On 6 February 2018 the Ministry of Commerce of the People’s Republic of China (MOFCOM) published two penalty decisions for failure to notify, which followed another such decision on 31 January. To date, MOFCOM has published a total of 20 such penalty decisions, eight of which were made within the last 12 months, reflecting MOFCOM’s increasingly strict approach to parties that fail to notify their transactions.
In the first decision, MOFCOM found that Grand Baoxin Auto Group Limited and Beijing Yan Bao Auto Service Co., Ltd. did not notify their joint acquisition of a Chinese auto components wholesaler and proceeded to register the change of shareholding in the target and revise the target’s board composition. The second decision involved the failure of Yihai Kerry Investments Co., Ltd. and Korean company CJ
CheilJedang Corporation to notify the formation of a joint venture. In the third decision, Shandong Sun Holding Group Co., Ltd. failed to notify its acquisition of sole control of three joint ventures in which it previously held 45 per cent stakes respectively.
The level of fines is still, by global standards, very low. In these three recent decisions, they ranged from RMB150,000 (approximately £17,000) to RMB300,000 (approximately £34,000). MOFCOM imposed a higher fine on each of Baoxin, Yan Bao and Shandong Sun because it was evident they were aware of their obligation to notify their transaction but nevertheless intentionally chose to implement without doing so: Baoxin had previously submitted merger filings to MOFCOM several times and Shandong Sun did submit a notification but this was rejected by MOFCOM for failing to comply with legal requirements. Shandong Sun subsequently re-filed but only after completion had already taken place.
This is clearly an area of active enforcement by MOFCOM. Last April, the MOFCOM Antimonopoly Bureau’s deputy director-general reportedly forewarned the possibility of increasing the level of fines and introducing new sanctions for failure to notify. However, any changes to the Anti-Monopoly Law will require extensive consultation and ultimately approval by the Standing Committee of the National People’s Congress.