CHINA Law and Practice Contributed by: Liu Cheng, Li Yumeng, Ye Hongtao and Jiang Hanxue, King & Wood
2. Jurisdiction 2.1 Notification
sions on failure-to-notify cases, with fines ranging from CNY800,000 to CNY2,000,000 and an average fine of approximately CNY1,528,571 per undertaking. The factors stipulated in the Trial Discretion Bench - mark were already considered in these cases. For more details, see 2.13 Penalties for the Implementa- tion of a Transaction Before Clearance . In July 2021, the SAMR published its penalty decision on a failure-to-notify case regarding the acquisition of CMC by Tencent Music, which is the only case where the SAMR has imposed remedies for failure-to-notify cases. The relevant remedies imposed included pro - hibiting the entering of exclusive copyright agree - ments or other exclusive agreements, and terminating existing exclusive agreements within a time limit to restore market competition. Tencent was also fined CNY50,000, which was the maximum penalty under the pre-amended AML. All penalties imposed for cases of failure to notify are In China, certain types of transactions that constitute a “concentration of undertakings” are caught if they meet the jurisdictional thresholds. A concentration of undertakings is defined as: • a merger of undertakings; • acquiring control over one or more undertakings through acquisition of equity or assets; and • acquiring control or the ability to exercise a deci - sive influence over one or more undertakings under a contract or any other means. made public by the SAMR. 2.3 Types of Transactions Internal restructuring or reorganisations are generally not caught if they fall under the exceptions outlined in 2.1 Notification . Based on the definition of “concentration”, trans - actions that do not involve the transfer of shares or assets but still concern the acquisition of control (eg, change of articles of association in relation to the appointment of directors and their voting mechanism) could potentially be caught.
Notification in China is compulsory as long as the pro - posed concentration meets the jurisdictional thresh - olds. However, the undertakings could be exempted from compulsory notification under the following circum - stances: • one of the undertakings involved in the concen - tration holds at least 50% of the voting shares or assets of each of the other undertakings; or • at least 50% of the voting shares or assets of each undertaking involved in the concentration are held by one undertaking not involved in the concentra - tion. 2.2 Failure to Notify Pursuant to Article 58 of the AML, if undertakings fail to seek clearance in relation to a notifiable concentra - tion, which thus may have the effect of excluding or limiting competition, the SAMR may at its discretion impose the following sanctions on the undertakings: • an order to cease implementing the concentration; • an order to dispose of the shares or assets within a specified period of time, transfer business within a specified period of time and take other necessary measures to restore the status quo ante; and/or • a fine of up to 10% of the previous financial year’s sales revenue. There is a fine of up to CNY5 million if the concen - tration of undertakings does not have the effect of excluding or limiting competition. In cases where the violation of the AML is “extreme - ly severe”, with an “extremely adverse” impact and “especially serious” consequences, the SAMR can increase the fine amount by two to five times. The revised penalty standards (ie, a fine of up to 10% of the previous year’s sales revenue of the undertak - ing concerned or a fine of up to CNY5 million) have been applied since early 2024. From 2025 to 13 May 2026, the SAMR published six administrative deci -
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