New Development in Implementing the AML regarding
Concentration Issues
(Susan Ning
February 25, 2009)
The PRC Ministry of Commerce (“MOFCOM”) has recently speeded up its
lawmaking work to complete the merger control regime in China. New guidance,
regulation drafts and other official documents, addressing both substantive and
procedural issues, have been published on MOFCOM’s official website during the
first two months of this year.
This article is aiming at providing a brief summary of the most important changes and
development reflecting in these new documents of MOFCOM, including but not
limited to:
Documents with Effectiveness:
Document
Operational Guidelines for Anti-Monopoly Review on
Concentration of Operators
《经营者集中反垄断审查办事指南》
Flow chart for the Ministry of Commerce’s Anti-Monopoly
Review on Concentration of Operators
商务部经营者集中反垄断审查流程图
Guidance on the Notification of Concentration of Operators
《关于经营者集中申报的指导意见》
Notification Form for Concentration of Operators
经营者集中申报表
Guidance on the Notification Documents and Materials of
Concentration of Operators
《关于经营者集中申报文件资料的指导意见》
Issuing Date
January 1, 2009
January 1, 2009
January 5, 2009
January 5, 2009
January 5, 2009
Drafts for Comment Collection:
Document
Issuing Date
Guidelines on the Definition of the January 7, 2009
Relevant Market (Draft)
《关于相关市场界定的指南（草案）》
Interim Measures on the Investigation January 19, 2009
and Treatment of the Concentration
of Operators not Notified according to
Law and Regulations (Draft)
《关于对未依法申报的经营者集中调
Termination Date for
Comment Collection
January 31, 2009
February 16, 2009
查处理的暂行办法（草案）》
Interim Measures on the Evidence
Collection of the Concentration of
Operators below the Notification
Threshold
with
Monopolization
Suspicion (Draft)
《关于对未达申报标准涉嫌垄断的经
营者集中证据收集的暂行办法（草
案）》
Interim Measures on the Notification of
the Concentration of Operators (Draft
for Comment Collection)
《经营者集中申报暂行办法（征求意
见稿）》
Interim Measures on Examination of
Concentration of Operators (Draft for
Comment Collection)
《经营者集中审查暂行办法（征求意
见稿）》
Interim Rules on the Investigation and
Determination of Concentration of
Operators below the Notification
Threshold
with
Monopolization
Suspicion
(Draft
for
Comment
Collection)
《关于对未达申报标准涉嫌垄断的经
营者集中调查处理的暂行办法（征求
意见稿）
》
January 19, 2009
February 16, 2009
January 20, 2009
February 16, 2009
January 20, 2009
February 16, 2009
February 6, 2009
March 6, 2009
This article only covers some of the important issues in the documents listed above.
The full text of these documents could be found on the official website of the
Anti-monopoly Bureau of MOFCOM at http://fldj.mofcom.gov.cn/.
As some of the documents have not yet come into effective, and may be further
modified, the content of this article may not be accurate if updated version of the
current rules or any new rules is promulgated after the date of this article.
I
Clarification of the scope of controllable concentration under the AML
(i) The definition of “Acquiring control of other operators”
The expression of “Acquiring control of other operators” as referred to in sub-articles
(2) and (3) of Article 20 of the PRC Antimonopoly Law (“AML”)1 includes:
(a) Acquiring more than 50% shares or assets with voting right of other operators; or
(b) By acquiring shares or assets and by contracts or other means, obtaining the power
to determine (i) the appointment of one or more of the directors or core
management personnel, (ii) the financial budget, (iii) the operation and sales, (iv)
the pricing, (v) the essential investment or other important management decisions.
(ii) Establishing new joint venture is also controllable
The AML has not clearly stipulate whether the establishment of new joint venture by
two or more operators shall be considered as the controllable concentration, but the
Interim Measures on the Notification of the Concentration of Operators have given an
affirmative answer to that question.
II Clarification of the turnover calculation method
(i) Tax involved in turnover calculation
When calculating the turnover, the taxes and associated charges shall be deducted
from the total amount of incomes. However, the Enterprise Income Tax and Value
Added Tax shall not be deducted.
(ii) Chinese territory for turnover calculation
“Within the People’s Republic of China” as referred to in Article 3 of the Provisions
of the State Council on Notification Thresholds of Concentrations of Undertakings
(“Provisions of Thresholds”) 2 means the locations of the purchasers of the products
1
Article 20 of the AML: A concentration of operators refers to the following situations:
(i) a merger of operators;
(ii) an acquisition of control of other operators by acquisition of shares or assets with voting right of other
operators to an adequate extent;
(iii) an acquisition of control of other operators or the capability of imposing determinative effects on other
operators by contract or other means.
2
Article 3 of the Provisions of Thresholds: When a concentration of undertakings reaches any of the following
thresholds, a prior notification shall be filed with the competent commerce authority under the State Council.
Without such notification, the concentration must not be put to implementation:
(i) The combined aggregate worldwide turnover of all the undertakings to the concentration in the last financial
year is more than RMB 10 billion, and the turnover within People’s Republic of China (the “PRC”) of each of at
least two of the undertakings to the concentration in the last financial year is over RMB 0.4 billion;
(ii) The combined aggregate PRC turnover of all the undertakings to the concentration in the last financial year
is more than RMB 2 billion, and the PRC turnover of each of at least two of the undertakings to the concentration
in the last financial year is over RMB 0.4 billion.
When calculating the “turnover”, characteristics of special industries and business areas such as banking, insurance,
securities and futures shall be taken into consideration. Specific methods will be enacted by the competent
commerce authority under the State Council, in conjunction with relevant departments of the State Council.
or services provided by the operators are within China, excluding Hong Kong, Macao
and Taiwan.
(iii) Special rules
As far as the seller(s) is concerned, only the turnover derived from its business
concerned in the transaction shall be calculated into its turnover.
Special rule has been established regarding successive transactions in a short period of
time. Where the same operators (including the enterprises controlling or controlled by
either of the operator) have continually conducted a series of transactions within one
year, none of which meets the thresholds as provided in Article 3 of the Provisions of
Thresholds, such series of transactions shall be deemed as one integrated
concentration. The turnover shall be calculated by adding together the respective
turnover of the businesses involved in each and all the transactions. “Within one
year” means the one year period from the completing date of the first transaction to
the date of executing the agreement of the last transaction.
III Implementing rules for the control of certain concentrations below the
notification threshold
Article 4 of the Provisions of Thresholds has already made it clear that concentrations
which do not reach the notification threshold can also be investigated if it is reflected
by the facts and evidences collected in accordance with standard procedures that the
concentration has or may have the effect of eliminating or restricting competition.
Interim Measures on the Evidence Collection of the Concentration of Operators
below the Notification Threshold with Monopolization Suspicion and Interim Rules on
the Investigation and Determination of Concentration of Operators below the
Notification Threshold with Monopolization Suspicion stipulate the major substantial
and procedural rules regarding the control of these special class of concentrations by
the anti-monopoly authorities, including the procedure and the scope of the evidence
collection of these concentrations, the operators’ right to apply for consultation with
the MOFCOM, the possible results after the investigation, etc.
It is worth-mentioning that the operators to the concentrations below the notification
threshold may voluntarily submit the application of antitrust notification. The
MOFCOM may accept the application when it deems necessary and review the
concentration according to the AML.3
3
Article 4 of the Provisions of Thresholds: Where concentrations do not reach the thresholds set forth in Article 3
herein, but it is reflected by the facts and evidences collected in accordance with standard procedures that the
concentration precludes or restricts competition or would preclude or restrict competition, the competent
commerce authority under the State Council shall conduct investigation in accordance with the law.
During the period of notification and examination of the voluntary notification, the
operators concerned may decide by themselves whether or not to proceed with the
transaction, but shall bear the corresponding responsibility of their own decision.
IV Proposal of restrictive conditions
To eliminate the actual or potential effect of eliminating or restricting competition
caused by the concentration, both the operators concerned and the MOFCOM can
propose restrictive conditions to the transaction.
Restrictive conditions may include the following categories:
(i) Structural conditions such as splitting part of the assets or business of the
business operator of the concentration;
(ii) Behavioral conditions such as opening the networks or platform or other basic
facilities of the business operator of the concentration, licensing of essential
technologies, etc;
(iii) Integrated conditions which are the combination of structural conditions and
behavioral conditions.
Several general requirements are set out regarding the restrictive conditions, namely
that: “The restrictive conditions proposed by the operators concerned must be
effective enough to eliminate the actual or potential effect of eliminating or restricting
competition caused by the concentration, and shall be realistic and practical”.
When the operators concerned propose restrictive conditions, it is requested that the
confidential information shall be clearly identified with reasons, and a separate public
version shall be submitted. The public version of the restrictive conditions must be
clear and definite enough for a third party to evaluate the effectiveness and feasibility
of such restrictive conditions.
V
Organization of hearings by MOFCOM
MOFCOM can organize hearings during the examination procedure, to investigate,
collect evidences, and hear the opinions of relevant parties. The hearings shall not
be held in public; and the participants of the hearing will get prior written notification
from MOFCOM when MOFCOM organizing the hearing.
VI Application form
The Notification Form for Concentration of Operators published by MOFCOM on
January 5, 2009 is the first version of the antitrust application form in China. Please
refer to Annex 14 of this article for the contents of the application form.
VII Flow chart
Flow chart for the Ministry of Commerce’s Anti-Monopoly Review on Concentration
of Operators illustrates the process of accepting application documents by MOFCOM.
Please refer to Annex 25 of this article for the contents of the flow chart.
4
5
Note: The MOFCOM will only accept the application form and other application documents written in Chinese.
The English version is translated from the Chinese version and is for reference only.
Note: The English version is translated from the Chinese version and is for reference only.