CHINA Law and Practice Contributed by: Liu Cheng and Li Yumeng (Audrey), King & Wood Mallesons
JV from disclosing the prices of cholesterol and vitamin D3 to third parties unless mandated by a client, governmental authorities or applicable law. 5. Decision: Prohibitions and Remedies 5.1 Authorities’ Ability to Prohibit or Interfere With Transactions Under the AML, a concentration may not be implemented until a clearance is obtained. If SAMR concludes that the concentration of undertakings has or may have anti-competitive effects, it may render a decision prohibiting the concentration or imposing restrictive conditions. Decisions not to approve or to conditionally approve are published on SAMR’s official web - site. 5.2 Parties’ Ability to Negotiate Remedies When SAMR has competition concerns about a transaction, it will inform the parties of its con - cerns and require them to provide remedy pro - posals within a specified timeframe. The parties may then propose structural and/or behavioural remedies to SAMR. Remedies typically used in practice include: • structural conditions such as divestiture of tangible assets, intangible assets including intellectual property rights, data, or relevant rights and interests; • behavioural conditions such as providing access to infrastructure including networks or platforms, licensing key technologies (includ - ing patents, know-how or other intellectual property), terminating exclusive agreements,
modifying platform rules or algorithms, offer - ing compatibility or not reducing the interop - erability level; • a “hold separate” condition, which is a rather unique approach employed by SAMR in some cases where the acquired business is required to remain independent for a certain length of time after the merger; while the ”hold separate” condition may be categorised as behavioural, SAMR has publicly expressed that this condition was intended to achieve similar effects as structural conditions; and • comprehensive conditions, combining both structural conditions and behavioural condi - tions. There are no express provisions within the AML or its accompanying regulations providing for whether remedies are required to address non- competition issues. However, in the Korean Air/ Asiana Airlines case, SAMR imposed a restric - tive condition that the parties must take reason - able and necessary data protection measures and establish a data protection system when the acquired entity withdraws from and changes the relevant airline alliance, reflecting the authority’s concerns about data. Therefore, we understand that SAMR may require the parties to resolve non-competition issues prior to clearance. 5.3 Legal Standard According to Article 39 of the Provisions on Concentration Review, SAMR shall evaluate the effectiveness, feasibility and timeliness of the remedies. If the remedies can effectively reduce the adverse effects of the concentration on com - petition, SAMR may decide to approve the con - centration with restrictive conditions. Otherwise, the remedies will be deemed unacceptable and SAMR can decide to prohibit the concentration.
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