ICLG Merger Control 2021 – China
2020-11-10
1 Relevant Authorities and Legislation
1.1 Who is/are the relevant merger authority(ies)?
The State Administration for Market Regulation ("SAMR"), a ministry level government agency, oversees the merger notification. The Anti-Monopoly Bureau ("AMB") within SAMR is the body responsible for merger control review.
Provincial Market Regulation Departments ("PMRDs") have the authority to carry out antitrust investigations against cartel, abuse of dominance and administrative monopoly conduct. However, PMRDs do not have the authority to review merger notifications.
SAMR may, pursuant to work needs, request PMRDs to provide assistance for merger control review, or to assist investigations for failure to notify and gun-jumping.
1.2 What is the merger legislation?
The merger legislation in China consists of the Anti-Monopoly Law ("AML"), notification thresholds regulations, implementation regulations, and the guidelines.
1. The AML
China's merger control regime is governed by the AML. The AML became effective on August 1, 2008. SAMR launched a public consultation on a draft of amendments to the AML in January 2020. The definition of "control" and a "stop the clock" mechanism are expected to be introduced into the AML.
2. The notification thresholds regulations
The Provisions of the State Council on the Notification Thresholds of Concentrations of Undertakings (August 3, 2008) ("Notification Thresholds Provisions") regulates the turnover thresholds of merger control filing. In addition, there are separate rules for the calculation of notification thresholds for the financial industry.
3. The implementation regulations on merger control
The implementation regulations on merger control include:
• Measures on the Notification of Concentrations of Undertakings ("Notification Measures");
• Measures on the Review of Concentrations of Undertakings ("Review Measures");
•Provisions on Imposing Restrictive Conditions on Concentration of Undertakings (for Trial Implementation) ("Remedy Provisions"); and
•Interim Provisions on (1) the applicable standards for the simplified procedure; (2) evaluating the impact of concentrations of undertakings on competition; and (3) investigations on failure to notify and gun-jumping.
In January 2020, SAMR issued the Interim Provisions on the Review of Concentrations of Undertakings (the "Draft Merger Review Provisions") for public comments. The Draft Merger Review Provisions will consolidate all the above implementation regulations on merger control.
4. The guidelines on merger control
The merger control guidelines are different from the relevant regulations promulgated by the State Council for the application of the AML and the regulations issued by SAMR. The law enforcement guidelines are usually introduced in the areas where law enforcement has greater discretion. The purpose of the guidelines is to restrict and guide law enforcement, maintain unity and continuity in the application of the law, and provide guidance to the undertakings. The guidelines do not have legal binding power on undertakings. However, because undertakings tend to pursue compliance and reduce transaction risks, in practice, the guidelines will be respected and followed in the merger notification.
In September 2018, SAMR issued six guidelines on:
• the notification of the concentration of undertakings;
• filing document and material preparation;
• working guidance;
• the notification form;
• simplified cases; and
• the names of concentrations of undertakings.
1.3 Is there any other relevant legislation for foreign mergers?
The Foreign Investment Law of China (the "FIL") became effective in January 2020. The FIL officially abolishes the "case-by-case" approval approach and establishes the administrative system of the foreign investment review ("FIR"), information reporting ("IR") and the national security review ("NSR"), aiming to improve the transparency of administration over foreign investment and ensure that foreign investment entities can participate in the market competition on an equal basis.
FIR
According to the FIL, the State shall implement the management systems of pre-establishment national treatment and a negative list for foreign investment. The negative list will be issued by or upon approval by the State Council. Foreign investors shall not invest in any field forbidden by the negative list for access of foreign investment (the "negative list"). For any field restricted by the negative list, foreign investors shall conform to the investment conditions provided in the negative list. Fields not included in the negative list shall be managed under the principle that domestic investment and foreign investment shall be treated uniformly.
In July 2020, the Special Administrative Measures for Foreign Investment Access (Edition 2020) ("National Negative List 2020") and the Special Administrative Measures for Foreign Investment Access in Pilot Free Trade Zones (2020 Version) ("FTZ Negative List 2020") promulgated by the National Development and Reform Commission ("NDRC") and the Ministry of Commerce ("MOFCOM") came into effect. The National Negative List only contains 33 items and the FTZ Negative List contains only 30 items. For industries on the negative list, approval is still needed for foreign investment in China. For industries outside the negative list, only a filing for recording purposes is needed.
IR
The State establishes a foreign investment information reporting system. Foreign investors or foreign investment enterprises shall submit investment information to the competent authorities through the system of enterprises registration and the disclosure of enterprise credibility information to public. Where any foreign investor or foreign investment enterprise fails to report their investment information as required by the foreign investment information reporting system, the competent authority shall order it to make corrections within a prescribed time limit. If such corrections are not made in time, a penalty of no less than RMB 100,000 and no more than RMB 500,000 shall be imposed.
NSR
NSRs are regulated in Article 35 of the FIL. According to Article 35 of the FIL, the State establishes a security review system to conduct a security review over foreign investment projects that affect or may affect national security. Foreign investors acquiring Chinese domestic companies could file for a voluntary NSR before closing if:
• the domestic target business is involved in a business that concerns national defence security; or
• the domestic target business is involved in a business that concerns national economic security, and the foreign acquiring business intends to acquire de facto control of the target domestic business.
No filing fee is needed for a NSR either. There is no sanction for failing to file the NSR. However, the un-notified merger may face uncertainty, since the authority could initiate a NSR at its discretion or according to third parties' complaints. The authority in charge may prohibit the merger if it determines that the merger would severely harm national security. In addition, according to the FIL, the decision made by the authority in charge upon the safety review in accordance with the law shall be final.
There are two phases of review in relation to the NSR procedure: a "General Review" phase; and a "Special Review" phase (if required):
• General Review. This phase takes a maximum of 30 working days from the date on which the Joint Committee receives MOFCOM's application (the parties involved in the transaction are required to first submit an application to MOFCOM). During this period, the Joint Committee will determine if the proposed deal is clear of national security concerns or whether more time is required to evaluate the proposed deal. During this phase, the Joint Committee will also solicit opinions from other relevant government departments. The determination as to whether the proposed deal is clear of national security concerns or whether more time is required to evaluate the proposed deal will be determined by the number of government departments invited to join this process – all determinations will be adopted on a unanimous basis.
• Special Review. This phase takes a maximum of 60 working days. During this period, the Joint Committee will evaluate the deal in more detail. The Joint Committee will decide during this phase whether the proposed deal is free of national security concerns or whether there are national security concerns, which will then lead to the proposed deal being prohibited.
1.4 Is there any other relevant legislation for mergers in particular sectors?
Intellectual Property Rights ("IP")
In June 2020, a book titled the Collection of Antitrust Regulations and Guidelines 2019, authored by the AMB of SAMR, was published by China Industry and Commerce Press. This book officially makes public the Antitrust Guidelines for the Intellectual Property Rights ("IP Guidelines"), in which sector-specific rules for merger control are provided.
1. Transactions involving IP may constitute a concentration of undertakings:
According to the IP Guidelines, undertakings gaining control over other undertakings or being able to exert decisive influence on other undertakings through transactions involving IP may constitute a concentration of undertakings. The following factors can be considered:
1) whether the IP constitutes an independent business;
2) whether the IP has generated independent and calculable turnover in the previous fiscal year; and
3) the method and duration of the IP licensing.
2. Remedies for transactions involving IP:
1) Structural remedies:
If the divestiture of IP is proposed, the divestiture should be effective, feasible, and timely to avoid the impact of market competition. More specifically, the undertaking divesting its IP should generally ensure that the transferee of the IP has the necessary resources and capabilities, and is willing to participate in market competition by applying the divested IP or engaging in the business involved.
2) Behavioural remedies:
• the licensing of the IP;
• maintaining the independent operation of the businesses relating to the IP (and the relevant businesses should have the conditions for effective competition within a certain period);
• restricting the licensing conditions of the IP, including requiring the undertaking to comply with fair, reasonable, and non-discriminatory obligations when implementing patent licences, and not to conduct tying. Undertakings usually need to make specific arrangements to ensure that they comply with this obligation; and
• charging reasonable licence fees. Undertakings shall generally specify in detail the calculation method and payment terms of licence fees, as well as fair negotiation conditions and opportunities, etc.
Active Pharmaceutical Ingredients ("APIs")
SAMR issued the Antitrust Guidelines in the Field of APIs (draft for public comments) ("Draft API Guideline") in October 2020. The Draft API Guideline pays special attention to the concentration of undertakings in the field of APIs that do not meet the notification threshold but have the effect of eliminating or restricting competition.
• Pre-consultation:
According to the Draft API Guideline, undertakings in the field of APIs are encouraged to consult with SAMR as soon as possible before implementing the concentration, if the number of undertakings of this type of API is small, and the market share and market concentration in the relevant API market are high, even if the annual turnover of the undertakings involved in the concentration may not meet the notification threshold.
• Actively initiate the notification:
Undertakings in the field of APIs can actively initiate the notification even if the annual turnover of the undertakings involved in the concentration may not meet the notification threshold.
• Investigation:
Where the concentration of undertakings has or may have the effect of eliminating or restricting competition, and the undertaking does not actively initiate the notification, SAMR may conduct investigations.
• Remedies:
If the investigation shows that the concentration of undertakings has or may have the effect of eliminating or restricting competition, SAMR may decide to prohibit the concentration or attach restrictive conditions to approve the concentration. Where the concentration has been implemented, SAMR may order the disposal of shares or assets, transfer the business within a time limit, and take other necessary measures to restore the state before the concentration.
1.5 Is there any other relevant legislation for mergers which might not be in the national interest?
According to the National Negative List 2020 mentioned above, mergers in the following industries might not be in the national interest:
1. Agriculture, forestry, animal husbandry and fishery:
• The restriction on the Chinese shareholding ratio in the selection and breeding of new wheat varieties and seed production is relaxed to no less than 34%, and the selection and breeding of new maize varieties and seed production must still be controlled by the Chinese side.
• The selection and breeding of genetically modified varieties and seed production are prohibited.
• Investment in fishing is prohibited.
2. Mining industry:
• Investment in the exploration, mining and beneficiation of rare earths, radioactive minerals and tungsten is prohibited.
3. Manufacturing:
• The printing of publications must be controlled by the Chinese party.
• It is prohibited to invest in traditional Chinese medicine decoction pieces and confidential prescription products of proprietary Chinese medicines.
• The Chinese shareholding ratio of commercial vehicles can be no less than 50%. Foreign businessmen are not allowed to establish joint ventures with more than two similar products. The above restrictions will be lifted in 2022.
• It is prohibited to invest in satellite TV broadcasting ground receiving facilities and the production of key components.
4. Production and supply of electricity, heat, gas and water:
• Nuclear power plants must be controlled by the Chinese party.
5. Wholesale and retail:
• Investment in tobacco wholesale and retail is prohibited.
6. Transportation, warehousing and postal industry:
• Domestic water transportation companies must be controlled by the Chinese party.
• Public airlines must be controlled by the Chinese party, the proportion of foreign investors must not exceed 25%, and the legal representatives shall be Chinese citizens.
• General airlines for agriculture, forestry and fishery are limited to joint ventures; other general aviation companies are limited to Chinese shareholders.
• Civil airports have to be relatively controlled by Chinese party. Foreign parties shall not participate in the construction and operation of airport towers.
• It is prohibited to invest in the express delivery of postal letters.
7. Information transmission, software and information technology service industry:
• The proportion of foreign shares in value-added telecommunications services shall not exceed 50%.
• It is prohibited to invest in news, internet publishing, audio-visual programmes, cyber cultural operations, and public information services except for music.
8. Leasing and business services:
• It is prohibited to invest in Chinese legal affairs and a foreign investor cannot become a partner of a domestic law firm.
• Market surveys are limited to joint ventures. Radio and television listening and viewing surveys must be controlled by the Chinese party.
• Investment in social surveys is prohibited.
9. Scientific research and technical service industry:
• Investment in human stem cells, genetic diagnosis and treatment is prohibited.
• Investment in humanities and social science research institutions is prohibited.
• It is prohibited to invest in geodetic surveying, mapping and remote sensing geology, except for new mining rights holders.
10. Education:
• It is limited to Sino-foreign cooperation in running schools, and must be led by the Chinese party.
• Investment in compulsory education institutions and religious education institutions is prohibited.
11. Health and social work:
• Medical institutions are limited to joint ventures.
12. Culture, sports and entertainment industry:
• Investment in news organisations (including but not limited to news agencies) is prohibited.
• It is prohibited to invest in the editing, publishing and production of books, newspapers, periodicals, audio-visual products and electronic publications.
• Investment in radio and television is prohibited.
• It is prohibited to invest in companies that produce and operate radio and television programmes.
• Investment in film companies and cinema is prohibited.
• Investment in cultural relic shops and state-owned museums is prohibited.
• Investment in cultural performance groups is prohibited.
2 Transactions Caught by Merger Control Legislation
2.1 Which types of transaction are caught – in particular, what constitutes a "merger" and how is the concept of "control" defined?
In China, transactions which amount to a "concentration" will be caught if the notification thresholds are met.
A concentration is defined as: (a) a merger of undertakings; (b) an acquisition of a controlling stake in other undertakings by an undertaking through the acquisition of equity or assets; and (c) an acquisition of a controlling stake in other undertakings by way of concluding contracts or exercising decisive influence.
According to the Guiding Opinions of the Notification of Concentration of Undertakings released by SAMR, the concept of "control" in a concentration includes "sole control" and "joint control". The following factors will be taken into consideration by SAMR when determining whether an undertaking acquires control over another:
• the purpose of the transaction and its future plans;
• the equity structure of the other undertakings before and after the transaction;
• the voting matters and voting mechanism of the general shareholders meeting of the other undertakings, the historical attendance, and the voting record;
• the composition of the board of directors or the board of supervisors of the other undertakings and the voting mechanism;
• the appointment and dismissal of senior executives of the other undertakings;
• the relationship among the shareholders and the board directors of the other undertakings, whether there are situations such as the presence of any person acting in concert; and
• the existence of major business relationships and cooperation agreements between the undertakings and the other operators.
2.2 Can the acquisition of a minority shareholding amount to a "merger"?
Yes. There are no provisions under the AML or in its related rules that address the acquisition of minority ownership interests. However, the acquisition of minority interests may also give rise to a notifiable transaction, depending on whether such acquisition may confer "control" of the target company on the acquirer. As described in the response to question 2.1, if based on the acquiring party's right to appoint directors or senior management, the veto rights against major business decisions, or the control over key resources, the acquisition of a minority shareholding can also amount to obtaining control over the target, and SAMR can then decide that a notifiable merger exists.
2.3 Are joint ventures subject to merger control?
According to the Guiding Opinions of the Notification of Concentration of Undertakings released by SAMR, the establishment of a joint venture is subject to merger notification if more than two undertakings are determined as having joint control over the joint venture, and meanwhile the notification thresholds are met. Other factors will not be considered in determining whether the joint venture is notifiable, such as whether the joint venture is a newly established company, or whether the joint venture has a market presence, etc.
Pure contractual arrangements without the creation of a new legal entity may not be notifiable.
2.4 What are the jurisdictional thresholds for application of merger control?
China adopts only the following turnover thresholds:
• during the previous fiscal year, the total global turnover of all the undertakings participating in the transaction exceeds RMB 10 billion, and at least two of these undertakings each had a turnover of more than RMB 400 million within China; or
• during the previous fiscal year, the total turnover within China of all the undertakings participating in the concentration exceeded RMB 2 billion, and at least two of these undertakings each had a turnover of more than RMB 400 million within China.
2.5 Does merger control apply in the absence of a substantive overlap?
Yes, it does. The competition issues involved in mergers and acquisitions may not only be horizontal, but could also be vertical or potential abusive conduct, such as tying. If a transaction constitutes a concentration and meets the threshold of merger notification, it must be notified to SAMR for merger review, even in the absence of a substantive overlap.
2.6 In what circumstances is it likely that transactions between parties outside your jurisdiction ("foreign-to-foreign" transactions) would be caught by your merger control legislation?
There are no express provisions within the AML or in its accompanying regulations which provide for special rules in respect of "foreign-to-foreign" transactions. The only reason to trigger a Chinese merger notification is the turnover thresholds (please see the answer to question 2.4) and the concentration test (please see the answer to question 2.1).
Certain foreign-to-foreign transactions are subject to the simplified procedures. According to the Interim Provisions on the Applicable Standards for Simplified Procedure, where the undertakings involved in the concentration establish joint ventures outside China and the joint ventures do not engage in business activities in China, or the undertakings involved in the concentration acquire shares or assets of overseas companies that do not engage in business activities in China, the simplified procedure may apply.
Under the simplified procedure, SAMR generally grants clearance in Phase I (30 days).
2.7 Please describe any mechanisms whereby the operation of the jurisdictional thresholds may be overridden by other provisions.
According to the Notification Thresholds Provisions, if a merger does not trigger the turnover thresholds, but it is reflected by facts and evidence that the merger may eliminate or restrict competition, SAMR could initiate an investigation according to the law (at its own discretion).
2.8 Where a merger takes place in stages, what principles are applied in order to identify whether the various stages constitute a single transaction or a series of transactions?
According to the Notification Measures, any concentration implemented between the same undertakings within two years that does not yet reach the notification thresholds shall be regarded as one single transaction, and the filing timing shall be the time when the notification threshold is triggered. The purpose for such regulation is to prevent undertakings from circumventing the notification obligation by splitting one merger into several sections.
Besides, the Notification Measures also stipulates that where an undertaking conducts the above-mentioned behaviour with other equivalent undertakings over which it has control, they are subject to the said provision.
The expression "equivalent undertakings" does not only mean the undertakings themselves. The subsidiary(s), indirect subsidiary(s), shareholder(s) and other affiliates of the undertakings concerned will also be deemed to be the "equivalent undertakings".
"Within two years" refers to the period between the day on which the first concentration deal is completed and the day on which the agreement of the last deal is executed.
The undertakings' turnover shall be the aggregated turnover of the several deals concerned.
3 Notification and its Impact on the Transaction Timetable
3.1 Where the jurisdictional thresholds are met, is notification compulsory and is there a deadline for notification?
The merger notification in China is compulsory, and such notification shall be made before the execution of the proposed transaction. Otherwise, the parties involved in the proposed transaction are subject to "failure to file" sanctions under China's AML. In practice, the notification will be filed soon after signing the transaction document.
3.2 Please describe any exceptions where, even though the jurisdictional thresholds are met, clearance is not required.
According to Article 22 of the AML, in the following cases, notification is not required:
• one of the parties to a concentration holds assets or shares that grant at least 50% of the voting rights in each of the other undertakings; or
• in each of the parties to a concentration, assets or shares that grant 50% of the voting rights in said undertakings are held by the same undertaking which is not party to the concentration.
3.3 Where a merger technically requires notification and clearance, what are the risks of not filing? Are there any formal sanctions?
Pursuant to Article 48 of the AML, if the undertakings fail to seek clearance in relation to a notifiable concentration, they could face the following sanctions:
• an order to cease implementing the concentration;
• an order to dispose of stocks or assets within a stipulated period, transfer the business within a stipulated period and/or adopt other necessary measures to restore the status before the concentration occurred; and
• an order to pay a fine of no more than RMB 500,000.
Specifically, MOFCOM published the Provisional Measures for Investigating and Handling Failure to Legally Notify the Concentration of Undertakings. The provisional measures became effective on February 1, 2012, and mainly stipulate the rules on the procedures for the investigation and handling of this circumstance.
From 2014 to 2019, the antitrust authority has published 50 cases of failure to notify the concentration of undertakings. Among these cases, the fines range from RMB 150,000 to RMB 400,000. The enterprises that have been fined include Chinese companies and foreign companies; for Chinese companies, there are both private enterprises and state-owned enterprises.
The following are the statistics of the administrative penalty cases involving failure to notify the concentration of undertakings:
2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
1 | 4 | 6 | 6 | 15 | 18 |
In January 2020, SAMR issued the draft amendment of the AML for public comment, in which Article 55 intends to change the fines for not filing from less than RMB 500,000 to less than 10% of the previous year's sales volume. If this amendment is officially passed, it will create effective deterrence to the parties that intentionally run the risks of not filing.
3.4 Is it possible to carve out local completion of a merger to avoid delaying global completion?
No. There are no express provisions within the AML or in its accompanying regulations which provide for exceptions that allow parties to close a cross-border transaction by carving out local completion prior to clearance by SAMR.
3.5 At what stage in the transaction timetable can the notification be filed?
The notification can only be filed after the execution of the transaction documents and before the closing of the transaction. For the acquisition of a listed company in the form of a public offer, the announced report on the acquisition by offer can be regarded as a signed transaction document.
A party can file the notification prior to signing a definitive agreement. However, SAMR may not accept the notification until the parties have provided the formal executed transaction documents.
Under very exceptional circumstances, SAMR would also accept the notification without the executed definitive agreement. In order to ask SAMR to waive the requirement of the executed definitive agreement, sufficient evidence needs to be submitted to prove that the executed transaction agreements cannot be submitted due to mandatory legal requirements of China or other jurisdictions or any other legitimate reasons. In such a situation, the notification could be filed with the relevant memorandums, framework agreements, draft agreements or tender offers, accompanied by the main terms and conditions of the transaction at the time of submission, instead of the executed definitive agreement.
3.6 What is the timeframe for scrutiny of the merger by the merger authority? What are the main stages in the regulatory process? Can the timeframe be suspended by the authority?
The following are the phases of review in relation to an antitrust merger notification:
· Phase I of review takes a maximum of 30 calendar days (from the date on which SAMR informs applicant(s) in writing that the filing is formally accepted).
· Phase II of review takes a maximum of 90 calendar days. SAMR will inform the applicant(s) in writing if the review period is extended from Phase I to Phase II.
SAMR has discretion to move the filing into a further extended phase of review for a maximum of 60 calendar days, provided that:
• the applicant(s) agree(s) to extend the time limit for the review;
• the documents submitted by the applicant(s) are inaccurate and require further verification; or
• the circumstances surrounding the transaction have changed significantly after notification by the applicant(s).
If SAMR fails to make a determination at the expiry of each set period of time as stated above, the parties may execute the transaction.
3.7 Is there any prohibition on completing the transaction before clearance is received or any compulsory waiting period has ended? What are the risks in completing before clearance is received?
Transactions shall not be implemented before obtaining the merger control clearance. Premature implementation may cause the sanctions as provided in Article 48 of the AML (please see the answer to question 3.3).
3.8 Where notification is required, is there a prescribed format?
An applicant who wishes to seek clearance by SAMR in respect of its transactions is required to fill in a Notification Form for Merger Review of Concentration of Undertakings (issued by SAMR). The scope of the Notification Form includes the following headings:
• general information relating to each party to the notified concentration (including business scope, information regarding subsidiaries or affiliates, etc.);
• summary of the proposed concentration (including deal amount and steps taken thus far);
• business rationale or motivations for undertaking the notified concentration;
• market definition (product and geographic market);
• industry overview (in relation to the relevant market);
• effect of the concentration on the relevant market;
• top five suppliers and customers in relation to each party to the concentration; and
• other information in relation to competitors in the relevant market.
All the required information should be included unless the parties can persuade SAMR that such information is not applicable to a specific case.
3.9 Is there a short form or accelerated procedure for any types of mergers? Are there any informal ways in which the clearance timetable can be speeded up?
Simplified procedure
Yes. A simplified procedure is available in China. The notification form for the simplified procedure is shorter than the form for the general procedure, and requires less information. The simplified procedure is applicable to the following situations:
• Horizontal mergers where the collective market share of all undertakings is less than 15%.
• Vertical mergers where the market share of each of the operators concerned in the concentration in each of the relevant upstream and downstream markets is less than 25%.
• Mergers that are neither horizontal nor vertical, and where the market share of each of the operators concerned in the concentration in each of the markets is less than 25%.
• Off-shore joint ventures which do not engage in any business operations in China.
• Acquisitions of off-shore targets which do not engage in any business operations in China.
• A reduction of the number of existing controlling shareholders where a joint venture jointly controlled by two or more operators is controlled by one or more existing operators as a result of the concentration.
Despite meeting the above criteria, a notification may still be ineligible for a simplified procedure due to reasons such as the relevant market being difficult to define, or if the concentration may adversely affect market entry, technology development, consumers or national economic development.
To speed up the clearance timetable
Most mergers are time-sensitive, and as a result, most merging entities generally wish for the merger review period and procedures to proceed as swiftly as possible. To speed up the clearance timetable, the parties must have more communication with SAMR, and cooperate with SAMR to provide information as required:
13. articulate why the merger is time-sensitive;
14. ensure that the merger filing report is complete (according to SAMR's requirements) and accurate;
15. if SAMR asks any supplementary questions or asks for clarifications, respond to these questions in a timely manner; and
16. if necessary, request a face-to-face meeting with the case handler of SAMR to clarify any remaining issues.
3.10 Who is responsible for making the notification?
The party acquiring control shall be responsible for making the notification.
Specifically, for a concentration of undertakings implemented in the form of a merger, all the parties participating in the merger shall make the notification; for a concentration of undertakings in other forms, the undertaking that has obtained control shall make notification, and the other undertakings shall cooperate. Moreover, if there are two or more undertakings who are obliged to notify, they could agree that one of them is responsible for making the notification, or they can jointly make the notification. However, if the undertaking that has agreed to make the notification fails to do so, the aforementioned agreement shall not exempt the other undertakings' legal liability for failing to notify the concentration in accordance with the law.
In addition, if the notification obligator fails to make the notification of a concentration, the other undertakings participating in the concentration may propose to make the notification.
3.11 Are there any fees in relation to merger control?
There is no filing fee under China's merger control regime.
3.12 What impact, if any, do rules governing a public offer for a listed business have on the merger control clearance process in such cases?
There is no specific rule governing public offers for listed businesses that would affect the merger control clearance process.
Information disclosure obligation
According to the Securities Law, persons who are privy to insider information of securities trading shall not divulge the insider information before such information is made public. Where an act of insider trading causes the investors to suffer losses, the person who carried out the insider trading shall bear compensation liability pursuant to the law.
In certain transactions, if SAMR discloses the Public Notice Form before the announcement of the transaction in the stock exchange, it may cause the leakage of insider information and the parties to the transaction may violate the Securities Law. In practice, parties can inform SAMR of this situation and find a solution to avoid such potential risk.
Hostile transaction.
In practice, during SAMR's review process, the acquiring party may face some practical problems in a hostile transaction. First, most of the parties do not sign any formal transaction agreements in the case of public tenders, which are normally required by SAMR to be part of the filing materials. However, SAMR may accept the public tender offer in lieu of a signed transaction document pursuant to Article 14 of the Guiding Opinions of the Notification of Concentration of Undertakings released by SAMR. Secondly, in a hostile transaction, the acquired target may not be cooperative in providing the information required in the filing, meaning that some non-public information, including the market data of the acquired target, may be difficult to obtain without the cooperation of the target. Even though Article 13 of the Guiding Opinions has provided that the acquired target shall have the obligation to assist with the acquirer's filing, there are no specific rules about the legal liabilities for breaching such obligation to assist. As a possible solution, based on our experience, the acquiring party may apply for pre-notification consultation with SAMR under such circumstances, and SAMR would take a case-by-case approach to reviewing the notification.
3.13 Will the notification be published?
For cases prohibited or cleared with conditions, SAMR will publish its decision, which includes the review timetable, the analysis SAMR made, and the supplementary conditions, if any. For non-conditionally cleared cases, SAMR will publish a list which includes the names of these deals and the dates of approval on a quarterly basis. For cases subject to a simplified procedure, SAMR will release a Public Notice Form which includes an introduction of the deal and the reasons for applying a simplified procedure on its website during the review period.
4 Substantive Assessment of the Merger and Outcome of the Process
4.1 What is the substantive test against which a merger will be assessed?
The AML sets out the factors to be considered by SAMR in assessing the competitive effects of a merger, and the Draft Merger Review Provisions provides more detailed rules to guide the merger control review:
1. Market shares and market control power of the merging parties in the relevant market:
Market share is an important factor in analysing the structure of the relevant market and the position of the undertakings and their competitors in the relevant market. Market share directly reflects the structure of the relevant market, and the position of the undertakings and their competitors in the relevant market.
2. Concentration levels of the relevant market:
Under normal circumstances, the higher the market concentration of the relevant market, the greater the increment in market concentration following the concentration, and the higher the possibility of the concentration producing the effect of eliminating or restricting competition. The Herfindahl-Hirschman Index ("HHI") and the combined market share of the top N enterprises in the industry ("CRn index") are used to measure the concentration of undertakings in the relevant market.
3. The impact of the concentration on market entry and technological development:
To judge the degree of difficulty of market entry, the possibility, timeliness and sufficiency of market entry shall be considered comprehensively. A concentration of undertakings is likely to raise the threshold for entering the relevant market. After the concentration, the undertakings may, by exercising the control over the market obtained or reinforced through the concentration, and through such means as controlling production factors, sales channels, technical advantages and key facilities, make it more difficult for other undertakings to enter the relevant market. The offsetting effect of the entry of a potential competitor may also be reviewed by SAMR.
Concentration may have a negative impact on technological advancement through the following means:
• it may mitigate the competitive pressure of undertakings participating in the concentration, and reduce the momentum and investment in technological innovation; and
• undertakings participating in the concentration may hinder investment, research and development and utilisation of other undertakings in the relevant technologies by using enhanced control over the market through the concentration.
4. Other factors that should be considered:
The following other factors shall also be comprehensively considered:
• the impact of the concentration on consumers and other relevant undertakings;
• the impact of the concentration on national economic development;
• the impact of the concentration on the public interest;
• the impact of the concentration on economic efficiency;
• whether undertakings that participate in the concentration are enterprises on the verge of bankruptcy; and
• whether there is offsetting buyer power.
4.2 To what extent are efficiency considerations taken into account?
An efficiency is likely to be achieved if the concentration will not create or strengthen a dominant market position. In such situation, a concentration of undertakings may raise economic efficiency, achieve the effect of economies of scale and economies of scope, raise the competitive pressure of undertakings in the relevant market, reduce product costs and improve product quality and diversification, thereby making a positive impact on the interests of consumers.
However, if the concentration will create or strengthen dominant market position, it is difficult to make efficiency arguments, because dominant undertakings are unlikely to pass on efficiencies to the consumers. In such situation, the concentration is likely to enhance their ability to carry out acts of excluding or restricting competition and make it more likely for them to damage the interests of consumers through such means as raising prices, lowering quality, restricting the quantity of production and sales and reducing investment in scientific and technological research and development.
4.3 Are non-competition issues taken into account in assessing the merger?
Yes. As we indicate in question 4.1 above, national economic development and the public interest will be considered, which means that SAMR does not only consider competition policy when reviewing a merger notification. Industrial policy will also be considered.
It is worth noting that industrial policy is not always contradictory to competition policy. Many industrial policies are aimed at being pro-competition.
4.4 What is the scope for the involvement of third parties (or complainants) in the regulatory scrutiny process?
Third parties do not possess a statutory right to access merger control files, but they do possess a right to challenge mergers in the process of review.
In its review process, SAMR may seek opinions from third parties (including government agencies, industry associations and other entities) in respect of the proposed acquisition, and third parties may voice their opinions through these consultations. The opinion solicitation process is usually conducted through fax or telephone communication. In particular, for the simplified merger control procedure, when a simple case has been formally accepted, SAMR shall publish an announcement of the case on its website for a period of 10 days. During the announcement period, any entity or individual (third party) can submit written comments to SAMR regarding whether or not the case shall be determined as a simple case. If the third party is of the opinion that the disclosed case shall not be determined as a simple case, objections can be raised to SAMR in the announcement period, supported with relevant evidence and contact information. Where SAMR finds that a case is not qualified for simplified procedures, it shall require the notifying party to withdraw the case and refile under normal procedures.
4.5 What information gathering powers (and sanctions) does the merger authority enjoy in relation to the scrutiny of a merger?
If the documents and materials submitted by the applicant(s) are inadequate, incomplete or inaccurate, according to the Guiding Opinions on the Notification of the Concentration of Undertakings, the applicant(s) shall make supplements, revisions, clarifications and explanations within the time limit specified by SAMR. Only when SAMR believes that the documents and materials for notification, including the supplementary documents and materials, comply with the AML, will it accept the notification. SAMR has broader information gathering power to collect notification-related information.
According to the AML, persons who provide false or misleading information or any other act to refuse or obstruct an investigation may be ordered by SAMR to:
• make a correction;
• pay a fine of no more than RMB 20,000 (in the case of individuals) and no more than RMB 200,000 (in the case of undertakings); or
• in cases where the case is "serious", a fine ranging from RMB 20,000 to RMB 100,000 may be imposed on individuals and a fine ranging from RMB 200,000 to RMB 1 million may be imposed on undertakings.
Where the case constitutes a criminal offence, criminal liability may also be pursued in accordance with the relevant laws.
4.6 During the regulatory process, what provision is there for the protection of commercially sensitive information?
Article 30 of the Guiding Opinions on the Notification of the Concentration of Undertakings provide that SAMR assumes responsibility for the confidentiality of certain confidential information submitted in the notification. No confidential information will be disclosed to third parties without the notifying parties' prior approval.
Since SAMR may need to consult relevant government agencies, industry associations and other entities' stakeholders, the parties can provide non-confidential versions of the notification by redacting the sensitive information to preserve confidentiality.
In certain merger notifications, where SAMR may need to communicate with its counterparts in other jurisdictions, the parties may issue a waiver to SAMR and allow SAMR to disclose information to and receive information from its counterparts to facilitate the merger control review process.
5 The End of the Process: Remedies, Appeals and Enforcement
5.1 How does the regulatory process end?
SAMR will generally issue a written notice of clearance. Unless the merger is prohibited or cleared with supplementary conditions (remedies), the decision will not be published or publicly announced.
5.2 Where competition problems are identified, is it possible to negotiate "remedies" which are acceptable to the parties?
Where competition problems are identified, it is possible for parties to negotiate remedies with SAMR. The remedies will be included in the review decision to be published by SAMR on its website. The parties will also sign a formal undertaking to perform the remedies.
According to the statistics, in about 60% of cases, behavioural remedies are accepted by the antitrust authorities, and about 40% of cases are subject to either structural remedies or remedies composed of both behavioural and structural requirements.
Behavioural remedies
Behavioural remedies are more frequently used by SAMR. SAMR is in favour of behavioural remedies for the following reasons:
1) Behavioural remedies are designed for anti-competitive behaviours and effects derived from the concentration, and can deal with competition concerns without changing the transaction structure.
2) Attaching remedies does not require the existence of competition issues. As long as there is the possibility of eliminating or restricting competition, SAMR can attach remedies. If a remedy is wrongly attached, an irreversible structural remedy is more damaging, whereas a behavioural remedy is more flexible and can be adapted to the above-mentioned uncertainty.
3) The parties and SAMR have the flexibility to create and choose behavioural remedies that meet the actual needs of the situation, while at the same time minimising the intervention in the commercial operation of the business.
4) In certain cases, behavioural remedies are equivalent to structural remedies in their effect. For example, non-discriminatory licensing of infrastructure or intellectual property rights to third parties can be considered as structural remedies.
5) The cost of supervision and execution is not excessively high.
Structural remedies
Structural remedies are not as popular as behavioural remedies for the following reasons:
1) The parties have an incentive to divest overlapping businesses with weaker strength and lower value, in order to weaken the future competition from the divested assets. This leads to the inherent inadequacy of the competitiveness of divested assets, which makes it difficult to attract suitable buyers for them or to operate them effectively after the divestiture.
2) Due to the lack of support in human resources, brand, financial support, etc., the competitiveness of divested assets is generally weaker than before the divestiture, and there are fewer constraints on the incumbent competitors.
3) The risk of the lack of qualified buyers, colluding with the divestiture obligor, does exist in reality.
4) The divestiture period may deteriorate the competitiveness and value of the divested assets.
5.3 To what extent have remedies been imposed in foreign-to-foreign mergers?
SAMR has imposed both behavioural and structural remedies in foreign-to-foreign mergers. There is no difference in the approach adopted by SAMR when remedies are being negotiated for foreign-to-foreign mergers compared to other mergers.
5.4 At what stage in the process can the negotiation of remedies be commenced? Please describe any relevant procedural steps and deadlines.
If a transaction may eliminate or restrict competition, SAMR will raise competition concerns in the Phase II review. The parties have the right to propose remedies to SAMR 20 days before the expiry of the Phase II review.
The negotiation process normally involves rounds of communications between the parties and SAMR, in which the remedy proposals will be revised. SAMR can seek comments from relevant stakeholders to evaluate the effect of the proposed remedies through surveys, hearings, expert meetings, etc.
As the remedy negotiation with SAMR can be very time consuming, it is suggested that parties conduct a self-evaluation and prepare remedy proposals at an early stage if the self-evaluation reveals that remedies will likely be required.
5.5 If a divestment remedy is required, does the merger authority have a standard approach to the terms and conditions to be applied to the divestment?
Yes. The Rules for Restrictive Conditions on Concentration of Undertakings for Trial Implementation (the "Divestiture Rules") issued in December 2014 by MOFCOM set out the rules and procedures relating to divestiture.
According to the Divestiture Rules, undertakings which are required to divest assets ("divestiture obligors") would have to divest their assets within a time limit stipulated in a merger control decision by the authority (if there is no such time limit provided in a merger decision, the divestiture obligors shall find the appropriate buyer and implement such divesture within six months after the issuance of the decision. Under certain exceptional circumstances, SAMR may grant an extra three months maximum to implement the divesture). Divestiture obligors may appoint a "supervision trustee" and a "divestiture trustee" to assist in the divestiture process. The former will supervise the divestiture process and the latter will assist with locating a purchaser, as well as assist with the actual sale process.
It is worth noting that since the decision on NXP's acquisition of Freescale at the end of 2015, the authority has consecutively applied "the upfront buyer" requirement in its decisions with restrictive conditions. Furthermore, a tight time limit for the completion of the divesture is usually imposed in this situation. The rule for "the upfront buyer" is stipulated in Article 14 of the Divestiture Rules, requiring that the determination of the buyer of the business to be divested is the prerequisite of obtaining the authority's approval and closing of the transaction. Up to now, current laws and regulations only specify the rule of "the upfront buyer"; however, there are limited regulations and cases related to the execution of this rule in practice. Nevertheless, considering the situations of recent cases, it can be reasonably predicted that the authority will apply "the upfront buyer" requirement in its future decisions with restrictive conditions. Furthermore, a tight time limit for the completion of the divesture is usually imposed in this situation.
5.6 Can the parties complete the merger before the remedies have been complied with?
In case of "the upfront buyer" remedy, the divestiture obligor cannot complete the merger unless it can find a proper buyer and conclude a sale agreement. In case of behavioural remedies, the parties can complete the merger first, since behavioural remedies are not a one-time action but may last for years.
5.7 How are any negotiated remedies enforced?
SAMR will supervise the enforcement of the remedies and request the parties to report to SAMR from time to time.
A supervising trustee will be appointed to fulfil the following duties under the supervision of SAMR:
• supervising the divestiture obligor's fulfilment of obligations under the decision of SAMR and the relevant agreements;
• evaluating the candidate buyers recommended by the divestiture obligor and the sale agreement to be concluded, and submitting the evaluation report to SAMR;
• supervising the performance of the sale agreement, and regularly submitting supervision reports to SAMR;
• coordinating about the dispute between the divestiture obligor and a potential buyer over divestiture matters; and
• submitting other reports relating to divestiture as required by SAMR.
If an undertaking participating in the concentration breaches the decision of SAMR, SAMR shall order it to make corrections within a specified period. If the circumstances are serious, SAMR shall order the undertaking to stop the concentration, dispose of the shares or assets within the specified period, transfer the business within the specified period and take other necessary measures to return to the status before the concentration, and may impose a fine of no more than RMB 500, 000.
5.8 Will a clearance decision cover ancillary restrictions?
Yes. The clearance decision of SAMR can cover ancillary restrictions, i.e. restrictions directly related and necessary to the implementation of the concentration.
5.9 Can a decision on merger clearance be appealed?
Pursuant to Article 53 of the AML, entities that are not satisfied with a clearance decision of SAMR in respect of merger control may seek a review of the decision (i.e., administrative review) by SAMR. Entities who are dissatisfied with the administrative review decision of SAMR may bring administrative lawsuits before the courts (i.e., judicial review).
5.10 What is the time limit for any appeal?
To appeal the clearance decision, undertakings need to apply for administrative review with SAMR within 60 days after knowing the clearance decision of SAMR. If the undertaking is still not convinced by the result of the administrative review, the undertaking could file for an administrative lawsuit within 15 days after receiving the administrative review decision.
5.11 Is there a time limit for enforcement of merger control legislation?
The AML, including in its accompanying regulations, does not provide a time limit for enforcement of merger control legislation.
6 Miscellaneous
6.1 To what extent does the merger authority in your jurisdiction liaise with those in other jurisdictions?
In May 2019, SAMR signed antitrust bilateral memoranda of understanding ("MOUs") with 28 jurisdictions including the European Union, United States, Brazil, Japan and South Korea.
In dozens of cross-border merger review cases, China's competition authority has practised due process in its cooperation with international counterparts. In the case of Dow/Dupont, China has actively cooperated with many jurisdictions including the European Union, United States, India and South Africa after gaining a waiver from the companies. Active communication with other jurisdictions has greatly improved the coordination of review timelines, definition of relevant markets, evaluation of competition harm and remedies. In the future, SAMR will explore wider and more in-depth cooperation with international competition authorities.
We understand that SAMR regularly consults with the competition authorities from more experienced jurisdictions such as the United States and the European Union. For example, on March 20, 2019, the AMB of SAMR and the Directorate-General for Competition of the European Union held a seminar during China-Europe Competition Policy Week in Beijing and discussed the concept of control in the merger review, the competition analysis of joint ventures, the role of competition law in standard essential patent licensing, and the comparison of cases regarding ultra-high pricing and resale price restriction. The competition authorities from these jurisdictions also conduct capacity building or technical assistance programmes for SAMR officials.
6.2 What is the recent enforcement record of the merger control regime in your jurisdiction?
In July 2020, SAMR cleared the merger notification in relation to the establishment of a Joint Venture between Shanghai Mingcha Zhegang Management Consulting Co., Ltd. and Huansheng Information Technology (Shanghai) Co., Ltd. (the "MZ case"). The significance of this merger notification is that SAMR formally accepted a merger notification related to a party involving a variable interest entity ("VIE") structure. Before this case, SAMR has never accepted or approved merger notifications involving VIE factors even though they have met the thresholds of merger control.
The VIE structure is designed to enable Chinese companies to bypass Chinese regulatory scrutiny and raise foreign funds. It has been broadly adopted by Chinese internet companies to attract foreign investors or achieve a listing overseas, but is viewed as illegal in China. The illegitimacy of the structure has made VIE companies unable to make merger notifications in China for compliance reasons. As a result, deals driven by VIE companies have normally escaped Chinese merger control scrutiny.
In the MZ Case, the parties proposed to set up a joint venture to engage in the development of information technology in the catering industry and internet technology, data processing, artificial intelligence application software/hardware development, and to provide technical solutions for the catering industry. While one party to the transaction has a VIE structure, the VIE structure in this case does not appear to involve any circumvention of foreign investment restrictions. The clearance decision was issued by SAMR without conditions.
The MZ Case did not provide solutions for transactions involving a VIE structure. However, two trends are clear: (1) the development of the digital economy and importance of internet companies in future market competition make it impossible for internet companies to escape from merger review; and (2) the greatly increased penalty for gun-jumping could make non-filing much worse than the VIE structure itself.
We are looking forward to future merger notification cases involving VIE being reviewed by SAMR.
6.3 Are there any proposals for reform of the merger control regime in your jurisdiction?
In January 2020, SAMR launched a public consultation on a draft of amendments to the AML. The key changes related to merger control are the definition of "control", a "stop-the-clock" mechanism and a higher penalty for "gun jumping". These amendments to the AML, once enacted, will have a profound impact on transactions and the merger control regime in China.
The definition of "control"
A definition of "control" is introduced in the draft of amendments to the AML. "Control" includes direct/indirect control, sole/joint control and de jure/de facto control. "Decisive influence" is defined as a form of control right, and is no longer a concept that exists in parallel with "control" under the AML.
A "stop-the-clock" mechanism
According to the draft of amendments to the AML, the clock is stopped:
• upon an application by or consent from the notifying party;
• where supplementary documents and materials are required from the notifying party by SAMR; and
• while negotiating remedies between the notifying party and SAMR.
The introduction of the "stop-the-clock" mechanism could help SAMR avoid "pull and refile" situations in its review of complex merger notifications.
Higher penalty for "gun jumping"
According to the draft of amendments to the AML, the maximum fine for "gun jumping" will be increased from RMB 500,000 to 10% of the undertakings' sales volume in the preceding year.
6.4 Please identify the date as at which your answers are up to date.
These answers are up to date as of October 27, 2020.
7 Is Merger Control fit for digital services & products?
7.1 Is there or has there been debate in your jurisdiction on the suitability of current merger control tools to address digital mergers?
The digital world is directly linked to the real world: it could be a distribution channel; and it can also deliver products and services that compete with the products and services in the real world. In theory, the current antitrust laws and economic theories can apply to the digital world, but in practice, we have already identified many unique characteristics of the digital world that cannot be found in the real world. For instance, in the real world many markets are highly independent and do not compete with each other. However, in the digital world, we understand that all companies are more or less competing with each other for the "attention" of online users. Moreover, in the real world a consumer can purchase far more goods than he/she can consume, whereas in the digital world the average online user's "attention" cannot cross the ceiling of approximately four hours per day, which means that no matter how hard the internet companies work, the "cake" for all players is fixed. In addition, "winner-takes-all" is very common in the digital world, but is rare in the real world. Finally, data is the foundation of the digital economy, which itself may also form market forces (agricultural economy – land, industrial economy – machines) and may affect market competition.
There are no merger control tools to address digital mergers in China. However, the draft of amendments to the AML introduces factors to be evaluated in assessing dominance in technology-related markets, such as network effects, economies of scale, lock-in effects and the ability to control and process relevant data. This suggests that the digital sector will remain a focus of the Chinese authority in the future.
7.2 Have there been any changes to law, process or guidance in relation to digital mergers (or are any such changes being proposed or considered)?
There is no regulation in China specifically targeting digital mergers. However, the Interim Provisions on Prohibiting Acts of Abuse of a Dominant Market Position, effective on September 1, 2019, provides rules related to the internet and other new economic formats:
• In the determination of whether an undertaking on the internet or of another new economic format holds a dominant market position, consideration may be given to the competitive characteristics of the relevant industry, business models, the number of users, network effects, lock-in effects, technological features, capabilities of market innovation, the mastery and processing of relevant data, the said undertaking's market forces in associated markets, and other factors. (Article 11.)
• Where the free model of the internet or other new economic formats is involved, comprehensive consideration shall be given to the free commodities and relevant charged commodities provided by undertakings, and other situations. (Article 15.)
7.3 Have there been any cases that have highlighted the difficulties of dealing with digital mergers, and how have these been handled?
One of the digital mergers under scrutiny by SAMR is the merger of ride-hailing giant Didi Chuxing Technology Co. ("Didi") with the China unit of Uber Technologies Inc. ("Uber") in 2016. The deal created a giant in the ride-hailing market in China. The $35 billion combination raised monopoly concerns, and three years after the announcement of the merger, SAMR is still assessing the deal under the AML. There are at least three issues involved in this case:
1. How to calculate the turnover?
Didi and Uber are ride-hailing companies. In general, they do not run taxis. Taxi fares go to the driver who provides the taxi services and Didi/Uber can only obtain the service fee. When calculating the turnover, only the service fee obtained by Didi/Uber can be used. In 2016, the turnover of Didi and Uber did not reach the threshold of RMB 400 million, so the transaction was not subject to merger control in China.
2. How to deal with the VIE structure?
Another issue is whether the authority can take into consideration the turnover of the parent company to calculate the total turnover. We note that Didi is controlled by several individuals and no large company is the shareholder. It is alleged that Didi operates under the VIE structure. The VIE structure, also known as "contractual arrangements", is commonly used by foreign investors to invest in China in industry sectors where foreign investments are prohibited or restricted, and is also used as a means for Chinese domestic companies to achieve an offshore financing or listing. The current laws and regulations, including the new FIL, do not contain content regarding the VIE structure issue. It is unlikely that SAMR will address the VIE-related issues since the law is unclear.
3. How to evaluate the anticompetitive effect?
When we review the competition history of the ride-hailing market in China, we notice that competition in the ride-hailing market is directly linked to competition in the mobile payment market. Before the Didi/Uber merger, there were two big companies in the ride-hailing market in China: Didi supported by Tencent; and Kuaidi supported by Alibaba. Both Tencent and Alibaba understand that the ride-hailing market is the gateway to promote the mobile payment service because everyone will take a taxi and everyone will feel comfortable using a mobile payment to pay for a taxi fare because it is a small amount and affordable. Each of them understands the market behind the mobile payment market, so they each provide a huge subsidy to Didi and Kuaidi. The final result is that Didi/Kuaidi merged, and everyone in China is starting to use the mobile payment service either through WeChat Pay or Alipay. The Didi/Uber merger could be considered as strengthening the market power of Tencent in both the ride-hailing market and the mobile payment market. The big data gathered by Didi is also a treasure house for further exploration.
The above situation may be applicable to other mergers with regard to the internet or other new economic formats. Since the Interim Provisions on Prohibiting Acts of Abuse of a Dominant Market Position already address the issues with regard to the internet or other new economic formats, we believe that rules regarding digital mergers could be introduced to China soon.
