Interim Provisions on the Review of Concentrations of Undertakings

Release Date: 10-23-2020 (effective 12-1-2020)

Source: Government Website

Chinese Title: 经营者集中审查暂行规定

Decree No. 30 of the State Administration for Market Regulation

The Interim Provisions on the Review of Concentrations of Undertakings, adopted at the 9th executive meeting of the State Administration for Market Regulation on October 20, 2020, are hereby promulgated, effective December 1, 2020.

Director General Zhang Gong

October 23, 2020

Interim Provisions on the Review of Concentrations of Undertakings

Chapter I General Provisions

Article 1 These Provisions are enacted in accordance with the Anti-monopoly Law of the People’s Republic of China (hereinafter referred to as the “Anti-monopoly Law”) and the Rules of the State Council on Declaration Threshold for A Concentration of Undertakings for the purpose of regulating the anti-monopoly review of concentrations of undertakings.

Article 2 The State Administration for Market Regulation (hereinafter referred to as the “SAMR”) is responsible for the anti-monopoly review of concentrations of undertakings and investigation and handling of concentrations of undertakings in violation of laws.The SAMR may, pursuant to work needs, entrust the market regulatory authorities of provinces, autonomous regions and municipalities directly under the Central Government to carry out the review of concentrations of undertakings.

Article 3 For the purpose of these Provisions, the term “concentration of undertakings” refers to any of the following circumstances as specified in Article 20 of the Anti-monopoly Law:

(I) the merger of undertakings;

(II) acquiring control over an undertaking by way of acquiring its shareholding or assets; or

(III) acquiring control over an undertaking by way of contract or any other means or having the ability to exercise decisive influence on an undertaking.

Article 4 To determine whether an undertaking obtains control over another undertaking or is able to exert decisive influence on another undertaking through a transaction, the following factors shall be considered:

(I) the purpose of the transaction and future plans;

(II) the shareholding structure of the other undertaking before and after the transaction and the changes thereof;

(III) voting matters and voting mechanism of the general meeting of shareholders of the other undertaking as well as its historical attendance and voting;

(IV) composition and voting mechanism of the board of directors or board of supervisors of the other undertaking;

(V) appointment and dismissal of senior management personnel of other undertakings;

(VI) for the relationship between the shareholders and directors of the other undertaking, whether there is any exercise of voting right by proxy or any person acting in concert;

(VII) whether there is any material business relationship or cooperation agreement between the undertaking and the other undertaking; and

(VIII) other factors that shall be considered.

Article 5 The SAMR shall treat all undertakings equally in conducting the anti-monopoly review of concentrations of undertakings.

Chapter II Declaration for Concentration of Undertakings

Article 6 Where a concentration of undertakings reaches the declaration threshold stipulated by the State Council (hereinafter referred to as the “declaration threshold”), the undertakings involved shall make a declaration in advance to the SAMR, and they shall not carry out the concentration unless the declaration is made.Where a concentration of undertakings does not reach the declaration threshold, but the facts and evidence collected in accordance with the prescribed procedures show that the concentration has or may have the effect of excluding or restricting competition, the SAMR shall conduct an investigation in accordance with the law.

Article 7 Turnover includes the income obtained by relevant undertakings from sale of products and provision of services in the previous accounting year, deducting relevant taxes and surcharges.

Article 8 The turnover of an undertaking that participates in a concentration shall be the sum of the turnover of the undertaking and all undertakings that have direct or indirect control relationship with the undertaking at the time of declaration, but shall exclude the turnover between the aforesaid undertakings.When an undertaking obtains parts of another undertaking and the transferor no longer has control over such parts or is unable to exert decisive influence thereon, the turnover of the target undertaking shall only include the turnover of such parts.

Where there are other undertakings jointly controlled by and between the undertakings that participate in a concentration of undertakings or between the undertakings that participate in a concentration of undertakings and those that do not participate in the concentration of undertakings, the turnover of the undertakings that participate in the concentration of undertakings shall include the turnover between the jointly controlled undertaking and a third party undertaking, which shall only be calculated once.

The calculation of the turnover of an undertaking in the financial industry shall be subject to the relevant provisions on the calculation of the turnover for the declaration on a concentration of undertakings in the financial industry.

Article 9 Concentrations of undertakings that have been implemented between the same undertakings within two years but do not satisfy the declaration threshold shall be deemed as one concentration. The time of concentration shall commence from the last transaction, and the turnover of the undertakings that participate in the concentration shall be calculated by consolidating the multiple transactions. The undertakings carry out the aforesaid acts through other undertakings that have a control relationship with them shall be subject to the present provision.For the purposes of the preceding paragraph, the term “within two years” shall refer to the period commencing from the date on which the first transaction is completed to the date on which an agreement is concluded for the last transaction.

Article 10 The SAMR shall strengthen its guidance on the declaration for concentration of undertakings. Prior to making a formal declaration, undertakings may raise specific issues for consultation to the SAMR in writing on the declaration for concentration.

Article 11 For a concentration of undertakings conducted by merger, all the undertakings that participate in the merger shall be declaration obligors; for a concentration of undertakings by other means, the undertaking that has obtained control or is able to exert decisive influence shall be the declaration obligor, and other undertakings shall render cooperation.Where there are multiple obligors to declare the same concentration of undertakings, one obligor may be entrusted to declare the concentration. Where the entrusted obligor fails to declare, other obligors are not exempted from the obligation to make declaration. Where the obligor fails to declare the concentration, other undertakings that participate in the concentration may propose to make declaration.

The declaration obligor may declare by itself or entrust an agent with declaration by law.

Article 12 The declaration documents and materials shall include the following contents:

(I) a written declaration, stating the name, domicile, business scope of the undertakings that participate in concentration and the scheduled date of concentration, with the identification certificate or registration document of the declarant attached; in the case of an overseas declarant, the notarization documents issued by a local notary agency and relevant certification documents shall also be submitted. Where the declaration is made by an agent, the power of attorney signed by the declarant shall be submitted;

(II) description of the impact of the concentration on the competition in the relevant market, including overview of the transaction for concentration , definition of relevant market, market shares and controlling power in relevant market of the undertakings involved in the concentration, major competitors and their market shares, market concentration ratio, market access, industrial development status, influence of concentration on market competition structure, industrial development, technological advancement, national economic development, consumers and other undertakings, and effect evaluation and basis of the influence of concentration on relevant market competition;

(III) the concentration agreement, including various forms of documents of the concentration agreement, such as agreements, contracts and corresponding supplementary documents;

(IV) the financial and accounting reports of the undertakings that participate in concentration for the previous fiscal year which have been audited by accounting firms; and

(V) other documents and materials to be submitted as required by the SAMR.The declarant shall be responsible for the authenticity of the declaration documents and materials.

Article 13 The declarant shall mark the trade secrets, undisclosed information or confidential business information in the declaration documents and materials and submit the public version and the confidential version of the declaration documents and materials at the same time. The declaration documents and materials shall be in Chinese.

Article 14 The SMAR shall examine the documents and materials submitted by a declarant. Where declaration documents and materials are found to be incomplete, the SMAR may require the declarant to supplement the documents and materials within a prescribed time limit. Failure of the declarant to submit supplementary documents within the prescribed time limit shall be deemed as failure to make declaration.

Article 15 Where the SAMR deems that the declaration documents and materials meet the statutory requirements upon examination, it shall place the case on file on the day when it receives the complete declaration documents and materials and notify the declarant in writing.

Article 16 Where a concentration of undertakings does not reach the declaration threshold, but the undertakings that participate in the concentration voluntarily declare the concentration of undertakings, and the SAMR deems it necessary to place the case on file after it has received the declaration documents and materials, it shall file the case for review and make a decision thereon in accordance with the Anti-monopoly Law.

Article 17 Under any of the following circumstances, a concentration of undertakings may be declared as a summary case, and the SAMR will review the concentration under the procedures for summary cases:

(I) where, on the same relevant market, the sum of market shares held by all undertakings participating in the concentration is less than 15%; on the upstream and downstream markets, the market shares held by all undertakings participating in the concentration is less than 25%; or the market share of the undertakings participating in the concentration that are not in the same relevant market and do not have an upstream and downstream relationship is less than 25% in each market related to the transaction;

(II) where an undertaking participating in the concentration establishes joint ventures outside China and the joint ventures do not engage in economic activities in China;

(III) where an undertaking participating in the concentration purchases the equity or assets of an overseas enterprise which is not engaged in any economic activities in China; or

(IV) where a joint venture jointly controlled by two or more undertakings is controlled by one or more undertakings aforesaid through the concentration.

Article 18 A concentration of undertakings that meets the requirements as specified in Article 17 hereof but falls under any of the following circumstances will not be deemed as a summary case:

(I) where a joint venture jointly controlled by two or more undertakings is controlled by one of the said undertakings through the concentration, and such undertaking and the joint venture are competitors in the same relevant market, and the sum of market shares of them exceeds 15%;

(II) where it is hard to define the relevant market involved in the concentration of undertakings;

(III) where the concentration of undertakings may have adverse impact on market access and technological progress;

(IV) where the concentration of undertakings may have adverse impact on consumers and other relevant undertakings;

(V) where the concentration of undertakings may have adverse impact on the national economic development; or

(VI) other circumstances that may have adverse impact on market competition as deemed by the SAMR.

Chapter III Review of Concentrations of Undertakings

Article 19 The SMAR shall, within 30 days from the date of case filing, conduct a preliminary review of the declared concentration of undertakings, decide on whether to conduct further review, and notify the undertakings in writing.If the SMAR decides to conduct further review, it shall, within 90 days from the date of decision, complete the review, decide on whether to prohibit the concentration of undertakings, and notify the undertakings in writing. In the event of compliance with Paragraph 2 of Article 26 of the Anti-monopoly Law, the SMAR may extend the review period provided in this Paragraph to a maximum of 60 days.

Article 20 Prior to a review decision made by the SMAR, where the declarant requests to withdraw its declaration of a concentration of undertakings, it shall submit a written application and state the reasons therefor. The declarant may withdraw its declaration upon consent of the SMAR.Where there is a major change in the concentration of transactions or the competition in the relevant market, and a new declaration is required, the declarant shall apply for withdrawal.

Upon withdrawal of the declaration of a concentration of undertakings, the review procedure shall terminate. Consent by the SMAR to the withdrawal of declaration shall not be deemed as approval of such concentration.

Article 21 During the review, the SMAR may, as required by the review, require the declarant to supplement relevant documents and materials within a prescribed time limit.The declarant may voluntarily provide relevant documents and materials that may assist in the review of and decision on the concentration of undertakings.

Article 22 During the review process, the undertakings that participate in the concentration may make written statement on the relevant declaration matters to the SMAR by means of letters, faxes or emails, and the SMAR shall listen to the statement of the parties concerned.

Article 23 During the review process, the SMAR may, as required by the review, solicit opinions from organizations or individuals such as the relevant government departments, industry associations, undertakings and consumers.

Article 24 For the review of a concentration of undertakings, the following factors shall be taken into account:

(I) the market shares of the undertakings that participate in the concentration and their control over the market;

(II) the degree of market concentration of the relevant market;

(III) the impact of the concentration of undertakings on market access and technological advancement;

(IV) the impact of the concentration of undertakings on consumers and other relevant undertakings;

(V) the impact of the concentration of undertakings on the development of national economy; and

(VI) other factors to be considered that have an impact on market competition.

Article 25 When the impact of a concentration of undertakings on competition is assessed, the authorities may examine the ability, motive and possibility of relevant undertakings to exclude or restrict competition individually or jointly.Where a concentration involves upstream and downstream markets or relevant markets, the authorities may examine the ability, motive and possibility of relevant undertakings to use their control over one or more markets to exclude or restrict competition in other markets.

Article 26 When the control over the market of the undertakings that participate in a concentration is assessed, the following factors may be considered: the market share of the undertakings that participate in the concentration in the relevant market, the degree of substitution of products or services, the capability to control the sales market or the raw material procurement market, the financial and technical conditions, as well as the market structure of the relevant market, the production capacity of other undertakings, the purchasing capability of downstream customers and the capability of switching suppliers, the offsetting effect of access of potential competitors, etc.When the market concentration of a relevant market is assessed, the following factors may be considered: the number of undertakings in the relevant market and the market shares, etc.

Article 27 When the impact of a concentration of undertakings on market access is assessed, the circumstances in which the undertakings affect market access through control of production factors, sales and procurement channels, key technologies, key facilities, etc., may be considered, and the possibility, timeliness and adequacy of access shall also be taken into account.When the impact of a concentration of undertakings on technological advancement is assessed, the impact of the concentration of undertakings on technological innovation impetus, technological research and development investment and utilization, technological resource integration, etc. may be considered.

Article 28 When the impact of a concentration of undertakings on consumers is assessed, the impact of the concentration of undertakings on the quantity, price, quality, diversification, etc., of products or services may be considered.When the impact of a concentration of undertakings on other relevant undertakings is assessed, the impact of the concentration of undertakings on market access, transaction opportunities, etc., of undertakings in the same relevant market, upstream and downstream markets, or associated markets may be considered.

Article 29 When the impact of a concentration of undertakings on the development of national economy is assessed, the impact of the concentration of undertakings on economic efficiency, business scale, and the development of the relevant industries, etc. may be considered.

Article 30 When the impact of a concentration of undertakings on competition is assessed, the impact of the concentration on public interests, whether the undertakings participating in the concentration are enterprises on the verge of bankruptcy, etc. may be comprehensively considered.

Article 31 Where the SMAR considers that a concentration of undertakings has or may have the effect of eliminating or restricting competition, it shall notify the declarant, and set a reasonable time limit for the undertakings participating in the concentration to submit their written opinions.The written opinions of the undertakings participating in the concentration shall include the relevant facts and reasons, and the corresponding evidence shall be provided. Where the participating undertakings fail to submit the written opinions within the prescribed time limit, they shall be deemed to have no objection.

Article 32 To reduce the effect of eliminating or restricting competition that a concentration has or may have, the undertakings participating in the concentration may submit a commitment proposal with restrictive conditions to the SMAR.The SMAR shall assess the effectiveness, feasibility and timeliness of the commitment proposal, and notify the declarant of the assessment results in a timely manner.

Where the SMAR considers that the commitment proposal is insufficient to reduce the adverse impact of the concentration on competition, it may negotiate with the undertakings participating in the concentration in respect of the restrictive conditions, and require them to submit other commitment proposals within a reasonable time limit.

Article 33 Depending on the specific circumstances of transactions on a concentration of undertakings, the restrictive conditions may include the following:

(I) structural conditions such as divestiture of tangible assets, intangible assets such as intellectual property, or related rights and interests (hereinafter referred to as the “divested business”);

(II) behavioral conditions such as opening up their networks, platforms and other infrastructure, licensing key technologies (including patents, know-how or other intellectual property), and terminating exclusive agreements; and

(III) comprehensive conditions combining structural conditions and behavioral conditions.The divested business shall generally contain all the elements necessary for effective competition in the relevant market, including tangible assets, intangible assets, equity, key personnel and customer agreements or supply agreements and other rights and interests. The divestiture objects may be the subsidiaries, branches or business departments of the undertakings participating in the concentration.

Article 34 Where there is a risk that the commitment proposal cannot be implemented, the undertakings participating in the concentration may put forward an alternative proposal. The alternative proposal shall take effect after the preferred proposal cannot be implemented, and the conditions of the alternative proposal shall be more stringent than that of the preferred proposal.In the case that the commitment proposal is divestiture, the undertakings participating in the concentration may put forward suggestions on a specific buyer and divestiture time in the commitment proposal if

(I) it is relatively difficult to make divestiture;

(II) it is relatively risky to maintain the competitiveness and marketability of the divested business before divestiture;

(III) the identity of the buyer has an important impact on whether the divested business can restore market competition; or

(IV) any other circumstances that the SMAR considers necessary.

Article 35 For a concentration of undertakings that has or may have the effect of eliminating or restricting competition, if the commitment proposal with restrictive conditions put forward by the undertakings participating in the concentration is able to effectively reduce the adverse effect of the concentration on competition, the SMAR may make a decision to approve the concentration with restrictive conditions. If the undertakings participating in the concentration fail to put forward a commitment proposal with restrictive conditions within the prescribed time limit, or the proposed commitment proposal cannot effectively reduce the adverse effect of the concentration on competition, the SMAR shall make a decision to prohibit the concentration.

Chapter IV Supervision and Implementation of Restrictive Conditions

Article 36 For a concentration of undertakings approved with restrictive conditions, the obligor shall strictly perform the obligations stipulated in the review decision and report the performance of such restrictive conditions to the SMAR as required.The SMAR may, on its own or through its trustees, supervise and inspect the performance of restrictive conditions by the obligor. If the concentration has passed the supervision and inspection by the trustees, the SMAR shall specify this in the review decision. Trustees include supervisory trustees and divestiture trustees.

Obligors refer to the undertakings that are required to perform the relevant obligations in the review decision on conditional approval of the concentration of undertakings.

Supervisory trustees refer to the natural persons, legal persons or other organizations that are entrusted by the obligors and evaluated and determined by the SMAR to be responsible for supervising the implementation of restrictive conditions by the obligors and reporting the same to the SMAR.

Divestiture trustees refer to the natural persons, legal persons or other organizations that are entrusted by the obligors and evaluated and determined by the SMAR to be responsible for selling the divested business and reporting the same to the SMAR in the entrusted divestiture stage.

Article 37 If the concentration has passed the supervision and inspection by the trustees, the obligors shall submit the candidates of supervisory trustees to the SMAR within 15 days after the review decision is made by the SMAR. If the restrictive conditions are divestiture, the obligors shall submit the candidates of divestiture trustees to the SMAR 30 days before entering the entrusted divestiture stage. Trustees shall meet the following requirements:

(I) being independent from the obligors and the buyers of the divested business;

(II) having a professional team to perform the duties of trustees, and the members of the team shall have the professional knowledge, skills and relevant experience necessary for supervising the restrictive conditions;

(III) being able to put forward feasible work schemes;

(IV) having not been punished in the course of acting as trustees in the past five years; and

(V) other requirements put forward by the SMAR.After the SMAR evaluates and determines trustees, the obligors shall conclude a written agreement with trustees to specify their respective rights and obligations, which shall be reported to the SMAR for approval. The trustees shall perform their duties with due diligence. The obligors shall pay remunerations to the trustees and provide the trustees with necessary support and convenience.

Article 38 Where the restrictive conditions are divestiture, the divestiture obligors shall, within the time limit specified in the review decision, find on their own suitable buyers of the divested business, sign a sales agreement, and complete the divestiture upon approval of the SMAR. If the divestiture obligors fail to complete the divestiture within the prescribed time limit, the SMAR may require the obligors to entrust the divestiture trustees to find suitable buyers of the divested business within the prescribed time limit. The buyers of the divested business shall meet the following requirements:

(I) being independent of the undertakings that participate in the concentration;

(II) having necessary resources and capabilities and being willing to use the divested business to participate in market competition;

(III) having obtained the approval of other regulatory authorities;

(IV) prohibition on financing to purchase the divested business from the undertakings that participate in the concentration by financing; and

(V) other requirements put forward by the SMAR in light of the specific conditions of the case.If the buyers have or can obtain part of the assets or interests in the divested business through other channels, they may apply to the SMAR for necessary adjustment to the scope of the divested business.

Article 39 In principle, the number of supervisory trustees, divestiture trustees and buyers of the divested business that are submitted by the obligors to the SMAR for review shall not be less than three. Under special circumstances, upon the approval of the SMAR, there may be less than three such candidates.The SMAR shall review the trustees, entrustment agreements and buyers of the divested business as well as the sale agreements submitted by the obligors, so as to ensure that they meet the requirements of the review decision.

If the restrictive conditions are divestiture, the time taken by the SMAR for the aforesaid review shall not be included in the divestiture period.

Article 40 Where the review decision does not specify the self-actuated divestiture period, the divestiture obligors shall find appropriate buyers and sign the sale agreement within six months from the date when the review decision is made. If the divestiture obligors file an application and state the reasons, the SMAR may, at its discretion, extend the self-actuated divestiture period, but the extension shall not exceed three months.Where the review decision does not specify the entrusted divestiture period, the divestiture trustees shall find appropriate buyers and sign the sale agreement within six months from the date when the entrusted divestiture commences.

Article 41 The divestiture obligors shall, after the SMAR examines and approves the buyer and the sale agreement, conclude the sale agreement with the buyer, transfer the divested business to the buyer and complete the relevant legal procedures such as the transfer of ownership within three months from the date of conclusion. If the divestiture obligors file an application and state the reasons, the SMAR may, at its discretion, extend the period for business transfer.

Article 42 Where the purchase of divested business by a buyer approved by the SMAR reaches the declaration threshold, the undertaking obtaining the control shall declare it to the SMAR as a new concentration of undertakings. Before the SMAR makes the review decision, the divestiture obligors shall not sell the divested business to the buyer.

Article 43 Before the completion of divestiture, the divestiture obligors shall perform the following obligations in order to ensure the existence, competitiveness and marketability of the divested business:

(I) keeping the divested business independent from the retained business, and taking all necessary measures to conduct management in a way that best suits the development of the divested business;

(II) refraining from any act that may have adverse impact on the divested business, including hiring the key staff of the divested business and obtaining the trade secrets or other confidential information of the divested business;

(III) designating a manager to be specifically responsible for managing the divested business. The managers shall perform his/her duties under the supervision of the supervisory trustees, and his/her appointment and replacement shall be approved by the supervisory trustees;

(IV) ensuring that the potential buyers can obtain sufficient information relating to the divested business in a fair and reasonable way and evaluate the commercial value and development potential of the divested business;

(V) providing necessary support and convenience to the buyer at the request of the buyer to ensure the smooth transfer and stable operation of the divested business; and

(VI) handing over the divested business to the buyer in a timely manner and performing the relevant legal procedures.

Article 44 The supervisory trustees shall perform the following duties under the supervision of the SMAR:

(I) supervising the obligors to perform the obligations specified herein, the review decision and relevant agreements;

(II) evaluating the buyer candidates recommended by the divestiture obligors and the sale agreement to be concluded, and submitting the evaluation report to the SMAR;

(III) supervising the implementation of the sale agreement of the divested business, and submitting the supervision report to the SMAR on a regular basis;

(IV) coordinating the dispute between the divestiture obligors and the potential buyers over the divestiture matters; and

(V) submitting other reports relating to the obligors’ performance of restrictive conditions in accordance with the requirements of the SMAR.Without the approval of the SMAR, the supervisory trustee shall not disclose the reports and relevant information submitted to the SMAR in the process of performing its duties.

Article 45 In the stage of entrusted divestiture, the divestiture trustee shall be responsible for finding a buyer for the divested business and reaching a sale agreement.The divestiture trustee is entitled to sell the divested business without a reserve price.

Article 46 A review decision shall stipulate the time limit for the additional restrictive conditions.In the event that, according to a review decision, the restrictive conditions will be automatically lifted upon expiration of the period, the restrictive conditions will be automatically lifted if the obligor does not violate the review decision as verified by the SMAR. If an obligor violates the review decision, the SMAR may appropriately extend the time limit for the additional restrictive conditions and announce the same to the public in a timely manner.

In the event that, according to a review decision, the obligor needs to apply for lifting the restrictive conditions upon expiration of such conditions, the obligor shall submit a written application and state the reasons therefor. If the SMAR decides to lift the restrictive conditions after assessment, it shall make an announcement to the public in a timely manner.

If the restrictive conditions are divestiture, the restrictive conditions will be automatically lifted if the obligor fulfills all the obligations upon verification by the SMAR.

Article 47 During the effective period of a review decision, the SMAR may, on its own initiative or upon application by the obligor, re-examine, change or lift the restrictive conditions. If the SMAR decides to change or lift the restrictive conditions, it shall make an announcement to the public in a timely manner.In changing or lifting the restrictive conditions, the SMAR shall take into account the following factors:

(I) whether the trading parties to the concentration have undergone significant changes;

(II) whether the competition in the relevant market has undergone substantial changes;

(III) whether the implementation of restrictive conditions is unnecessary or impossible; and

(IV) other factors that shall be taken into account.

Chapter V Investigation into the Illegal Concentration of Undertakings

Article 48 Where a concentration of undertakings has reached the threshold for declaration, but the undertakings fail to declare the implementation of the concentration, implement the concentration without approval after declaration, or violate the review decision, an investigation shall be conducted in accordance with the provisions of this Chapter.

Article 49 Any organization or individual has the right to report to the SMAR any suspected concentration of undertakings in violation of the law. The SMAR shall keep the informant confidential.The report shall be made in writing, and shall provide the basic information of the informant and the person against whom the report is made, the facts and evidence relating to the implementation of concentration of undertakings in violation of the law, etc., and the SMAR shall conduct necessary verification.

Article 50 If there are preliminary facts and evidence that a concentration of undertakings is suspected of violation of the law, the SMAR shall place the case on file and notify the undertaking under investigation in writing.

Article 51 The undertaking under investigation shall, within 30 days from the date when the notice of case filing is served, submit to the SMAR documents and materials relating to whether the case is a concentration of undertakings, whether the concentration reaches the declaration threshold, whether the concentration is declared, and whether the concentration has been implemented in violation of the law, etc.

Article 52 The SMAR shall, within 30 days from the date when it receives the documents and materials submitted by the undertaking under investigation in accordance with Article 51 hereof, complete the preliminary investigation into whether the transaction under investigation is a concentration of undertakings that has been implemented in violation of the law.If it is a concentration of undertakings that has been implemented in violation of the law, the SMAR shall decide to carry out further investigation and notify the undertaking under investigation in writing. The undertaking shall stop the illegal act.

If it is not a concentration of undertakings that has been implemented in violation of the law, the SMAR shall decide not to carry out further investigation and notify the undertaking under investigation in writing.

Article 53 Where the SMAR decides to carry out further investigation, the undertaking under investigation shall, within 30 days from the date when it receives the written notice from the SMAR, submit the relevant documents and materials to the SMAR in accordance with the provisions hereof concerning the documents and materials for the declaration of concentration of undertakings.The SMAR shall, within 120 days from the date when it receives the documents and materials submitted by the undertaking under investigation that meet the provisions of the preceding paragraph, complete the further investigation.

At the stage of further investigation, the SMAR shall, in accordance with the Anti-monopoly Law and these Provisions, evaluate whether the transaction under investigation has or is likely to have the effect of eliminating or restricting competition.

Article 54 During the investigation, the undertaking under investigation and the interested parties are entitled to present their opinions. The SMAR shall verify the facts, reasons and evidence provided by the undertaking under investigation and the interested parties.

Article 55 Prior to a decision on administrative penalty, the SMAR shall notify the undertaking under investigation of the facts, reasons and basis for the decision.The undertaking under investigation shall submit its written opinions within the time limit specified by the SMAR. The written opinions shall include the relevant facts and evidence.

Article 56 The SMAR shall decide according to law on how to punish an illegal concentration of undertakings and may make public such decision.

Chapter VI Legal Liability

Article 57 Any undertaking implementing concentration in violation of the Anti-monopoly Law shall be penalized in accordance with Article 48 of the Anti-monopoly Law.

Article 58 Where a declarant conceals the relevant information or provides false materials, the SMAR shall not file the case for the declaration of concentration of undertakings or revoke the case filed and may impose penalties in accordance with Article 52 of the Anti-monopoly Law.

Article 59 Where a trustee fails to perform its duties as required, the SMAR shall order it to make corrections; in serious cases, the SMAR may require the obligor to replace the trustee and impose a fine of not more than 30,000 yuan on the trustee.

Article 60 Where the buyer of the divested business fails to perform its obligations as required, which affects the implementation of the restrictive conditions, the SMAR shall order it to make corrections and may impose a fine of not more than 30,000 yuan on the buyer.

Chapter VII Supplementary Provisions

Article 61 The SMAR and other organizations and individuals shall bear the obligation to keep confidential the trade secrets, undisclosed information or confidential business information known to them, except for the information that shall be disclosed in accordance with the provisions of laws and regulations or the consent of the obligee has been obtained in advance.

Article 62 With regard to a concentration of undertakings that does not meet the declaration standards but has or may have the effect of eliminating or restricting competition, the SMAR may collect facts and evidence and conduct an investigation in accordance with these Provisions.

Article 63 During the process of review or investigation, the SMAR may organize a hearing. The hearing procedures shall be subject to the Interim Provisions on Administrative Licensing Procedures for Market Regulation and the Interim Measures for Administrative Penalty Hearings for Market Regulation.

Article 64 With regard to the written documents to be served on undertakings, the Interim Provisions on Administrative Penalty Procedures for Market Regulation shall apply mutatis mutandis.

Article 65 These Provisions shall come into force as of December 1, 2020.

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