China: Anti-Monopoly Reporting For The Financial Industry In China

Last Updated: 28 October 2009


In August 2008, the People's Republic of China ("PRC") implemented the Anti-Monopoly Law (the "AML"). Under Articles 20 and 21 of the AML, transactions qualified as "concentration", which include mergers and acquisitions, are required to be reported to the Anti-Monopoly Bureau of the Ministry of Commerce (the "MOFCOM") for approval.

Pursuant to the AML, the Provisions of the State Council on Thresholds for Prior Notification of Concentration of Undertakings (the "Regulations") specify that the reporting obligation will be triggered if, during the financial year preceding the concentration,

  1. the aggregate worldwide turnover of all the parties involved in the transaction exceeds RMB 10 billion and each of at least two parties has turnover in the PRC exceeding RMB 400 million; or
  2. the aggregate turnover in the PRC of all the parties involved in the transaction exceeds RMB 2 billion, and each of at least two parties has turnover in the PRC exceeding RMB 400 million.

Notwithstanding this general turnover threshold, the Regulations state that specific measures will be laid down in calculating the turnover of the banking, insurance, securities and futures industries by reference to their unique circumstances.

It was not until August this year that the Measures for Calculating the Turnover for the Declaration of Business Concentration in the Financial Industry (the "Measures") came into force to provide guidance on how turnover is to be calculated in the financial industry.

Scope Of Application Of The Measures

Article 2 of the Measures stipulate the calculation of turnover for companies in the financial industry, including:-

  • banking financial institutions
  • securities companies
  • futures companies
  • fund management companies; and
  • insurance companies

It is noted that "banking financial institutions" above covers financial institutions taking savings from the public, which include commercial banks, urban credit cooperation and rural credit cooperation as well as financial asset management companies, trust corporations, finance companies, financial lease companies, automobile finance companies, currency brokerage companies and other banking regulatory authorities' approved financial institutions.

Companies not falling within the above categories remain to be governed by the general turnover threshold in the Regulations unless otherwise specified.

Methods Of Calculation

The Measures further clarify the calculation of turnover threshold by listing the items that should be included in computing the turnover in respect of each category of institutions referred to above. A brief summary of the relevant rules is as follows :-


Items included in calculating the turnover

Banking financial institutions

  1. net interest earnings
  2. handling fee and net commission earnings
  3. gains from investment
  4. income from changes in fair market value
  5. gains from currency exchange
  6. other business income

Securities companies

  1. handling fee and net commission earnings (including brokerage business, asset management business, underwriting and sponsoring business and financial advisory business)
  2. net interest earnings
  3. gains from investment
  4. gains from currency exchange
  5. other business income

Futures companies

  1. handling fee and net commission earnings
  2. net interest earnings from bank deposits

Fund management companies

  1. earnings from management fee
  2. handling fee earnings

Insurance companies

  1. insurance premiums of the original insurance contract plus reinsurance premiums received less ceded premiums

The 10% Calculation Rule

Possibly in view of the high income flows of the financial entities, the Measures try to resolve the issue by stipulating that only 10% of the turnover (after deducting the business tax and surcharges) will be counted for the purpose of calculating the turnover of the said institutions. In essence, a higher threshold is put in place for mandatory reporting of the transactions undertaken by the financial entities. Otherwise, significant inconvenience will be caused as the financial entities may be relatively easy to exceed the turnover threshold under the Regulations in view of their significant income flows.


Entities engaging in the financial sector are advised to assess the impact of the Measures on their future or proposed transactions in advance to determine if the reporting obligation under the AML may be triggered. At the same time, they should note that under the Regulations, MOFCOM reserves the right to initiate an investigation even if the concentration does not exceed the turnover threshold if there are facts and evidence establishing that such concentration may have the effects of eliminating or restricting competition.

If you have any questions about the above Measures 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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