CHINA Law and Practice Contributed by: Liu Cheng and Li Yumeng (Audrey), King & Wood Mallesons
competition policies and implementing fair competition review. In July 2022, SAMR announced a three-year pilot programme to take place from 1 August 2022 to 31 July 2025, during which SAMR will delegate the initial review of certain simplified procedure merger filings to five provincial Administrations for Market Regulation (“Provincial AMRs”) in Bei - jing, Shanghai, Chongqing, Shaanxi and Guang - dong. Parties to transactions that require merger clear - ance will continue to submit filings to SAMR, but SAMR may delegate cases to the Provin - cial AMRs at its discretion and inform the filing parties of the delegation. While the provincial AMRs will review cases assigned to them, SAMR remains the final decision maker on all merger filings. During the review process, SAMR and the Provincial AMRs may also consult other industry regulators regarding their opinions on transactions from a regulatory or industry policy perspective. Notification in China is compulsory as long as the proposed concentration meets the jurisdic - tional thresholds. However, the undertakings could be exempted from compulsory notification under the following circumstances: • one of the undertakings involved in the con - centration holds at least 50% of the voting shares or assets of each of the other under - takings; or 2. Jurisdiction 2.1 Notification
• at least 50% of the voting shares or assets of each undertaking involved in the concentra - tion are held by one undertaking not involved in the concentration. 2.2 Failure to Notify Pursuant to Article 58 of the AML, if undertakings fail to seek clearance in relation to a notifiable concentration, which thus may have the effect of excluding or limiting competition, SAMR may at its discretion impose the following sanctions on the undertakings: • an order to cease implementing the concen - tration; • 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 con - centration of undertakings does not have the effect of excluding or limiting competition. In cases where the violation of the AML is “extremely severe”, with an ”extremely adverse” impact and “especially serious” consequences, 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 undertaking concerned or a fine up to CNY5 million) have been applied since early 2024. From 2024 to May 2025, SAMR published five administrative decisions on failure-to-notify cases, with fines ranging from CNY700,000 to CNY1,750,000 and an average fine of approxi - mately CNY1,378,600 per undertaking. The fac -
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