlackRock’s turnover in Mainland China likely exceeds RMB 800 million. In addition to BlackRock, the turnover of the other buyers also needs to be assessed.
- Target Companies (HPHS/HPGHL): These companies are primarily engaged in port operations. According to CK Hutchison’s 2023 financial report, its global port business generated total revenue of approximately HKD 40.851 billion (approximately RMB 38 billion), with the Chinese market accounting for 5% of this6, or around HKD 2 billion. Therefore, the turnover of the two target companies in Mainland China may also exceed the RMB 800 million threshold.
- PSA International: As mentioned earlier, PSA International may also be considered an undertaking involved in the concentration under certain circumstances. The turnover of PSA International (including its ultimate controlling entity’s entire group) in Mainland China should also be taken into account.
Based on the above analysis, regardless of whether PSA International is considered an undertaking involved in the concentration, at least two parties (the BlackRock-TiL Consortium and the two target companies) are likely to meet the notification thresholds, potentially triggering China’s merger notification obligation. However, it is worth noting that the calculation of turnover for port operations can be complex, particularly in determining whether revenue from services provided to Chinese enterprises or vessels qualifies as turnover in China. This issue may require further clarification.
D. Notification Obligations and Legal Liability
According to Article 13 of SAMR’s Regulations on the Review of Concentration of Undertakings, the undertaking that acquires control or decisive influence is the notifying party, while other undertakings involved must cooperate with the notification process. In this transaction, the BlackRock-TiL Consortium, as the acquirer, will gain control over the target companies and is therefore the notifying party. Other parties to the transaction are required to provide necessary cooperation.
Furthermore, the AML, as amended in 2022, significantly increased the penalties for failure to notify a concentration of undertakings. For transactions that do not have the effect of eliminating or restricting competition, the maximum fine is RMB 5 million. For transactions that have or may have the effect of eliminating or restricting competition, the maximum fine is 10% of the previous year’s sales revenue. Additionally, the anti-monopoly enforcement authority may order the parties to cease implementation of the concentration, divest shares or assets within a specified period, transfer business operations, or take other necessary measures to restore the pre-concentration status.
In summary, from a legal procedural perspective, the notifying party for this transaction is the BlackRock-TiL Consortium, not CK Hutchison. Similarly, the legal liability for failure to notify, including potential fines, rests with the BlackRock-TiL Consortium, not CK Hutchison. That said, if the transaction fails to obtain clearance from China’s merger control review, the consequences of the transaction’s failure would need to be borne by all parties involved, including BlackRock and CK Hutchison.
As a globally recognized regulatory measure for M&A transactions, antitrust review often plays a decisive role in the success or failure of commercial deals. This transaction, as a global restructuring of port assets, involves regulatory coordination across 23 jurisdictions, making its complexity and risks significant. For example, the 2022 acquisition of Maersk Container Industry by China International Marine Containers (Group) Ltd. (CIMC) ultimately failed due to antitrust reviews in the U.S. and Germany, resulting in CIMC paying Maersk a hefty fee of $85 million (approximately RMB 616 million). If this transaction triggers China’s merger notification obligation, the antitrust review process could become a critical regulatory variable affecting the transaction’s progress.
III. Does the Transaction Trigger China’s National Security Review?
According to Article 2 of the Measures for the Security Review of Foreign Investment (the “Security Review Measures”) jointly issued by the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM), the trigger for a national security review is a foreign investment that “affects or may affect national security.” The scope of such reviews is limited to direct or indirect investment activities by foreign investors within China, including the establishment of new enterprises, mergers and acquisitions of domestic enterprises’ equity or assets, and similar transactions. These transactions must undergo and pass a national security review before they can proceed.
In this case, the buyer, seller, and target companies are all registered outside Mainland China, and the transaction explicitly excludes port assets in Mainland China and Hong Kong. The divested overseas ports (e.g., the Panama Canal ports) are not considered Chinese domestic assets. Therefore, on its face, the transaction does not meet the definition of “foreign investment” under Article 2 of the Security Review Measures, and there are certain obstacles to directly applying the foreign investment security review process.
However, Article 59 of the National Security Law provides a potential alternative basis for triggering a national security review. It states: “The state shall establish systems and mechanisms for national security review and regulation, conducting national security reviews on foreign investments, specific items and key technologies, network information technology products and services, construction projects involving national security matters, and other significant matters and activities that affect or may affect national security, to effectively prevent and mitigate national security risks.”
Therefore, a possible approach would be to invoke this catch-all provision by defining the transaction as “other significant matters and activities that affect or may affect national security.” However, the National Security Law does not provide further interpretation of the scope of “other significant matters and activities,” and there are currently no specific operational guidelines or publicly available cases in China regarding the proactive initiation of national security reviews for purely offshore transactions.
On the other hand, the transaction may also trigger a national security review under the Data Security Law. Article 24 of the Data Security Law, which came into effect in September 2021, stipulates: “The state shall establish a data security review system to conduct national security reviews on data processing activities that affect or may affect national security.” Given that this transaction involves 43 overseas ports, which, as a matter of common practice, regularly handle information related to the entry and exit of Chinese vessels and cargo, the acquisition could potentially involve “data processing activities that may affect national security.” Whether this could trigger a national security review would depend on the specific rules and procedural practices in this area.
In conclusion, based on the current legal framework and past practices, it remains uncertain whether this transaction will trigger China’s national security review. However, considering the strategic importance of the Panama Canal as a global maritime “chokepoint” and the potential indirect impact of the transfer of control over related ports on China’s maritime logistics security and associated data processing activities, the possibility of triggering a national security review cannot be ruled out.
It is worth mentioning that Hong Kong also has its own competition law, but unlike Mainland China, it does not have a merger control regime except in the telecommunications sector, which is not relevant to this case. While the National Security Law is also applicable in Hong Kong, the question of whether it would be invoked in this context is beyond the scope of this analysis.
1 The seller, CK Hutchison, is a company formed through the merger of Cheung Kong Holdings and Hutchison Whampoa under the Li Ka Shing family. It was restructured and listed in January 2015, with businesses spanning ports, retail, energy telecommunications, and other fields. With a global footprint in over 50 countries and regions, its port division has long ranked among the top terminal operators worldwide.
2 The buyer, the BlackRock-TiL consortium, comprises three entities: BlackRock, the world's largest asset manager; its infrastructure fund GIP (acquired by BlackRock in early 2024); and TiL, the terminal investment platform of MSC (Mediterranean Shipping Company), the world's largest shipping company.
3 https://www1.hkexnews.hk/listedco/listconews/sehk/2025/0304/2025030402129_c.pdf
4 The remaining 10% of PPC's shares are held by PSA International Pte Ltd.
5 https://www.samr.gov.cn/fldes/ajgs/jyaj/art/2023/art_25b15afba71d46ee9389f5127d435f32.html
6 https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0419/2024041900569_c.pdf.
