Provisions on the Examination of Concentrations of Undertakings

Provisions on the Examination of Concentrations of Undertakings

Order of the State Administration for Market Regulation
(No.67)

The Provisions on the Examination of Concentrations of Undertakings, as deliberated and approved at the second executive meeting of the State Administration for Market Regulation on February 20, 2023, are hereby issued, and shall enter into force on April 15, 2023.

Director: Luo Wen

March10, 2023

Provisions on the Examination of Concentrations of Undertakings

Chapter I General Provisions

Article 1 For the purposes of regulating the anti-monopoly examination of concentrations of undertakings, these Provisions are formulated in accordance with the Anti-monopoly Law of the People's Republic of China (hereinafter referred to as the "Anti-monopoly Law") and the Provisions of the State Council on the Thresholds for the Report of Concentrations of Undertakings.

Article 2 The State Administration for Market Regulation (hereinafter referred to as the "SAMR") shall be responsible for the anti-monopoly examination of concentrations of undertakings and the investigation and handling of any illegally implemented concentration of undertakings.

The SAMR may delegate the examination of concentrations of undertakings to the market regulatory departments of the provinces, autonomous regions, and municipalities directly under the Central Government (provincial market regulatory departments), where appropriate.

The SAMR shall strengthen the guidance on and supervision of the delegated provincial market regulatory departments, improve the system for training and management of examiners, and guarantee that examination work is scientific, proper, and consistent.

Article 3 Undertakings may, by fair competition and voluntary combination, implement a concentration according to law to expand the scale of operations and enhance their market competitiveness.

The SAMR shall adhere to fairness and justice and treat all undertakings equally when conducting the anti-monopoly examination of concentration of undertakings.

Article 4 For the purpose of these Provisions, "concentration of undertakings" means the following circumstances as provided in Article 25 of the Anti-monopoly Law:

(1) Merger of undertakings.

(2) An undertaking acquires control over other undertakings by acquiring their equities or assets.

(3) An undertaking acquires control over other undertakings or is able to exert a decisive influence on other undertakings by contract or any other means.

Article 5 The following factors shall be taken into consideration when determining whether an undertaking acquires control over another undertaking or is able to exert a decisive influence on another undertaking:

(1) The purpose of the transaction and future plans.

(2) The equity structure of the other undertaking before and after the transaction and the changes therein.

(3) The matters put to vote, voting rules, historical attendance rates, and vote in the shareholders' meeting or any other authority of the other undertaking.

(4) The composition, voting mechanism, and historical attendance rates and voting information of the board of directors and other decision-making or management bodies of the other undertaking.

(5) The appointment and removal of officers of the other undertaking.

(6) The relationship between shareholders and directors of the other undertaking and whether there is proxy voting, a person acting in concert, or the like.

(7) Whether there is a material commercial relationship, cooperation agreement, or the like between the undertaking and the other undertaking.

(8) Other factors required to be considered.

Where not less than two undertakings have control over a third undertaking or are able to exert a decisive influence over such third undertaking, they have joint control over the third undertaking.

Article 6 The SAMR shall improve the system for the classified and graded examination of concentrations of undertakings.

The SAMR may formulate specific examination measures for the concentrations of undertakings in important fields related to the national economy and people's livelihood, among others.

The SAMR shall assess the implementation effect of the system for the examination of concentrations of undertakings and improve examination work based on assessment results.

Article 7 The SAMR shall strengthen the construction of an information technology-enabled framework for the examination of concentrations of undertakings and leverage technical means to advance smart regulation and improve examination efficiency.

Chapter II Report of Concentrations of Undertakings

Article 8 Where a concentration of undertakings meets the reporting threshold established by the State Council (hereinafter referred to as the "reporting threshold"), the undertakings shall make a report to the SAMR in advance, and the concentration shall not be implemented without reporting or until approval after reporting.

If the concentration of undertakings does not meet the reporting threshold, but there is evidence that the concentration of undertakings has or may have the effect of eliminating or limiting competition, the SAMR may require the undertakings to make a report and give written notice to the undertakings. If the concentration has not been implemented, the undertakings shall not implement the concentration without reporting or until approval after reporting; or if the concentration has been implemented, the undertakings shall make a report within 120 days of receiving the written notice and take necessary measures such as suspending the implementation of the concentration to reduce the adverse effects of the concentration on competition.

Factors for judging whether to implement a concentration shall include without limitation whether the market participant registration or registration of the change of rights is completed, appointment of officers, actual participation in operating decision-making and management, exchange of sensitive information with other undertakings, and substantive integration of business.

Article 9 Revenue shall be the income generated by the sale of goods or provision of services by a relevant undertaking for the last fiscal year, less relevant taxes and surcharges.

For the purpose of the preceding paragraph, “last fiscal year” means the fiscal year immediately preceding the signing date of the concentration agreement.

Article 10 The revenue of an undertaking involved in a concentration shall be the combined revenue of the undertaking and each undertaking directly or indirectly controlling or controlled by the undertaking at the time of report, excluding the revenue from transactions between the aforementioned undertakings.

When an undertaking acquires a component of another undertaking, and the transferor ceases to have control over or is unable to exert a decisive influence on the component, the revenue of the target undertaking shall only include the revenue of the component.

If an undertaking is under the joint control of other undertakings involved in a concentration or of an undertaking involved in the concentration and an undertaking not involved, the revenue of the undertaking or undertakings involved in the concentration shall include the revenue from the transactions between the undertaking under joint control and a third party, and such revenue shall be included only once and equally apportioned among the undertakings participating in concentration with joint control.

The provisions on the calculation of revenue for reporting of concentrations of financial undertakings shall apply to the calculation of revenue of financial undertakings.

Article 11 The concentrations implemented by an undertaking within two years, each of which does not meet the reporting threshold, shall be treated as a concentration, the time of the concentration shall be the time of the final transaction, and the revenue of the undertakings involved in the concentration shall be calculated on the basis of combining the transactions. If an undertaking performs the above acts by another undertaking controlling or controlled by the undertaking, these Provisions shall apply.

For the purpose of the preceding paragraph, "within two years" means the period from the completion date of the first transaction to the date of signing an agreement for the final transaction.

Article 12 The SAMR shall strengthen guidance on the reporting of concentration of undertakings. Before making a formal report, an undertaking may apply in writing for discussion on matters concerning the reporting of concentration and enumerate the specific issues to be discussed.

Article 13 In the case of a concentration implemented by means of merger, all parties to the merger are required to submit a report; and in the case of any other concentration of undertakings, the undertaking who acquires control or is able to exert a decisive influence is required to notify, and the other undertaking or undertakings shall be cooperative.

If there are multiple reporting obligors in a same concentration of undertakings, one reporting obligor may be appointed to submit the report. If the appointed reporting obligor fails to make a report, the other reporting obligor or reporting obligors may not be exempted from the obligation of reporting. If the reporting obligor fails to make a report, the other undertaking or undertakings involved in the concentration may make a report.

A reporter may make a report by itself or by someone else appointed as agent according to law. The reporter shall select an agent strictly and prudently. The reporting agent shall be honest and trustworthy, and operate in compliance with applicable provisions.

Article 14 Reporting documents and materials shall include the following:

(1) A reporting form. The reporting form shall state the name, domicile (business premises), and business scope of each undertaking involved in the concentration and the scheduled effective date of the concentration and be accompanied by the identification or registration document of the reporter. An overseas reporter shall also submit the notarization documents issued by the local notary office and the related authentication certificates. If an agent is appointed to make a report, a power of attorney shall be submitted.

(2) A description of the effect of the concentration on the competition of a market concerned, including an overview of concentration transactions; the definition of the relevant market; the market share of each undertaking involved in the concentration in the relevant market and their control over the market; each main competitor and their market shares; market concentration; market entry; industry development status; the effect of the concentration on the market competition structure, industry development, technological advances, innovation, national economic development, consumers, and other undertakings; and the assessment of the effect and basis of the effect of the concentration on competition in the relevant market.

(3) A concentration agreement, notwithstanding the various names used for the concentration agreements, such as agreements, contracts, and corresponding supplementary documents.

(4) The financial accounting report of each undertaking involved in the concentration for the last fiscal year audited by an accounting firm.

(5) Other documents and materials required by the SAMR.

The reporter shall be responsible for the authenticity, accuracy, and completeness of the reporting documents and materials.

The reporting agent shall assist the reporter to review the reporting documents and materials with respect to authenticity, accuracy, and completenessreporting document.

Article 15 A reporter shall mark all trade secrets, undisclosed information, confidential business information, personal privacy, or personal information in the reporting documents and materials and submit a public and a confidential version of the reporting documents and materials at the same time. The reporting documents and materials shall be presented in Chinese.

Article 16 The SAMR shall check the documents and materials submitted by the reporter. In case it finds that the reporting documents and materials are incomplete, it may require the reporter to make supplements within a specified period. If the reporter fails to do so, it shall be deemed as having not filed a report.

Article 17 Where the SAMR considers upon check that the reporting documents and materials meet the statutory requirements, it shall grant acceptance and notify the reporter in writing on the date of receipt of the complete set of reporting documents and materials.

Article 18 Where an undertaking involved in a concentration which does not meet the reporting threshold voluntarily reports the concentration, the SAMR shall, if it deems it necessary to grant acceptance after a check on the received reporting documents and materials, conduct an examination and make a decision according to the Anti-monopoly Law.

Article 19 Under any of the following circumstances, a concentration of undertakings may be reported as a summary case, and the SAMR shall conduct an examination in accordance with the summary case procedures:

(1) In the same relevant market, the combined market shares of the undertakings involved in the concentration are less than 15%; in the upstream or downstream market, the market shares of the undertakings involved in the concentration is less than 25%; and the undertakings involved in the concentration that neither operates in the same relevant market nor is in an upstream or downstream relationship have market shares of less than 25% in each market related to the transaction.

(2) An undertaking involved in the concentration has a joint venture outside the territory of China, which is not engaged in economic activities in the territory of China.

(3) An undertaking involved in the concentration acquires the equities or assets of an overseas enterprise which is not engaged in economic activities in the territory of China.

(4) A joint venture under the joint control of two or more undertakings is controlled by one or more of the undertakings through concentration.

Article 20 A concentration of undertakings which complies with Article 19 of these Provisions but falls under any of the following circumstances shall not be treated as a summary case:

(1) A joint venture under the joint control of two or more undertakings is controlled by one of the undertakings through concentration, and the undertaking and the joint venture are competitors in the same relevant market, with combined market shares of more than 15%.

(2) It is difficult to define a relevant market by the concentration of undertakings.

(3) The concentration of undertakings may have an adverse effect on market entry and technological progress.

(4) The concentration of undertakings may have an adverse effect on consumers and other relevant undertakings.

(5) The concentration of undertakings may have an adverse effect on the development of national economy.

(6) The SAMR otherwise considers that there may be an adverse effect on market competition.

Article 21 The SAMR shall, after accepting a summary case, publicize the basic information of the case for a period of ten days. The basic information of the publicized case shall be filed by the reporter.

If a summary case reported does not meet the standards for summary cases, the SAMR shall return the case and require the reporter to make a report as a non-summary case.

Chapter III Examination of Concentrations of Undertakings

Article 22 The SAMR shall, within 30 days of acceptance, conduct a preliminary examination of a reported concentration of undertakings, make a decision on whether to ......