FAQ relating to anti-monopoly
Q: What are the main contents in the draft Interim Regulations on Standard for Simple Cases of Concentration of Business Operators?
A: The Draft Regulation on Simple Cases is an encouraging step towards the creation of a simplified procedure for cases that are unlikely to raise competitive concerns. It clarifies the standards Ministry of Commerce will use to distinguish simple cases from cases that merit a more in-depth investigation.
Q: What kind of concentration transaction will be classified as a simple concentration case?
A: Under the Draft Regulation on Simple Cases, a concentration transaction shall meet the following requirements:
(i) Within the same relevant market, combined market share of the business operators who are participating in the transaction is less than 15%;
(ii) If there are upstream or downstream relationships among the business operators participating in the concentration transaction, but the cumulative market share of all such business operators in either the upstream or the downstream marker is less than 25%;
(iii) If there are no upstream or downstream relationships among the business operators participating in the concentration transaction, but the cumulative market share of all business operators in each of the markets is less than 25%;
(iv) If the business operators participating in the concentration are establishing a joint venture in a territory outside the PRC, but such joint venture will not engage in any business activities in the PRC;
(v) If the business operators participating in the concentration are to acquire the equity interest or assets of an offshore target company, but such offshore target company does not and will not engage in any business activities in the PRC; or
(vi) A joint venture currently under joint-control of more than two business operators will be controlled by one or more business operators after the concentration transaction.
Q: What kind of transactions will be excluded from the simple concentration cases?
A: Under the Draft Regulation on Simple Cases, the following transactions will be excluded from the simple concentration cases:
(i) A joint venture currently under joint-control of more than two business operators will be controlled by one single business operator through the concentration transaction and such single business operator is a competitor of the joint venture in the same relevant market;
(ii) It is difficult to define the relevant market pertaining to the proposed concentration of the business operators;
(iii) The proposed concentration will have an adverse impact on access to market or technology improvement;
(iv) The proposed concentration will have an adverse impact on the interests of consumers and other relevant business operators;
(v) The proposed concentration will have an adverse impact on the national economic development; or
(vi) Other circumstances that MOFCOM determines might have an adverse impact on market competition.
Q: What is the main difference in the draft Regulations Regarding Additional Restrictive Conditions for Mergers of Business Operators (the "Draft Remedy Regulation")?
A: Compared to the 2010 Interim Provisions, the Draft Remedy Regulation establishes more detailed procedures for MOFCOM to impose restrictive conditions on its conditional approval of a proposed concentration of business operators. Moreover, the Draft Remedy Regulation provides the pre-merger reporting applicants with certain guidelines regarding how to apply for and negotiate with MOFCOM regarding the remedies for MOFCOM’s conditional approval of the transaction.
The Draft Remedy Regulation also provides specific time frames for the reporting applicants to propose the remedies, appoint a trustee, and sign a contract with the potential buyer for divestiture of assets/ business, etc. It also set forth the elements which will be considered by MOFCOM when it reviews the possibility of removing or revising the remedies imposed by its conditional approval of a transaction.
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