On 6 February 2009, China’s Ministry of Commerce (MOFCOM) issued for public comment draft Interim Measures on the Investigation and Handling of Suspected-of-Monopoly Concentrations of Business Operators Without Reaching the Notification Thresholds (Investigation Measures for Non-Reportable Concentrations). The deadline to submit comments is 6 March 2009. The draft Investigation Measures for Non-Reportable Concentrations provide some guidance as to how MOFCOM likely will enforce China’s Anti-Monopoly Law (AML) in connection with those transactions that do not meet the AML’s notification thresholds. This release follows MOFCOM’s 20 January 2009 issuance of draft rules governing evidence collection in the investigation of non-reportable concentrations. For more information, see MWE China Law Offices’ China Law Alert “China’s MOFCOM Issues Additional Draft Merger Review Rules for Public Comments” .

The Investigation Measures on Non-Reportable Concentrations outline the procedures by which MOFCOM will investigate concentrations that do not meet the AML’s notification thresholds, but which may have the effect of restricting competition. The procedures detailed in these draft rules parallel the investigative process outlined in the AML for notifiable transactions. For example, the draft rules provide for an investigation period similar to the examination period imposed upon reportable transactions by the AML. As such, MOFCOM’s investigation of a non-reportable concentration should be completed within 30 days. In certain circumstances, the reviewing agency may extend the initial 30-day period for another 90 days as well as an additional 60 days, for a potential 180-day investigation period. Parties to the concentration under investigation will have the opportunity to present their case during the investigation.

Further, if the concentration has not yet been completed, the parties may make a written commitment to suspend the concentration during MOFCOM’s investigation. MOFCOM will then endeavor to complete the investigation within the time period that MOFCOM approved.

The draft Investigation Measures for Non-Reportable Concentrations propose that MOFCOM consider the same factors in its analysis of non-reportable transactions as those enumerated in the AML, including the parties’ respective market shares, the extent of consolidation in the relevant market(s), the concentration’s effect on market entry and innovation, the concentration’s effect on consumers and competitors, the concentration’s effect on national economic development, and other factors that the enforcement agencies deem worthy of consideration.

If at the conclusion of its investigation MOFCOM finds that the concentration may have the effect of restricting competition, MOFCOM has the same remedial options available to it as those provided in the AML. For example, if the parties have not yet completed the transaction, MOFCOM can prohibit the concentration or place restrictive conditions on it. If the transaction has been completed, MOFCOM may order a divestiture or other remedies that will restore competition to its pre-consolidation state. However, where MOFCOM does not find that a concentration may have the effect of restricting competition, it will simply close its investigation.

These most recent draft guidelines follow MOFCOM’s release of three final guidelines, as well as six draft rules for public comment since 1 January 2009.

The three final guidelines include the following:

  • The Guidelines on the Procedures for Anti-Monopoly Examination of the Concentration of Business Operators
  • The Guiding Opinions on Notifications of Concentrations of Business Operators
  • The Guiding Opinions on Documents and Materials Regarding Filings for Concentration of Business Operators

The six draft rules include the following:

  • Guidelines on Defining the Relevant Market
  • Interim Measures on Notification of Concentrations of Business Operators
  • Interim Measures on Examination of Concentrations of Business Operators
  • Interim Measures on the Investigation and Handling of Concentrations of Business Operators Without Notifications
  • Interim Measures on the Evidence Collection for Suspected-of-Monopoly Concentrations of Business Operators Without Reaching the Notification Thresholds
  • Interim Measures on the Investigation and Handling of Suspected-of-Monopoly Concentrations of Business Operators Without Reaching the Notification Thresholds