The Anti-Monopoly Law (the "Law") of the People's
Republic of China ("PRC") came into effect on 1 August
2008. Two days later, the State Council promulgated the
"Regulations of Filing Standards for Concentrations of
Operators" (the "Regulations") to provide the
thresholds above which operators must report business concentration
to the Anti-Monopoly Bureau of the Ministry of Commerce (the
Definition of "Concentration"
Under Article 20 of the Law, concentration of operators refers
to the following situations :-
merger of the operators;
an operator acquires the controlling interest of other
operator(s) through acquiring its shareholding or its assets;
an operator acquires the controlling interest or is able to
exert influence on the decision of another operator(s) through
contractual arrangement etc.
Article 21 of the Law requires the operator to file for approval
with the relevant anti-monopoly enforcement organization if the
degree of concentration will exceed the filing standards set by the
State Council. Otherwise, such concentration should not be
implemented. The Regulations aim to provide further details on the
filing thresholds in addition to Article 21. These thresholds will
become an important issue in transactions involving merger,
acquisition or one entity taking control of another entity in
Detail thresholds for filing
Under Article 3 of the Regulations, if the concentration of the
operators reaches any of the following thresholds, the filing
obligation to the MOFCOM will be triggered :-
(i) during the financial year preceding the concentration, the
aggregate worldwide turnover of all of the companies involved in
the transaction exceeded RMB 10 billion and the turnover of at
least 2 of the operators exceeded RMB 400 million in the financial
year preceding the concentration; or
(ii) during the financial year preceding the concentration, the
aggregate turnover in China of all of the companies involved in the
transaction exceeded RMB 2 billion, and the turnover of at least 2
of the operators exceeded RMB 400 million in the financial year
preceding the concentration.
Area for Clarification
Further clarification is required on the calculation of
turnover, especially whether the turnover of its subsidiary or
affiliated companies of the operators will be included, although
the Regulations provide that the calculation of turnover should
take into account the actual circumstances of the specific
industries such as banking, insurance, securities and futures (and
the authorities will promulgate further specific rules in these
Under Article 4 of the Regulations, even if the concentration
has not exceeded the above thresholds, the MOFCOM reserves the
right to investigate if the evidence collected according to the
prescribed procedures shows that such concentration may have the
effect of excluding or restricting competition.
The MOFCOM shall clarify whether any voluntary filing is
If you have any question about the above Regulations or the
Anti-Monopoly Law or other issues on foreign direct investments,
joint ventures, mergers and acquisitions in Mainland China,
experienced lawyers in our China Business Department will be happy
to assist you.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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