Provisions on the Review of Concentrations of Undertakings
Provisions on the Review of Concentrations of Undertakings
Provisions on the Review of Concentrations of Undertakings
Order of the State Administration for Market Regulation No. 67
March 10, 2023
Chapter I General Provisions
Article 1 These Provisions are enacted in accordance with the Anti-Monopoly Law of the People's Republic of China (the “Anti-Monopoly Law”) and the Provisions of the State Council on the Thresholds for the Declaration of Concentrations of Undertakings to standardize the anti-monopoly review of concentrations of undertakings.
Article 2 The State Administration for Market Regulation (the “SAMR”) shall be in charge of the anti-monopoly review of concentrations of undertakings, as well as the investigation and handling of illegal concentrations of undertakings.
The SAMR may, according to work needs, delegate the market regulatory authority of a province, autonomous region, or municipality directly under the Central Government (hereinafter referred to as the “provincial market regulatory authority”) to conduct the review of a concentration of undertakings.
The SAMR shall enhance efforts to guide and supervise a delegated provincial market regulatory authority and improve the review staff training and management systems to ensure the scientificity, standardization, and consistency of the review.
Article 3 Undertakings may, through fair competition and voluntary association, legally implement a concentration to expand their business scale and improve their market competitiveness.
When conducting the anti-monopoly review of a concentration of undertakings, the SAMR shall maintain fairness and impartiality and treat all undertakings equally in accordance with the law.
Article 4 For the purposes of these Provisions, the term "concentration of undertakings" refers to the following circumstances as prescribed in Article 25 of the Anti-Monopoly Law:
(1) a merger of undertakings;
(2) an acquisition of control over another undertaking by an undertaking through acquiring equity or assets; or
(3) an acquisition of control or the ability to exert a decisive influence over another undertaking by an undertaking through contract or other means.
Article 5 To determine whether an undertaking will acquire control or the ability to exert a decisive influence over another undertaking, the following factors shall be considered:
(1) the purpose of the transaction and future plan;
(2) the equity structure of that other undertaking and changes thereof before and after the transaction;
(3) matters subject to voting at a shareholders’ meeting/general meeting of shareholders of that another undertaking and its voting mechanism, as well as its past attendance rate and voting records;
(4) the composition and voting mechanism of the decision-making or management body such as the board of directors of that another undertaking, as well as its past attendance rate and voting records;
(5) information such as the appointment and removal of senior management of that another undertaking;
(6) the relationship between shareholders or directors of that another undertaking, whether there is proxy voting or persons acting in concert, etc.;
(7) whether there is any material business relationship or cooperation agreement between the undertaking and that another undertaking; and
(8) other factors that should be considered.
The acquisition of control or the ability to exert a decisive influence over any other undertaking by two or more undertakings constitutes joint control over that other undertaking.
Article 6 The SAMR shall improve the scheme for the review of concentrations of undertakings based on their classification and grading.
The SAMR may formulate specific measures for the review of concentrations of undertakings in important areas such as those related to the national economy or people’s wellbeing.
The SAMR shall evaluate the effect of implementing the review scheme for concentrations of undertakings, and improve the review based on the evaluation results.
Article 7 The SAMR shall enhance the development of an information technology system for the centralized review of concentrations of undertakings and fully employ means of technology to promote smart regulation and improve review efficiency.
Chapter II Declaration of Concentrations of Undertakings
Article 8 Where a concentration of undertakings meets the declaration threshold set by the State Council (the “declaration threshold”), the undertakings shall declare the concentration to the SMAR before implementing it, and must not implement the concentration without a declaration or without obtaining approval after the declaration.
If a concentration of undertakings does not reach the declaration threshold, but there is evidence proving that such concentration has or may have the effect of excluding or restricting competition, the SAMR may require the undertakings to declare it by written notice to the undertakings. If the concentration has not yet been implemented, the undertakings must not implement the concentration without a declaration or without obtaining approval after the declaration; if the concentration has already been implemented, the undertakings shall declare it within 120 days from the date of receiving the written notice, and take necessary action such as suspending the implementation of the concentration and reducing any adverse of the concentration on competition.
Factors to determine whether a concentration has been implemented include, but are not limited to, whether a market entity registration or registration of changes in rights has been completed, whether senior management have been appointed, whether one undertaking is actually participating in the business decision-making and management of another undertaking, and whether one undertaking has exchanged any sensitive information or substantially merged its business with another undertaking.
Article 9 Turnover shall include the income derived from the sale of products or provision of services by a relevant undertaking in the previous fiscal year, with relevant taxes and surcharges deducted.
For the purposes of the preceding paragraph, previous fiscal year means the fiscal year immediately before the date of execution of the concentration agreement.
Article 10 The turnover of a party to a concentration shall be the combined turnover of that party and all other undertakings directly or indirectly controlling or controlled by it at the time of the declaration, excluding the turnover generated between the aforementioned undertakings.
If an undertaking acquires a part of another undertaking and the latter ceases to have control or the ability to exert a decisive influence over that part, the turnover of the target undertaking shall include only the turnover of that part.
If parties to a concentration, or a party to a concentration and an undertaking that is not a party to that concentration, jointly control any other undertaking, the turnover of any party to that concentration shall include the turnover generated between that other undertaking being jointly controlled and any third-party undertaking, calculated only once and equally allocated between the parties to the concentration who jointly control it.
The calculation of the turnover of an undertaking in the financial sector shall be subject to the relevant regulations on the calculation of the turnover for the declaration of concentrations of undertakings in the financial sector.
Article 11 Multiple concentrations of undertakings implemented within two years between the same undertakings that do not each reach the declaration threshold shall be considered as one single concentration, dated based on the last transaction, and the turnover of the parties to the concentration shall be calculated in a consolidated manner based on the multiple transactions implemented. Where the aforementioned activity is carried by an undertaking through another undertaking controlling or controlled by it, this provision shall apply.
For the purposes of the preceding paragraph, two years mean the period from the date of completion of the first transaction to the date of execution of the agreement for the last transaction.
Article 12 The SAMR shall enhance guidance on the declaration of concentrations of undertakings. Before making an official declaration, undertakings may submit a written request for consultation on matters pertaining to the declaration, listing the specific issues to be consulted.
Article 13 In the case of a concentration of undertakings implemented in the form of a merger, all parties to the merger shall be obligated to make a declaration (hereinafter referred to as the “obligated declaring parties”); in other cases of a concentration of undertakings, the undertaking who will acquire control or the ability to exert a decisive influence over another undertaking shall be the obligated declaring party and the other undertaking(s) shall provide assistance.
If there is more than one obligated declaring party in the same concentration of undertakings, one of them may be designated to make the declaration. If the designated obligated declaring party fails to make the declaration, the other obligated declaring party/parties cannot be exempted from the declaration obligation. In the case of the failure by the obligated declaring party/parties to make the declaration, any other party to the concentration may make the declaration.
A declaring party may make a declaration by themselves or duly appoint a declaration agent to do it on their behalf. Declaring parties shall select an agent in a rigorous and prudent manner.Declaration agents shall be honest and trustworthy and operate in a compliant manner.
Article 14 The declaration documents and materials shall include the following:
(1) A declaration form, stating the name, domicile (place of business), and business scope of each party to the concentration, and the scheduled date to implement the concentration, attached with the identity document or registration document of the declaring party. An overseas declaring party must also provide notarized documents issued by their local notary authority and relevant certification documents.
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Order of the State Administration for Market Regulation No. 67
March 10, 2023
Chapter I General Provisions
Article 1 These Provisions are enacted in accordance with the Anti-Monopoly Law of the People's Republic of China (the “Anti-Monopoly Law”) and the Provisions of the State Council on the Thresholds for the Declaration of Concentrations of Undertakings to standardize the anti-monopoly review of concentrations of undertakings.
Article 2 The State Administration for Market Regulation (the “SAMR”) shall be in charge of the anti-monopoly review of concentrations of undertakings, as well as the investigation and handling of illegal concentrations of undertakings.
The SAMR may, according to work needs, delegate the market regulatory authority of a province, autonomous region, or municipality directly under the Central Government (hereinafter referred to as the “provincial market regulatory authority”) to conduct the review of a concentration of undertakings.
The SAMR shall enhance efforts to guide and supervise a delegated provincial market regulatory authority and improve the review staff training and management systems to ensure the scientificity, standardization, and consistency of the review.
Article 3 Undertakings may, through fair competition and voluntary association, legally implement a concentration to expand their business scale and improve their market competitiveness.
When conducting the anti-monopoly review of a concentration of undertakings, the SAMR shall maintain fairness and impartiality and treat all undertakings equally in accordance with the law.
Article 4 For the purposes of these Provisions, the term "concentration of undertakings" refers to the following circumstances as prescribed in Article 25 of the Anti-Monopoly Law:
(1) a merger of undertakings;
(2) an acquisition of control over another undertaking by an undertaking through acquiring equity or assets; or
(3) an acquisition of control or the ability to exert a decisive influence over another undertaking by an undertaking through contract or other means.
Article 5 To determine whether an undertaking will acquire control or the ability to exert a decisive influence over another undertaking, the following factors shall be considered:
(1) the purpose of the transaction and future plan;
(2) the equity structure of that other undertaking and changes thereof before and after the transaction;
(3) matters subject to voting at a shareholders’ meeting/general meeting of shareholders of that another undertaking and its voting mechanism, as well as its past attendance rate and voting records;
(4) the composition and voting mechanism of the decision-making or management body such as the board of directors of that another undertaking, as well as its past attendance rate and voting records;
(5) information such as the appointment and removal of senior management of that another undertaking;
(6) the relationship between shareholders or directors of that another undertaking, whether there is proxy voting or persons acting in concert, etc.;
(7) whether there is any material business relationship or cooperation agreement between the undertaking and that another undertaking; and
(8) other factors that should be considered.
The acquisition of control or the ability to exert a decisive influence over any other undertaking by two or more undertakings constitutes joint control over that other undertaking.
Article 6 The SAMR shall improve the scheme for the review of concentrations of undertakings based on their classification and grading.
The SAMR may formulate specific measures for the review of concentrations of undertakings in important areas such as those related to the national economy or people’s wellbeing.
The SAMR shall evaluate the effect of implementing the review scheme for concentrations of undertakings, and improve the review based on the evaluation results.
Article 7 The SAMR shall enhance the development of an information technology system for the centralized review of concentrations of undertakings and fully employ means of technology to promote smart regulation and improve review efficiency.
Chapter II Declaration of Concentrations of Undertakings
Article 8 Where a concentration of undertakings meets the declaration threshold set by the State Council (the “declaration threshold”), the undertakings shall declare the concentration to the SMAR before implementing it, and must not implement the concentration without a declaration or without obtaining approval after the declaration.
If a concentration of undertakings does not reach the declaration threshold, but there is evidence proving that such concentration has or may have the effect of excluding or restricting competition, the SAMR may require the undertakings to declare it by written notice to the undertakings. If the concentration has not yet been implemented, the undertakings must not implement the concentration without a declaration or without obtaining approval after the declaration; if the concentration has already been implemented, the undertakings shall declare it within 120 days from the date of receiving the written notice, and take necessary action such as suspending the implementation of the concentration and reducing any adverse of the concentration on competition.
Factors to determine whether a concentration has been implemented include, but are not limited to, whether a market entity registration or registration of changes in rights has been completed, whether senior management have been appointed, whether one undertaking is actually participating in the business decision-making and management of another undertaking, and whether one undertaking has exchanged any sensitive information or substantially merged its business with another undertaking.
Article 9 Turnover shall include the income derived from the sale of products or provision of services by a relevant undertaking in the previous fiscal year, with relevant taxes and surcharges deducted.
For the purposes of the preceding paragraph, previous fiscal year means the fiscal year immediately before the date of execution of the concentration agreement.
Article 10 The turnover of a party to a concentration shall be the combined turnover of that party and all other undertakings directly or indirectly controlling or controlled by it at the time of the declaration, excluding the turnover generated between the aforementioned undertakings.
If an undertaking acquires a part of another undertaking and the latter ceases to have control or the ability to exert a decisive influence over that part, the turnover of the target undertaking shall include only the turnover of that part.
If parties to a concentration, or a party to a concentration and an undertaking that is not a party to that concentration, jointly control any other undertaking, the turnover of any party to that concentration shall include the turnover generated between that other undertaking being jointly controlled and any third-party undertaking, calculated only once and equally allocated between the parties to the concentration who jointly control it.
The calculation of the turnover of an undertaking in the financial sector shall be subject to the relevant regulations on the calculation of the turnover for the declaration of concentrations of undertakings in the financial sector.
Article 11 Multiple concentrations of undertakings implemented within two years between the same undertakings that do not each reach the declaration threshold shall be considered as one single concentration, dated based on the last transaction, and the turnover of the parties to the concentration shall be calculated in a consolidated manner based on the multiple transactions implemented. Where the aforementioned activity is carried by an undertaking through another undertaking controlling or controlled by it, this provision shall apply.
For the purposes of the preceding paragraph, two years mean the period from the date of completion of the first transaction to the date of execution of the agreement for the last transaction.
Article 12 The SAMR shall enhance guidance on the declaration of concentrations of undertakings. Before making an official declaration, undertakings may submit a written request for consultation on matters pertaining to the declaration, listing the specific issues to be consulted.
Article 13 In the case of a concentration of undertakings implemented in the form of a merger, all parties to the merger shall be obligated to make a declaration (hereinafter referred to as the “obligated declaring parties”); in other cases of a concentration of undertakings, the undertaking who will acquire control or the ability to exert a decisive influence over another undertaking shall be the obligated declaring party and the other undertaking(s) shall provide assistance.
If there is more than one obligated declaring party in the same concentration of undertakings, one of them may be designated to make the declaration. If the designated obligated declaring party fails to make the declaration, the other obligated declaring party/parties cannot be exempted from the declaration obligation. In the case of the failure by the obligated declaring party/parties to make the declaration, any other party to the concentration may make the declaration.
A declaring party may make a declaration by themselves or duly appoint a declaration agent to do it on their behalf. Declaring parties shall select an agent in a rigorous and prudent manner.Declaration agents shall be honest and trustworthy and operate in a compliant manner.
Article 14 The declaration documents and materials shall include the following:
(1) A declaration form, stating the name, domicile (place of business), and business scope of each party to the concentration, and the scheduled date to implement the concentration, attached with the identity document or registration document of the declaring party. An overseas declaring party must also provide notarized documents issued by their local notary authority and relevant certification documents.
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