On September 11, the General Administration of Market Supervision issued a circular on the Anti-monopoly Compliance Guidelines for Concentration of Operators.
2 Necessity
of Compliance The examination of concentration of undertakings is an anti-monopoly supervision system in advance, aiming at preventing undertakings from excluding and restricting competition in relevant markets through concentration of undertakings.
Strengthening the anti-monopoly compliance management of concentration of business operators can help operators identify, assess and control the anti-monopoly legal risks of concentration of business operators, avoid concentration of business operators that have or may have the effect of excluding or restricting competition, and prevent legal liability for illegal implementation of concentration. Article
3 Scope
of Application These Guidelines shall apply to the anti-monopoly compliance activities of business operators when they carry out concentration of business operators within and outside the territory of China. Chapter
II Main Provisions
on Examination of Concentration of Business Operators Article 4 Concentration
of business operators refers to the following circumstances: merger of business operators, acquisition of control over other business operators by means of acquisition of equity or assets by business operators, The operator acquires control over other operators or can exert decisive influence on other operators by means of contract or other means.
For a newly established joint venture, if at least two business operators jointly control the joint venture, it constitutes a concentration of business operators; if only one business operator solely controls the joint venture and the other business operators have no control, it does not constitute a concentration of business operators. Article
5 Where the concentration
of undertakings meets the declaration standards, the undertakings shall declare to the State Administration of Market Supervision and Administration (hereinafter referred to as the State Administration of Market Supervision and Administration) in advance, and shall not implement the concentration without declaration or approval after declaration. If the declaration criteria are not met, but there is evidence to prove that the concentration of business operators has or may have the effect of eliminating or restricting competition, the General Administration of Market Supervision may require the business operators to declare and notify the business operators in writing, and the business operators shall declare according to law. A concentration of
business operators may not be reported to the State Administration of Market Supervision under any of the following circumstances:
(1) One of the business operators involved in the concentration owns more than 50% of the voting shares or assets of each of the other business operators;
(2) More than 50% of the voting shares or assets of each operator participating in the concentration are owned by the same operator not participating in the concentration. Article
6 In the case of a concentration of business operators implemented by way of merger by the reporting obligors
, all parties to the merger shall be the reporting obligors. In the case of a concentration of business operators under other circumstances, the business operator that has obtained the control right or is able to exert decisive influence shall be the reporting obligor, and other business operators shall cooperate with it. Where there are more than one declaration obligors for the
same concentration of business operators, one declaration obligor may be entrusted to declare. If the entrusted declaration obligor fails to declare, other declaration obligors shall not be exempted from the obligation of declaration. Where the declaration obligor fails to declare, other business operators participating in the concentration may file a declaration. If the
declaration obligor fails to fulfill the declaration obligation in accordance with the law, resulting in the illegal implementation of concentration, the declaration obligor shall bear the corresponding legal liability. Article
7 After
receiving the declaration of concentration of undertakings, the General Administration of Market Supervision shall assess the possible competitive impact of concentration of undertakings according to law. After examination, the General Administration of Market Supervision shall unconditionally approve the concentration of business operators that do not have the effect of excluding or restricting competition according to law, and approve or prohibit the concentration of business operators that have or may have the effect of excluding or restricting competition with restrictive conditions according to law. Article
8 The General Administration of Market Supervision shall conduct an investigation in accordance with the law if the illegal implementation of the investigation
of the concentration of operators meets the declaration criteria, and the operators fail to declare the implementation of the concentration, implement the concentration without approval after the declaration, or violate the examination decision. If the concentration of
undertakings fails to meet the declaration criteria, but there is evidence to prove that the concentration of undertakings has or may have the effect of excluding or restricting competition, and the undertakings fail to declare in accordance with the relevant provisions, the General Administration of Market Supervision shall conduct an investigation in accordance with the law. The main factors to judge
whether to implement centralization include whether to complete the registration of business entities or the registration of changes in rights, appoint senior managers, actually participate in business decision-making and management, exchange sensitive information with other operators, and substantively integrate business. Article
9 Legal Risks and Liabilities
An operator who violates the provisions of the Anti-monopoly Law on the concentration of business operators may face the following legal risks or bear the following legal liabilities:
(1) The illegal implementation of concentration has or may have the effect of eliminating or restricting competition. The General Administration of Market Supervision shall, in accordance with the law, order the suspension of the implementation of the concentration, the disposal of shares or assets within a time limit, the transfer of business within a time limit and the adoption of other necessary measures to restore the state before the concentration, impose a fine of less than 10% of the sales of the previous year; if it does not have the effect of eliminating or restricting competition, impose a fine of less than 5 million yuan;
(2) Where an operator refuses to provide relevant materials or information, or provides false materials or information, or conceals, destroys or transfers evidence, or has other acts of refusing or obstructing the investigation, the General Administration of Market Supervision shall order him to make corrections in accordance with the law and impose a penalty of more than 10000 yuan on him. A fine of less than 1% of the sales amount of the previous year shall be imposed on a unit, and a fine of less than 5 million yuan shall be imposed on an individual if there is no sales amount or it is difficult to calculate the sales amount of the previous year;
(3) If the circumstances of the illegal act are particularly serious, the impact is particularly bad and the consequences are particularly serious, the General Administration of Market Supervision may determine the specific amount of the fine at least twice and less than five times the amount of the fine specified in Items (1) and (2);
(4) Those who are subject to administrative penalties for illegal acts shall be recorded in the credit record in accordance with the relevant provisions of the State and shall be publicized to the public;
(5) Those who carry out monopolistic acts and cause losses to others shall bear civil liabilities according to law, and those who damage the public interests may face civil public interest litigation;
(Six) if an illegal act constitutes a crime, criminal responsibility shall be investigated according to law. Chapter
III Key Compliance Risks
Article 10 Concentration
of Operators of Key Concern It is suggested that operators focus on the following concentrations of operators. Fully assess the anti-monopoly legal risks:
(1) Merger with an operator with a turnover of more than 400 million yuan in China in the previous fiscal year;
(2) Acquisition of equity or assets of an operator with a turnover of more than 400 million yuan in China in the previous fiscal year;
(3) Jointly purchasing the equity or assets of another operator with an operator whose turnover in China in the previous fiscal year exceeds 400 million yuan;
(4) Obtaining the control right of an operator whose turnover in China in the previous fiscal year exceeds 400 million yuan or being able to exert decisive influence on it by means of contract or other means;
(5) The establishment of a new joint venture with a business operator with a turnover of more than 400 million yuan in China in the previous fiscal year;
(6) The concentration of business operators with a huge amount of transaction or which may have a significant impact on the market and attract wide attention in the industry. The standard of turnover of 400 million yuan mentioned in
the preceding paragraph and the first paragraph of Article 20 of these Guidelines is established according to the declaration standard at the time of promulgation of these Guidelines. If the declaration standard is revised subsequently, the standard of 400 million yuan shall be adjusted accordingly. Article
11 When judging whether a transaction should be declared for concentration of business operators, the focus of attention
in judging whether a transaction should be declared for concentration of business operators shall first judge whether the transaction constitutes a concentration of business operators, and then judge whether the concentration of business operators meets the declaration criteria. It is suggested to refer to the provisions on the judgment of control rights and the calculation of turnover in the Provisions on the Examination of Concentration of Operators.When judging whether to declare or not, we need to focus on the following risks:
(1) Inaccurate determination of control rights, misjudgment of transactions that do not constitute concentration of business operators, resulting in failure to declare illegal implementation of concentration in accordance with the law.
[Case] The judgment of whether a transaction constitutes a concentration of undertakings depends on whether the undertakings acquire control over other undertakings or can exert decisive influence on other undertakings through the transaction. The acquisition of minority equity may also result in the acquisition of control rights, thus constituting the concentration of business operators. If enterprise A acquires 20% of the equity of enterprise B, although enterprise A is not the largest shareholder, enterprise A can veto the annual business plan, financial budget, appointment and removal of senior managers and other business management matters of enterprise B alone, then enterprise A is likely to obtain the (common) control of enterprise B, which constitutes the concentration of operators. If the concentration of business operators meets the declaration criteria and enterprise A fails to declare, it constitutes the illegal implementation of concentration without declaration according to law.
(2) The calculation of turnover is inaccurate, and the misjudgment of the concentration of operators fails to meet the declaration standards, resulting in the failure to declare the illegal implementation of concentration according to law.
[Case] The turnover of the operator participating in the concentration includes the total turnover of the operator and all operators directly or indirectly controlling the operator at the time of declaration, but does not include the turnover between the above-mentioned operators. As the acquirer, the turnover of enterprise A in China in the previous fiscal year is only 200 million yuan, but the turnover of group B in China in the previous fiscal year of enterprise A meets the declaration standard. When judging whether it meets the declaration standard, it should be calculated according to the turnover of group B. If enterprise A fails to declare according to the calculation of turnover of 200 million yuan, it may constitute the illegal implementation of concentration without declaration according to law. Article
12 When determining when to declare a concentration of business operators that
meets the declaration criteria, the business operators shall declare to the General Administration of Market Supervision after signing the concentration agreement and before implementing the concentration. Failure to declare in time may constitute failure to declare the illegal implementation of the concentration in accordance with the law.
[Case] For the same economic purpose, a step-by-step acquisition transaction between undertakings may constitute a concentration of undertakings if the transactions are interrelated and mutually conditional, which needs to be declared before the implementation of the first step. A company and B company signed a transaction agreement, according to the agreement, a company will be divided into three steps to acquire all the shares of the target company held by B company, the first acquisition of 16% equity, the second acquisition of 34% equity, the third acquisition of the R emaining equity, the final completion of all 100% equity acquisition, the multi-step transaction is likely to constitute a concentration of operators. If it meets the declaration criteria, it needs to declare before the implementation of the first step, otherwise it constitutes the illegal implementation of concentration without declaration according to law. Article
13 After declaring the concentration of
operators, the operators shall not implement the concentration before obtaining the approval of the General Administration of Market Supervision, otherwise they will constitute a "rush" and bear the legal responsibility for the illegal implementation of the concentration.
[Case] Enterprise A and Enterprise B planned to establish a new joint venture and declared the concentration of business operators in accordance with the law, but completed the registration procedures of the joint venture without the decision of the State Administration of Market Supervision on the examination of the concentration of business operators, which constituted the illegal implementation of the concentration. Enterprise A and Enterprise B shall bear the legal liability for the illegal implementation of concentration. Article
14 Requirements
for declaration agents The declarer may declare by himself or entrust others to declare on his behalf according to law. The declarer shall be strict and prudent in choosing an agent, strengthen the management of the agent's behavior, and assume corresponding responsibilities according to law. The declaring agent shall operate in good faith and in compliance with regulations, and shall not intentionally conceal relevant information, provide false materials or take other actions to obstruct the examination and investigation of cases of concentration of business operators. Article
15 The
applicant shall be responsible for the authenticity, accuracy and completeness of the declaration documents and materials. The declaration agent is responsible for assisting the declarer in examining the authenticity, accuracy and completeness of the declaration documents and materials. Article
16 If the General Administration of Market Supervision considers that the concentration of undertakings declared in
accordance with the law has or may have the effect of eliminating or restricting competition, it shall approve or prohibit the concentration of undertakings with additional restrictive conditions. The
assessment of the competitive impact of the concentration of undertakings may examine the ability, motivation and possibility of the relevant undertakings to exclude or restrict competition individually or jointly. If the concentration involves upstream and downstream markets or related markets, the ability, motivation and possibility of relevant operators to exclude or restrict competition in other markets by using their control power in one or more markets may be examined.
[Case] Operators may refer to the announcement of anti-monopoly review decision on conditional approval/prohibition of concentration cases published on the website of the General Administration of Market Supervision. Article
17 Where the concentration of business operators is approved by additional restrictive conditions in violation of the examination decision
, the business operators shall strictly abide by the restrictive conditions. Where the concentration of business operators is prohibited, the business operators shall not implement the concentration.
[Case] Enterprise A's acquisition of enterprise B's concentration of equity operators is approved with additional restrictive conditions. One of the conditions is to require enterprise A not to reduce the discount given to distributors for related products, and to entrust supervisory trustees to supervise the implementation. The supervisory trustee found that the discount given by enterprise A to the distributor violated the relevant requirements of the conditional review decision, and the General Administration of Market Supervision imposed administrative penalties on enterprise A according to law after investigation and verification. Article
18 Obstructing the examination and investigation
of concentration of business operators and cooperating with the examination and investigation of concentration of business operators are the legal obligations that business operators should abide by. Operators who refuse to provide relevant material information, or provide false material information, or conceal, destroy or transfer evidence, or have other acts of refusing or obstructing investigation, will bear more serious legal consequences. Article
19 There are differences in the standards and procedures for the declaration of concentration of business operators in
different jurisdictions. When an operator carries out the business of concentration of operators, it is suggested that attention should be paid to the legal provisions of concentration of operators or anti-monopoly supervision of merger and acquisition control in overseas jurisdictions that may be involved.
With regard to the anti-monopoly compliance of the concentration of overseas business operators, the business operators may refer to the contents of the anti-monopoly compliance of the concentration of business operators in the Guidelines for the Anti-monopoly Compliance of Enterprises Abroad issued by the General Administration of Market Supervision. Chapter
IV Compliance Risk Management
Article 20 The compliance management system
encourages the operators who have the demand for concentration of operators to establish the anti-monopoly compliance management system for concentration of operators, especially the operators whose annual turnover exceeds 400 million yuan in China; It is suggested that operators with annual turnover of more than 10 billion yuan in China should establish an anti-monopoly compliance management system for concentration of operators.
Encourage qualified group enterprises to establish anti-monopoly compliance management system for concentration of business operators at all levels of parent companies and subsidiaries, or take effective measures to cover anti-monopoly compliance management for concentration of business operators at all levels of group members. Article
21 a
business operator may establish or designate a relevant department to undertake the anti-monopoly compliance management responsibilities of concentration of business operators (hereinafter referred to as the compliance management department). It shall mainly perform the following duties:
(1) to formulate, evaluate and update the anti-monopoly compliance management system and measures for the concentration of undertakings, and supervise the implementation of the system and measures;
(2) to identify and evaluate the anti-monopoly compliance risks of the concentration of undertakings, and stop and correct the non-compliant concentration of undertakings in a timely manner;
(3) To report to the decision-making level or the senior management on the anti-monopoly compliance of the concentration of undertakings, prompt the major compliance risks and take corresponding measures;
(4) To provide suggestions, consultation and guidance on the anti-monopoly compliance of the concentration of undertakings to the relevant internal departments and personnel;
(5) organize and carry out anti-monopoly compliance training on concentration of business operators to enhance the compliance awareness and ability of relevant personnel;
(6) cooperate with relevant responsible departments such as personnel to implement relevant compliance reward and punishment measures;
(7) study and follow up the latest laws and regulations on concentration of business operators at home and abroad as well as law enforcement practices;
(8) To guide the construction of the anti-monopoly compliance management system for the concentration of undertakings of the affiliated enterprises within the group;
(9) To coordinate and organize the relevant internal departments and personnel to cooperate with the State Administration of Market Supervision in the examination and investigation of the concentration of undertakings;
(10) Other compliance-related work.
The compliance department may entrust a professional institution to assist in the relevant work.Article
22 The person in charge of
anti-monopoly compliance of concentration of undertakings shall encourage the undertakings that have reached a certain scale and have relatively frequent concentration acts to set up a person in charge of anti-monopoly compliance of concentration of undertakings (hereinafter referred to as the person in charge of compliance), who shall be responsible for the anti-monopoly compliance matters of concentration of undertakings and perform the relevant compliance management duties. The chief compliance officer shall possess the following compliance management capabilities:
(1) to master the relevant anti-monopoly laws and regulations on concentration of undertakings;
(2) to have the professional knowledge to identify and provention and control the anti-monopoly legal risks of concentration of undertakings;
(3) to be familiar with the business process of the whole chain of internal investment and merger of undertakings;
(4) Understand the competition situation of the market where the main business of the operator is located;
(5) Other compliance management capabilities that should be possessed.
A business operator may designate the senior management personnel in charge of compliance and legal affairs as the person in charge of compliance, grant them corresponding duties and powers, provide necessary working conditions, post treatment and education and training, and ensure that they perform their duties of anti-monopoly compliance management in the concentration of business operators. Article
23 The key positions
of the investment, legal and financial departments closely related to the investment and merger business within the operators are the key positions of the anti-monopoly compliance management of the concentration of operators. It is suggested that the personnel in key positions should:
(1) be aware of the relevant laws and regulations on concentration of undertakings;
(2) comply with the requirements of anti-monopoly compliance management on concentration of undertakings;
(3) participate in the anti-monopoly compliance training on concentration of undertakings;
(4) providing relevant materials required for compliance; and
(5) other work related to compliance. Article
24 Risk identification and assessment
suggest that operators embed anti-monopoly compliance audit procedures for concentration of operators in the decision-making and implementation process of investment mergers and acquisitions, identify and assess anti-monopoly legal risks for concentration of operators, prepare for declaration in advance and take corresponding risk prevention measures. Operators are encouraged to identify and assess the possible anti-monopoly legal risks of concentration of operators at an earlier stage, such as formulating investment and merger plans and conducting investment and merger negotiations. Article
25 Risk response
encourages business operators to establish an anti-monopoly compliance risk response mechanism for concentration of business operators, and to formulate corresponding measures for different legal risks, mainly including the following aspects:
To fulfill the obligation of declaration in a timely manner according to law, reserve necessary time for the examination of declaration, and ensure that no concentration is implemented before declaration and approval;
(2) To timely adjust the transaction plan, transaction structure or take other necessary measures to reduce the adverse impact of the transaction on market competition if it is found that the proposed transaction may have the effect of eliminating or restricting competition;
(3) After the declaration, if the General Administration of Market Supervision considers that the concentration of operators has or may have the effect of eliminating or restricting competition, the operators shall put forward a plan with additional restrictive conditions as soon as possible;
(4) If it is found that it may constitute an illegal concentration of operators, it shall promptly stop the relevant acts and communicate with the General Administration of Market Supervision, and actively cooperate with the relevant work. Chapter
V Compliance Management Guarantee
Article 26 Compliance Commitment
encourages operators to establish an anti-monopoly compliance commitment mechanism for concentration of operators. Compliance commitment can improve the awareness and attention of decision-makers and senior managers of anti-monopoly legal risks of concentration of operators, and ensure the effective implementation of compliance management. Personnel in key positions such as decision-makers, senior managers and investment departments of
business operators may make anti-monopoly compliance commitments for concentration of business operators, or incorporate anti-monopoly compliance contents for concentration of business operators into the overall compliance commitments. Operators can specify the adverse consequences of violation of compliance commitments by relevant personnel in the internal personnel management system. Article
27 a compliance reporting
business operator may establish a centralized anti-monopoly compliance reporting mechanism, or include centralized anti-monopoly compliance matters in the overall compliance report. The chief compliance officer may regularly report to the decision-making level or senior management of the business operators on the anti-monopoly compliance of the concentration of business operators. In case of major compliance risks, the person in charge of compliance shall report to the decision-making level or senior management of the operator in a timely manner and put forward suggestions for risk response. Operators
are encouraged to report to the General Administration of Market Supervision and provincial market supervision departments on the anti-monopoly compliance and progress of concentration of operators, including the construction of compliance management system, the allocation of compliance personnel, compliance audit records, compliance publicity and training, third-party evaluation, and the declaration and punishment in recent years. Provincial market supervision departments may regularly understand the compliance management of operators within their jurisdiction and give necessary support and guidance to operators. Article
28 Compliance evaluation
encourages business operators to regularly evaluate the implementation effect of the anti-monopoly compliance management system of concentration of business operators in an appropriate way, continuously improve the compliance management system and improve the compliance management system. The evaluation of the effectiveness of the anti-monopoly compliance management system for concentration of
undertakings may include the following aspects:
(1) the establishment of a clear and enforceable compliance management system and process;
(2) the appointment of a compliance officer with clear responsibilities;
(3) The establishment of a clear compliance reward and punishment mechanism and measures;
(4) The compliance audit has been fully, fully and effectively implemented;
(5) Other circumstances related to the effective operation of compliance. Article
29 a compliance consulting
business operator may establish an anti-monopoly compliance consulting mechanism for the concentration of business operators. The relevant personnel of the undertakings are encouraged to consult the compliance department or the compliance chief as soon as possible about the compliance problems encountered in the course of the concentration of undertakings. Operators may consult with external legal experts and professional institutions on compliance, or consult with the General Administration of Market Supervision and relevant provincial market supervision departments on matters such as declaration of concentration of operators. The General Administration of
Market Supervision and provincial market supervision departments guide operators to do a good job in compliance and declaration. Article
30 Compliance training
encourages operators to conduct centralized compliance publicity and training in various forms, such as expert lectures and publication of manuals, to guide and urge relevant personnel of operators to improve their awareness and ability of compliance and to enhance the efficiency of compliance management. Operators are
encouraged to train decision-makers and senior managers in basic knowledge of concentration of operators, and to conduct professional training and assessment of concentration of operators for compliance officers and key personnel. The General Administration of
Market Supervision and provincial market supervision departments should strengthen the publicity and training of anti-monopoly compliance in the concentration of operators, and guide operators to do a good job in compliance management. Article
31 Compliance rewards and punishments
encourage business operators to establish an anti-monopoly compliance reward and punishment mechanism for internal concentration of business operators, commend and reward the persons in charge of compliance and key positions who have achieved remarkable results in compliance work, and when business operators commit major illegal acts of concentration of business operators. Necessary punishments shall be given to the chief compliance officer or the personnel in key positions who fail to perform their compliance duties prudently. Article
32 Compliance Incentives
In order to encourage business operators to actively carry out anti-monopoly compliance of concentration of business operators, the General Administration of Market Supervision may consider the construction and implementation of the anti-monopoly compliance management system of concentration of business operators when investigating and dealing with the illegal implementation of concentration. Article
33 Give full play to the role
of trade associations, encourage trade associations to give full play to the role of bridge and link, organize operators and market supervision departments to carry out exchanges and training on the examination of concentration of operators, and serve operators to establish and improve the anti-monopoly compliance management system of concentration of operators.Chapter
VI Supplementary Provisions
Article 34 Effectiveness
of the Guidelines These Guidelines only provide general guidance on the anti-monopoly compliance of concentration of business operators for reference by business operators, and are not mandatory. Operators can refine and improve the internal compliance management system and establish a compliance management system according to their own characteristics. The explanation of the review system of concentration of undertakings in
these Guidelines is mostly principled and general, and the case listing does not cover all legal risks. It is suggested that operators should make specific analysis and evaluation according to the relevant laws and regulations on concentration of undertakings and specific issues when referring to these Guidelines. Article
35 Interpretation
of the Guidelines The General Administration of Market Supervision shall be responsible for the interpretation of these Guidelines.
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