On September 8 2017 the Ministry of Commerce (MOFCOM) released an exposure draft of the amendments to its Provisions on the Antitrust Review of Concentrations for public comment.(1)

The provisions were first published in November 2009 and the amendments aim to improve their functionality, comprehensiveness and quality by incorporating the experience that MOFCOM has garnered since then and its existing best practices.

Rather than creating new rules, the exposure draft predominantly reflects MOFCOM's existing best practices. As such, it integrates some of the existing rules prescribed by MOFCOM's other guidance, such as the Guidelines on Concentration Notification 2014. However, it also provides several new provisions in order to address additional key issues, such as:

  • mutually conditional transactions;
  • concentration parties; and
  • investigations into transactions that fail to reach the statutory threshold.

This update analyses the key amendments proposed in order to inform companies of the implications of the potential changes and the problems that may arise.

Mutually conditional transactions

The exposure draft introduces the term 'mutually conditional transactions' and states that:

"where the same undertaking(s) acquire control or decisive influence over another one or multiple undertaking(s) through multiple simultaneous or successive transactions, and the aforesaid transactions are conditional each other from legal or factual perspective, such transactions should be treated as one concentration."

However, this provision is intended to regulate multi-step transactions. In practice, companies sometimes split one planned transaction into multiple simultaneous or successive transactions in order to implement part of the planned transaction at an early stage, without having to wait for the lengthy antitrust review process to be completed. However, according to the above provision, MOFCOM will treat such mutually conditional transactions as one concentration, rather than separate concentrations. This means that MOFCOM will deem a concentration to be implemented as early as when the first transaction in the series is closed.

MOFCOM's previous practice has reflected this approach. For instance, in Canon's acquisition of Toshiba Medical, Canon and Toshiba Medical designed a two-stage transaction. In the first stage, Canon acquired only 20% of the voting rights over Toshiba Medical so that control was not acquired through the first-stage deal. However, Canon agreed with Toshiba Medical that it would acquire the remaining voting rights after obtaining antitrust approval from the relevant jurisdictions, including China, in the second stage. MOFCOM initiated an investigation into the parties and held that:

  • the two transactions should be deemed to be one concentration; and
  • the parties had implemented the concentration when the first transaction was closed, even though control was not acquired at that time.

In addition to the above practice, Article 15 of the exposure draft stipulates that:

"multiple transactions between the same undertakings within 2 years and that individually do not reach the statutory threshold, should be treated as one concentration, and the time for concentration should be calculated from when the last transaction happens."

Therefore, a concentration will be deemed to have been formed and the relevant notification obligation will be triggered when the last transaction which reaches the statutory threshold occurs.

However, the exposure draft fails to differentiate clearly between transactions which fall under the scope of mutually conditional transactions and transactions which fall under Article 15 of the exposure draft. If this is not clarified in the final provisions, companies should rely only on MOFCOM's practice going forward.

Concentration parties

As opposed to the Provisions on the Antitrust Review of Concentrations and the Guidelines on Concentration Notification, the exposure draft includes a provision that clarifies which parties constitute concentration parties in various scenarios. However, this provision is in line with MOFCOM's existing practice.

Specifically, Article 9 of the exposure draft provides that:

"(1) when the concentration takes the form of a merger, all merging parties are the concentration parties; (2) where undertaking(s) acquire sole control over another undertaking (s), or acquire control from joint control to sole control, the undertaking acquiring sole control and the target are the concentration parties; (3) where undertaking(s) acquire sole control over part of another undertaking(s), the undertaking acquiring sole control and the part of another undertaking(s) are the concentration parties; (4) where the concentration takes the form of establishment of a new joint venture [(JV)], all parents of the JV are the concentration parties, while the newly formed JV is not the concentration party; (5) where undertaking(s) acquire joint control over another existing undertaking, all undertakings having joint control over the JV ex post the transaction together with the JV are concentration parties. However, where the existing JV was solely controlled by a specific undertaking, which has joint control over the JV together with another undertaking (s) ex post the transaction, then all undertakings having joint control over the JV ex post the transaction are the concentration parties, while the existing JV is not the concentration party."

Notably, which parties constitute the concentration parties to a transaction will determine:

  • the turnover calculation and whether a transaction reaches the statutory threshold; and
  • whether the notifying party has an information collection obligation.

More importantly, market definition will also be affected, as the relevant market will be determined based on an examination of horizontal overlap, vertical relationships and the neighbouring relationship between the concentration parties, in accordance with the MOFCOM filing rules. Therefore, including Article 9 will increase the provisions' comprehensiveness.

Preceding financial year for turnover calculation

The Guidelines on Concentration Notification require turnover for the preceding financial year to be calculated. However, they do not clarify how to determine the preceding year and which rules should be used to do so.

Article 10 of the exposure draft provides that the preceding financial year should be determined:

  • based on when a concentration agreement is signed; and
  • using the rules that apply to the place where the undertaking is registered.

Notably, this provision makes calculating turnover less ambiguous. Nonetheless, the guidelines remain vague with respect to special situations in which more than one transaction agreement has been signed and the signing occurred in different years.

Reporting obligations for significant and essential changes

The exposure draft provides a new reporting obligation in the case of significant changes to a concentration and a refiling obligation in the case of essential changes. According to Article 28 of the exposure draft, where significant changes to a concentration occur after MOFCOM has been notified, the notifying party must submit a written report to MOFCOM in due course. If essential changes occur, the notifying party must withdraw and refile the notification. Despite this provision, the exposure draft does not elaborate or provide detailed criteria on what constitutes significant and essential changes.

As such, this provision is concerning, as it may give MOFCOM significant discretion to request notifying parties to withdraw and refile a notification.

Investigations into concentrations under statutory threshold

The exposure draft provides for a so-called 'save clause', which gives MOFCOM the power to initiate an investigation into a concentration that does not reach the statutory threshold, but which may, in MOFCOM's view, have anti-competitive effects.

Including such a provision is plausible, given that it is possible that competition may be restricted or eliminated by a concentration that does not reach the statutory threshold in today's evolving economic society. This is especially true with regard to the digital market, where big data plays a key role and the platform economy is unique.

However, it has since been proposed that the provisions on the detailed procedures for such investigations by MOFCOM be supplemented with additional provisions, particularly with regard to the procedural rights of reporting parties and investigated parties' rights of defence before MOFCOM officially starts an investigation.


In general, MOFCOM's move to amend the Provisions on the Antitrust Review of Concentrations by summarising the experience that it has accumulated through nine years of enforcement is praiseworthy. However, although the amendments will largely enhance the transparency and predictability of MOFCOM's enforcement, several issues will need to be resolved through the public consultation process.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

For further information on this topic please contact Hao Zhan or Ying Song at AnJie Law Firm by telephone (+86 10 8567 5988) or email ( or The AnJie Law Firm website can be accessed at


(1) Further information is available here.