China: MOFCOM Releases New Consultation Drafts Relating to China´s Merger Control Regime – Part I

Last Updated: 23 January 2009

Originally published January 22, 2009

Article by Hannah C. L. Ha , John M. Hickin and Gerry P. O'Brien

Keywords: MOFCOM, China's Ministry of Commerce, new consultation drafts, China's merger control Regime, Anti-monopoly Law, AML, draft notification measures, draft review measures, draft investigation measures, draft evidence collection measures

China's Ministry of Commerce ("MOFCOM") has released four new consultation drafts relating to the country's Anti-monopoly Law ("AML") merger control regime. Those drafts are:

  • Interim Measures for Notification of Concentration of Undertakings ("Draft Notification Measures")
  • Interim Measures for Review of Concentration of Undertaking ("Draft Review Measures")
  • Interim Measures for Investigating and Disposing of Suspected Concentration of Undertakings Failing to File Notification in Accordance with the Law ("Draft Investigation Measures"); and
  • Interim Measures for Collecting Evidence on Suspected Monopolistic Concentration of Undertakings below the Thresholds ("Draft Evidence Collection Measures").

MOFCOM has invited submissions on these drafts, for which the deadline is 16 February 2009.

This client alert highlights key elements of the Draft Notification Measures, which resolve some (but not all) of the uncertainties that have surrounded the mandatory transaction notification obligations in the AML. A further client alert will be issued shortly, containing information regarding the highlights of the Draft Review Measures, Draft Investigation Measures and the Draft Evidence Collection Measures.

Highlights of the Draft Notification Measures

The Draft Notification Measures clarify several issues relating to provisions in the AML which require that certain transactions (referred to as 'concentrations' in the law) be notified to MOFCOM for pre-approval. Examples are provided below.

1. The Draft Notification Measures provide additional clarity regarding which transactions qualify as concentrations under the AML

Under Article 20 of the AML, a concentration is defined as including, inter alia:

  • the acquisition of control over another undertaking via the purchase of shares or assets; and
  • the acquisition of control, or the ability to exercise determinative effects, over an undertaking by contract or other means.

The Draft Notification Measures explain how the phrase "acquisition of control" should be interpreted in this context. Specifically, it provides that an acquisition of control will occur where an undertaking acquires more than 50% of the voting shares or assets of another undertaking. Additionally, it provides that an acquisition of control will occur in other circumstances (such as where less than 50% of the voting share or assets are obtained, or relevant contracts are implemented) where an undertaking gains the ability to, inter alia:

  • decide the nomination of one or more directors or other core members of another undertaking;
  • decide another undertaking's financial budget, operation and sales, product pricing, or significant investment; or
  • make other significant decisions on significant management and operation matters, for another undertaking.

Unfortunately, it is not clear from the Draft Notification Measures:

  • if the existence of just one of the criteria mentioned in the bullet points above will, by itself, be sufficient to constitute an acquisition of control (it may be that MOFCOM will reserve the right to determine this on a case-by-case basis); and
  • whether an undertaking that is already in a position to exercise control over another undertaking will be required to notify MOFCOM of any further transaction that may strengthen or further their control rights (for example, it is unclear how MOFCOM will treat a proposed transaction under which an undertaking holding 51% of the voting shares in another undertaking would acquire the remaining 49% of voting shares).

However, the Draft Notification Measures do confirm that the joint establishment of a new joint venture enterprise by two or more undertakings will qualify as a concentration under the AML.

2. The Draft Notification Measures clarify how the turnover of an undertaking should be calculated for the purposes of applying the relevant mandatory notification thresholds

In August 2008, China's State Council adopted rules that specify when concentrations need to be notified to MOFCOM for competition-related review under the AML. Those rules contain global and China-specific turnover thresholds ("Turnover Thresholds"), and provide that a concentration must be notified if those thresholds are achieved by undertakings involved in a concentration. The Turnover Thresholds were reported in our client alert dated 7 August 2008.

The Draft Notification Measures clarify certain matters relating to how the Turnover Thresholds are applied. In particular, they specify that:

  1. the turnover of an undertaking involved in a concentration includes turnover generated by other members of the undertaking's corporate group, and other affiliates of the group, if they satisfy criteria referenced in the Draft Notification Measures;
  2. the relevant turnover to consider is net of any taxes and surcharges (except any enterprise income tax and value added tax that will be offset, which should not be deducted);
  3. China-specific turnover should not include turnover generated by the supply of products or services to undertakings located in Hong Kong, Macau or Taiwan; and
  4. when a concentration relates to the acquisition of part of one or more undertakings, only the turnover from such part will count in respect of the undertaking(s). It appears this will address situations such as the proposed acquisition of a discrete business division of an undertaking, and would mean that only relevant turnover of that business division needs to be considered - to the exclusion of the rest of the 'seller' undertaking and its corporate group and affiliates.

3. Unclear provisions in the Draft Notification Measures

Unfortunately, the Draft Notification Measures also contain some provisions that may need to be altered to be made clear.

Article 7 is an example. This Article addresses situations where two or more concentrations are conducted between the same undertakings (or relevant members of their corporate group) within a relevant twelve month period, and each concentration assessed in isolation does not achieve the Turnover Thresholds.

The Article appears to allow MOFCOM to effectively treat the successive concentrations as a single transaction, and to aggregate relevant turnover of undertakings involved in the successive concentrations when applying the Turnover Thresholds. It is believed that the Article is directed at the issue of 'creeping acquisitions' (that is, the acquisition of a number of individual assets or businesses over time that may collectively raise competition concerns, but which individually may not qualify for mandatory MOFCOM review). However, the wording used in the Article is ambiguous and unclear, and is likely to be revised as a result of the consultation process so that MOFCOM's relevant requirements and powers can be made clear.

4. Other matters

The Draft Notification Measures also contain provisions:

  • clarifying MOFCOM's procedures, and the rights and obligations of relevant undertakings, in respect of concentrations that do not meet the Turnover Thresholds; and
  • overlapping with finalised Directive Opinions on Notification of Concentration of Undertaking ("Directive Opinions") recently issued by MOFCOM. For example, the Draft Notification Measures specify which party is required to submit a notification to MOFCOM in the context of each of the possible concentration scenarios, and outline some of the documents and information required to be included in notifications submitted to MOFCOM. Both of these matters were addressed in the Directive Opinions summarised in our client alert of 9 January 2009, and there is substantial overlap between the relevant documents.

Next Steps

JSM provided feedback on an earlier version of the Draft Notification Measures, which MOFCOM circulated to a select group of experts and stakeholders. We are pleased to report that a number of the concerns that we raised about this earlier draft have now been addressed by MOFCOM.

JSM will continue to work closely with Chinese authorities in an effort to ensure they address other issues and uncertainties such as those mentioned in this client alert, and any parties who would like to make their views known to MOFCOM are invited to contact JSM for assistance.

Learn more about our Hong Kong office and Antitrust & Competition practice.

Visit us at

Copyright 2008. JSM, Mayer Brown International LLP and/or Mayer Brown LLP. All rights reserved. Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: JSM, a Hong Kong partnership, and its associated entities in Asia; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and Mayer Brown LLP, a limited liability partnership established in the United States. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

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.