CHINA Law and Practice Contributed by: Liu Cheng and Li Yumeng (Audrey), King & Wood Mallesons
2.8 Foreign-to-Foreign Transactions Foreign-to-foreign transactions are subject to merger control provided the jurisdictional thresh - olds are met. There is no other local effect test except for the jurisdictional thresholds. A local presence is not required. When a target has no sales and/or assets in China, a filing is not required unless there are multiple buyers that are acquiring joint control of the target and the buyers have reached the jurisdictional thresholds. 2.9 Market Share Jurisdictional Threshold There is currently no market share jurisdictional threshold. 2.10 Joint Ventures The establishment of a joint venture is subject to merger control review if more than two undertak - ings are determined as having control over the joint venture and the notification thresholds are met. There are not known to be any special rules for determining whether joint ventures meet the jurisdictional thresholds. 2.11 Power of Authorities to Investigate a Transaction Where a transaction does not meet the jurisdic - tional thresholds, but facts and evidence col - lected establish that such concentration has or may have the effect of eliminating or restricting competition, SAMR can initiate an investigation in accordance with the law.
Since the AML Amendments, SAMR has not yet actually called in any below-threshold transac - tion. There is no statute of limitations on SAMR’s abil - ity to investigate a transaction. 2.12 Requirement for Clearance Before Implementation A transaction may not be closed before clear - ance. 2.13 Penalties for the Implementation of a Transaction Before Clearance Pursuant to Article 58 of the AML, if undertak - ings implement the transaction before clear - ance and the transaction thereby has the effect of eliminating or restricting competition, SAMR may at its discretion impose the following sanc - tions 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. The final amount of the penalty will be deter - mined based on the Trial Discretion Benchmark. Key rules and procedures include: • For cases with no competition concerns, there is a three-step approach:
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