As at August 2014, the Anti-Monopoly Law had been implemented for six years, during which time the Ministry of Commerce (MOFCOM) had opened a total of 945 cases, concluding 875 of them. Among them, MOFCOM unconditionally approved 849 cases, accounting for 97% of all concluded cases, conditionally approved four cases and barred two cases. It can be said that the system and legislation for the review of anti-monopoly filings in China is becoming increasingly better, more transparent and more mature. Based on our own practical experience, we would like to offer some compliance-related recommendations to filing enterprises.

File using the simplified case procedure wherever possible. With a view to further making the anti-monopoly review of business operator concentrations compliant, enhancing the efficiency and transparency of business operator concentration filings and related reviews and facilitating filings by business operators, the MOFCOM Anti-Monopoly Bureau revised and issued the Guiding Opinions on the Filing of Simplified Business Operator Concentration Cases (for Trial Implementation).

The criteria applicable to simplified cases were implemented from 12 February 2014. If a filing satisfies the criteria for a simplified case, it should be made in accordance with the simplified procedure. In this way, the preparation of the documents and materials necessary for the filing can be reduced whereas the approval period can be accelerated. If the filing does not satisfy the criteria, it must be made in accordance with the normal procedure, failing which the Anti-Monopoly Bureau will require the filer to file again as a non-simplified case. This will stretch out the time required and increase the amount of work.

File as soon as possible so as to avoid affecting the merger. The maximum review period is 180 days, counting from the date of opening of the case. A review before the opening of a case can last from a few weeks to a few months. In the Coca-Cola case, Coca-Cola submitted the filing materials to MOFCOM on 18 September 2008. MOFCOM conducted the case opening review on 20 November.

Additionally, MOFCOM may decide on whether to extend the period at its own discretion, up to a maximum of 60 days. MOFCOM accorded itself extensions in United Technologies’ acquisition of Goodrich, Google’s acquisition of Motorola Mobility and in General Electric’s and Shenhua’s establishment of a joint venture.

The work to be done by an enterprise in the course of a filing. If the acquisition amount is very large, the transaction involves a famous local brand or involves a highly concentrated industry, MOFCOM, in its anti-monopoly review, will gather opinions from inside the industry and the industry association while additionally tracking public opinion in the media and online. Just the opposing opinion of a certain competitor in the industry may be enough to kill a potential acquisition transaction. An enterprise needs to cooperate with MOFCOM in its work and liaise with domestic and foreign media at the first instance, and additionally needs to do the work with relevant parties so as to secure their understanding and support.

Performance of attached restrictive conditions. MOFCOM will conduct monitoring inspections of the performance of the restrictive conditions by business operators involved in a concentration to which such conditions were attached, and such business operators are required to report on the their performance of the restrictive conditions to the by the specified deadlines.

If a business operator fails to perform its obligations in accordance with the restrictive conditions, MOFCOM may order it to rectify the matter within a specified period of time. If it fails to do so, MOFCOM may handle the matter in accordance with the Anti-Monopoly Law. Accordingly, the restrictive conditions to which an enterprise commits must be practically feasible, so enterprises are strongly urged not to commit to obligations that they could not possibly perform for the sake of securing approval, e.g. restrictive conditions that need to be satisfied that in effect constitute a disguised prohibition of the transaction.

Legal consequences of failing to file in accordance with the law. The term “business operator concentration for which a filing was not made in accordance with the law” means a concentration that satisfies the filing criteria set forth in the Measures of the State Council on the Criteria for the Filing of Business Operator Concentrations where the business operators implemented the concentration without first making a filing with MOFCOM in accordance with the Anti-Monopoly Law.

Where a business operator implements a concentration without making a filing, MOFCOM may impose a fine of up to RMB 500,000 (US$80,600). MOFCOM may also order it to take measures to restore the pre-concentration state, publish the penalty decision (commencing from May 2014), etc.

If an enterprise satisfies the filing criteria, it must first make a filing. For example, the MOFCOM’s administrative penalty decision in the case of the acquisition of RDA by the Unisplendour Group states that given that the turnover in China of these two companies in the year prior to 2013 exceeded the criteria requiring a prior filing (i.e. reaching RMB 2 billion in total and reaching RMB 400 million separately) they should have carried out an anti-monopoly filing with MOFCOM before proceeding with the acquisition. However, Unisplendour failed to carry out the filing, MOFCOM published the penalty decision and fined it RMB 300,000.

Investigation measures available to MOFCOM in the course of an investigation and cooperation by enterprises. MOFCOM may: (1) enter the place of business of the business operators being investigated or other relevant premises to conduct an inspection; (2) question the business operators being investigated, materially interested parties and other relevant entities and individuals and require them to give an explanation of relevant matters; (3) review and take copies of the relevant certificates, agreements, account books, business correspondence, electronic data and other such documents and materials of the entities mentioned in (2); (4) place under seal and seize relevant evidence; and (5) check the business operators’ bank accounts.

In the course of such an investigation, it is imperative that the business operators being investigated offer their cooperation. If a business operator refuses to provide relevant materials or information, or provides false information, withholds, destroys or diverts evidence, or refuses or obstructs the investigation, MOFCOM may order it to rectify the matter and impose an appropriate fine, and if a criminal offence is constituted, pursue its criminal liability in accordance with the law.

Susan Guo is a partner in the Beijing office of AllBright Law Offices