On March 27, 2013, the Ministry of Commerce (the “MOFCOM”) published draft Regulations Relating to Imposing Restrictive Conditions on Concentration of Business Operators (《关于经营者集中附加限制性条件的规定》1) seeking public comments by April 26, 2013 (the “Draft Regulations”). It is anticipated that the Draft Regulations will be finalized within 2013. After the Draft Regulations come into force, they will replace the Interim Provisions of the Ministry of Commerce on Implementing Assets or Business Divestiture Related to Concentration of Business Operators (《商务部关于实施经营者集中资产或业务剥离的暂行规定》) which was promulgated by MOFCOM on July 5, 2010 and became effective on the same date (the “2010 Interim Provisions”).

Compared to the 2010 Interim Provisions, the Draft Regulations establish more detailed procedures for MOFCOM to impose restrictive conditions on its conditional approval of a proposed concentration of business operators. Furthermore, the Draft Regulations provide the pre-merger reporting applicants with certain guidelines regarding how to apply for and negotiate with MOFCOM regarding the remedies for MOFCOM’s conditional approval of the transaction. These Draft Regulations signal MOFCOM’s efforts to provide more clear guidance and transparency to its conditional approval process. Below is a summary of the Draft Regulations.


The 2010 Interim Provisions addressed only the structural remedies for divestiture of assets and/or business. In addition to the structural remedies, the Draft Regulations explicitly provide for certain behavioral remedies (such as requiring the business operators to open up its network or platform, requesting the business operators to license key technology or to terminate exclusivity agreements, etc.) and combined remedies (combination of both structural and behavioral remedies). In practice, in MOFCOM’s previous pre-merger reviewing process, MOFCOM has been receptive to behavioral remedies. The expansion of the range of remedies for conditional approval is a sign that shows MOFCOM can be flexible and will welcome the parties to offer less burdensome remedies that may have less impact on the deal structure and/or value.


The Draft Regulations further provide specific time frames for the reporting applicants to propose the remedies, appoint a trustee, and sign a contract with the potential buyer for divestiture of assets/business, etc. Also, the Draft Regulations set forth more provisions regarding the negotiation and evaluation methods and deadlines. For example, Article 10 of the Draft Regulations provides the methods for MOFCOM to evaluate the remedies proposed by the reporting applicants, such as (i) consultation with relevant governmental authorities, industrial associations, business operators and consumers, (ii) distribution of questionnaires, (iii) convening hearings, etc. Article 11 of the Draft Regulations provides that the reporting applicant must submit its final revisions to its proposed remedies to MOFCOM no less than twenty (20) days before the expiration of the statutory review period. Article 13 of the Draft Regulations provides that if MOFCOM does not specify the valid term for the behavioral remedies in its review decision regarding its conditional approval, the valid term for such behavioral remedies will be ten (10) years.

Furthermore, the Draft Regulations also set forth the elements which will be considered by MOFCOM when it reviews the possibility of removing or revising the remedies imposed by its conditional approval of a transaction. Such elements include among others, (i) whether the fundamental transaction based on which the MOFCOM’s review decision is made has significantly changed; (ii) whether the competitive situation of the relevant market has materially changed; and (iii) whether the change or removal of the remedies is consistent with the social and public interest.

These specific provisions described above not only provide the reporting parties with more guidance to propose the remedies and negotiate with MOFCOM regarding its proposal, but also provide MOFCOM with broad administrative discretion to review, evaluate, and make its decision on conditional approval and remedies thereof. We anticipate that such provisions may be revised after MOFCOM’s collection of comments from the public.


Another notable change compared to the 2010 Interim Provisions is that the Draft Regulations add a chapter specifying the legal liability for (i) business operator(s) participating in the concentration, (ii) the trustee(s), (iii) the purchaser(s) of the divested business, and (iv) the MOFCOM officials, who violate the review decision issued by MOFCOM or the Draft Regulations. For example, if the business operators participating in the concentration violate the terms of the remedies, such business operators will be subject to a fine up to RMB500,000 or MOFCOM has the authority to order the parties to restore the situation existing before the transaction. This additional chapter reflects MOFCOM’s intention to strengthen the enforcement of remedies required by MOFCOM in its review decision for its conditional approval of a concentration, which imposes binding obligations on the business operators participating in the concentration.


During an official press conference regarding the developments of the enforcement of the Anti-Monopoly Law by MOFCOM in 2012, which was held on December 27, 2012, the Director-General of the Anti-Monopoly Bureau of MOFCOM promised to issue more guidelines and implementing rules for the enforcement of the PRC Anti-Monopoly Law. Since MOFCOM is seeking public comments on the Draft Regulations, it is expected that there will still be certain revisions to the Draft Regulations (e.g., the key elements for MOFCOM to consider changing or removing certain restrictive conditions in MOFCOM ordered remedies, confidentiality issues for MOFCOM regarding the transaction when MOFCOM evaluates the remedies proposed by the reporting parties through consultations). After the Draft Regulations are finalized, they will provide guidance regarding the remedies for conditional approvals of proposed concentrations. Also, these Draft Regulations are an example of MOFCOM’s commitment to develop a more effective and transparent pre-merger review process.