China: MOFCOM Consults On Comprehensive Draft Merger Remedies Regulation – What Is MOFCOM's Preference: Structural, Behavioural Or Hybrid?

Last Updated: 25 April 2013
Article by Hannah C. L. Ha, John M. Hickin and Philip F. Monaghan

Keywords: MOFCOM, restrictive conditions, business operators

As part of a continued move toward greater transparency in China's merger control regime, the Chinese Ministry of Commerce (MOFCOM) published for public comment on 27 March 2013 draft Regulations on the Imposition of Restrictive Conditions on Concentrations of Business Operators (Draft Restrictive Conditions Regulations). The consultation closes on 26 April. The new draft rules are comprehensive in scope and largely in line with mainstream international practice – notably in the EU.1

A significant expansion on MOFCOM's existing remedy framework

Intended to update and ultimately replace MOFCOM's Interim Measures for the Divesture of Assets or Businesses when Implementing Concentrations of Business Operators (2010), the Draft Restrictive Conditions Regulations represent a significant expansion on MOFCOM's existing guidance on merger remedies and offer greater certainty from a procedural point of view as regards the imposition of remedial conditions on transactions which MOFCOM might otherwise seek to prohibit. Moreover, apart from one or two innovations which we discuss further below, the draft is largely consistent with practice in other major antitrust jurisdictions notably the US and EU and is to be welcomed on that basis.

Procedural matters aside, it is however somewhat unfortunate that these new draft regulations do not offer any commentary on the appropriateness of the different types of possible remedy which MOFCOM might impose (structural, behavioural or conduct and hybrid) and in particular do not offer any guidance on the circumstances which might justify the imposition of behavioural or conduct remedies which MOFCOM has a practice of seeking. To that extent, the Draft Restrictive Conditions Regulations are something of a missed opportunity.

Key aspects of the proposed new regime for remedies

In summary, the Draft Restrictive Conditions Regulations offer guidance on:

  • The types of restrictive conditions that MOFCOM might apply: MOFCOM may impose structural, behavioural or hybrid conditions (Article 5). Behavioural conditions are generally imposed for 10 years unless otherwise specified (Article 13). MOFCOM may impose restrictive conditions on concentrations with a view to reducing adverse effects on competition (Article 2). This restates Article 29 of the Anti-Monopoly Law (AML) and suggests that while MOFCOM may take into consideration non-competition factors in its review (pursuant to Article 27 AML), non-competition considerations should not be a basis for imposing a restrictive condition. Parties may argue whether MOFCOM has consistently adopted such an approach in its decisional practice.
  • Timing for the negotiation of remedies: MOFCOM will make known in a "timely" manner its position on whether the notified concentration has or may have adverse effects on competition with a view to the notifying parties proposing appropriate remedies (Article 7). Parties may then propose remedies "within the period specified by MOFCOM" (Article 8). Parties may also propose remedies before MOFCOM has formulated its view on whether the transaction will give rise to competition concerns (Article 7).
  • Impact on timing of the overall review process: The draft imposes only limited timing obligations on MOFCOM for the assessment of remedy proposals. These are to be assessed in a "timely" manner (Article 7), while parties must submit a final remedies proposal at least 20 days prior to the final merger review deadline (Article 11) – the end of Phase II for example. The draft provides for a public consultation on or "market testing" of remedies but again there is no mention of any timeframe for this. The draft does not therefore seek to address delays to MOFCOM's review which might be incurred when parties enter into remedies discussions with the Chinese regulator.
  • Divestitures: The draft provides detailed guidance on the form a structural remedy may take, and the procedures that apply in that regard (Chapter 3). Divestitures may involve a divestiture by the parties themselves or an "entrusted divestiture" where the parties are unable to complete a structural divestiture within the required time. Businesses will generally have six months to find a purchaser, however MOFCOM may require "up-front buyer" divestitures in some circumstances where the parties may not complete the notified transaction before finding a suitable purchaser and entering into a sale and purchase agreement in respect of the business to be divested. These requirements are all generally consistent with international practice. There does not appear however to be any express provision made for a "fix it first" remedy – where parties would enter into a sale and purchase agreement even before clearance. The draft envisages alternative divestiture commitments – generally known as "Crown Jewels" remedies – again in line with international practice.
  • Monitoring of conditions: The regulation spells out the duties and obligations of the parties and the divestiture and monitoring trustees (Chapter 4).
  • Variation or withdrawal of remedies:
    • At the parties' request: The draft sets out the process for parties to request in writing a variation or removal of conditions by MOFCOM, and the factors taken into account in assessing such requests including whether there have been any material changes or if the request would be in the public interest (Articles 31-32). This public interest consideration may be somewhat misplaced given that remedies are imposed ostensibly to address competition concerns in the first instance.
    • On MOFCOM's own initiative: MOFCOM may review restrictive conditions imposed, vary or withdraw them if it becomes impossible or unnecessary to implement the remedies, or, if the competitive environment has changed (Article 30). This provision might well be cause for concern as it appears to give MOFCOM considerable leverage over the parties going forward without offering any particular procedural safeguards. In contrast, the EU Remedies Notice is much less intrusive and provides that in some circumstances "it may also be appropriate for the parties to include a clause in the commitments, allowing the [EU] Commission to trigger a limited modification to the commitments" and that "[p]rocedurally, the parties may be obliged in such cases to propose a change to the commitments... or the [EU] Commission may itself, after hearing the parties, modify the conditions" (emphasis added). Procedural safeguard mechanisms such as these would be a welcome addition to MOFCOM's final form regulations.
  • Consequences of breach: If any party breaches MOFCOM's conditional clearance decision, the party will be ordered to rectify the breach within a specified time period (Article 34). In a case of gross violation, implementation of the concentration could be halted or the transaction unwound with a view to restoring the position to the status quo ante. MOFCOM may also impose a fine of not more than RMB500,000. These provisions effectively reiterate Article 48 of the AML.

Missed opportunity?

Typically, antitrust authorities, including in the EU, US and Australia, have a strong preference for structural over behavioural commitments, often citing the monitoring and enforcement burden associated with conduct remedies as the main reason for rejecting them. In that respect, the EU Commission's Remedies Notice indicates that behavioural commitments "may be acceptable exceptionally in very specific circumstances"2, while the 2004 Remedies Guidelines of the US Department of Justice (DOJ) noted that "[s]tructural remedies are preferred to conduct remedies in merger cases because they are relatively clean and certain, and generally avoid costly government entanglement in the market"3. Likewise, the Australian Competition and Consumer Commission (ACCC) in its 2008 merger guidelines indicates its "strong preference for structural undertakings" and its view that behavioural remedies are "rarely appropriate on their own"4.

Although the Draft Restrictive Conditions Regulations do not provide much insight as regards MOFCOM's policy considerations when assessing whether a particular remedy proposal is suitable, the regulator has demonstrated a willingness to accept and an apparent preference for extensive, and often open-ended, conduct remedies. Indeed almost all of the agency's published decisions in 2012 involved the imposition of extensive behavioural commitments. Against the backdrop of its decisional practice, it is unfortunate that the Draft Restrictive Conditions Regulations do not offer some guidance on when MOFCOM will likely seek conduct remedies and/or some insight into MOFCOM's experience with them.

Commentary in this area would be particularly welcome in view of recent trends which seem to demonstrate overseas regulators becoming more willing to accept behavioural undertakings. The US DOJ, has for example, accepted behavioural remedies in a number of mergers in the media and technology sectors. This is consistent with an approach outlined in the DOJ's 2011 Remedies Guidelines, which comment that "[c]onduct remedies can be an effective method for dealing with competition concerns raised by vertical mergers and also are sometimes used to address concerns raised by horizontal mergers"5. Similarly in 2012, the ACCC has demonstrated a practice of accepting behavioural undertakings in certain instances.

Given the overall procedural flavour of the Draft Restrictive Conditions Regulation, it seems unlikely that the final form regulations will explore these issues – and, as stated above, this is something of a missed opportunity. Nonetheless, the proposed rules do continue a trend of ever greater transparency and are clearly to be welcomed on that account.

Originally published April 22, 2013


1. Available in Chinese on MOFCOM's website at:

2. European Commission Information Notice on remedies acceptable under Council Regulation (EC) No139/2004 and under Commission Regulation (EC) No 802/2004 (OJ C 267/5, 22.10.2008).

3. 'Antitrust Division Policy Guide to Merger Remedies', US Department of Justice, October 2004 -

4. 'Merger guidelines', 63 [11-12], ACCC, November 2008.

5. 'Antitrust Division Policy Guide to Merger Remedies', 12, US Department of Justice, June 2011 -

Learn more about our PRC offices, Antitrust & Competition and Mergers & Acquisitions practices.

Visit us at

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2013. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.