Since 2 December 2014 China’s Ministry of Commerce (MOFCOM) has published 14 formal decisions against companies for failing to submit a merger notification in breach of the Anti-Monopoly Law (AML), with seven (50 per cent) of these being in the past twelve months. Most recently, MOFCOM announced on 11 April 2017 that it had fined a wholly owned subsidiary of Cummins, Inc., the New York-listed manufacturer of power generation equipment, and Xiangyang Kanghao Mechanical & Electrical Engineering for failing to notify their PRC-based joint venture deal, imposing a fine of RMB 150,000 on each of the parties. On 4 January 2017 MOFCOM published its decision to fine Canon Inc. for failure to notify its acquisition of Toshiba Medical Systems Corporation. This was the first foreign-to-foreign transaction to attract a MOFCOM penalty for failure to notify.
The current statutory maximum fine for failure to notify is RMB 500,000, although the largest fine to date, announced on 3 May 2016, is still only RMB 400,000, which was imposed on Bombardier Transport Group Sweden Limited for failure to notify the creation of a joint venture with Xinyu Group Co., Ltd.
The deputy director general of MOFCOM, Mr. Han Chunlin, is reported to have stated publicly on 21 April 2017 that the agency considers the current statutory maximum fine to be too low. MOFCOM are working to propose amendments to the AML to increase fines for failure to notify and other possible punitive measures.
Currently under the AML, MOFCOM may also order the undertakings concerned to stop implementing the transaction, divest all or some of the shares or assets acquired, unwind the transaction or adopt other necessary measures to restore the market conditions prior to the concentration. Based on the 14 formal decisions to date, MOFCOM has not yet sought to impose such orders, possibly due to the fact that none of these cases have raised any competition concerns.