The Interim Provisions on the Standards Applicable to Simple Cases involving Concentration of Business Operators (the “Provisions”) has been officially promulgated and shall come into effect as of February 11, 2014.

According to Article 2 of the Provisions, a transaction involving concentration of business operators shall be deemed as a simple case if it falls under any of the following circumstances:

  1. Where in the same relevant market, the total market share of all business operators participating in the concentration is less than 15%;
  2. Where an upstream or downstream relationship exists among the business operators participating in the concentration, and the market share of such business operators is less than 25% in both the upstream and the downstream markets;
  3. Where the business operators participating in the concentration are not in the same relevant market and do not have upstream and downstream relationship, and the market share of such business operators is less than 25% in each market relating to the transaction;
  4. Where a business operator participating in the concentration establishes an overseas joint venture enterprise, and the joint venture enterprise does not engage in any economic activities within the territory of China;
  5. Where a business operator participating in the concentration acquires the equity or assets of an overseas enterprise, and the overseas enterprise does not engage in any economic activities within the territory of China; or
  6. Where a joint venture enterprise that is jointly controlled by two or more business operators will be controlled by one or more of such business operators after concentration.

According to Article 3, a transaction involving concentration of business operators that meets the requirements set out in Article 2 of the Provisions shall not be deemed as a simple case if it falls under any of the following circumstances:

  1. Where a joint venture enterprise that is jointly controlled by two or more business operators will be controlled by one of such business operators after concentration, and this business operator and the joint venture enterprise are competitors in the same relevant market;
  2. Where it is difficult to define the relevant market involved in the concentration of business operators;
  3. Where the concentration of business operators may adversely affect market entry or technological improvement;
  4. Where the concentration of business operators may adversely affect consumers and other business operators;
  5. Where the concentration of business operators may adversely affect national economic development; or
  6. Where the MOFCOM is of the view that the concentration of business operators may otherwise adversely affect competition in the market.

Comments:

Procedures for concentration filing review will be simplified, and such review should be more transparent. The Provisions have established the quantitative standards for relatively simple transactions and those may exclude or restrain the competitive effect of relevant market, so that in the future the acceptance procedures may be simplified and the concentration filling review may be accelerated, which is positive for both the entities that are required to file for concentration review and the intermediates. Although the Provisions have come into effect, the detailed procedural regulations applicable to simple cases have not been promulgated. While continuously focusing on the promulgation of such regulations, we will also communicate with the Anti-monopoly Bureau in advance for detailed procedural information regarding the cases that meet the conditions provided in the Provisions.

In addition, according to Article 4 (2) of the Provisions, where a third party claims that the concentration of business operators will or may exclude or restrain competition, and provides relevant evidences, the MOFCOM may cancel its recognition of a transaction involving concentration of business operators as a simple case. In the past, it was common for the MOFCOM to inquire the trade union and competitors in the relevant market. However, it is unknown that whether the procedures regarding concentration filing cases will be more transparent and whether a third party who has not been inquired by the MOFCOM (usually an interested party) could publicly acquire the filing information and claim against such filing. As the counsel in a case regarding concentration filing of business operators, our law firm has submitted appeals against a thirty party’s claim and obtained timely response. Considering the requirements of both our clients and other parties, the concentration filing review procedures should be much more transparent, so that such review will be more justifiable, and the definition criterion of relevant market will be gradually improved.