CHINA Law and Practice Contributed by: Liu Cheng and Li Yumeng (Audrey), King & Wood Mallesons
5.4 Negotiating Remedies With Authorities
is made. In case of behavioural remedies, the parties are normally required to comply with the remedies for five to ten years. Normally, parties can complete the transaction before the remedies are complied with. However, before the completion of the divestiture, the par - ties are subject to the following obligations to ensure the continuity, competitiveness and mar - ketability of the divested business: • keeping the divested business independent of the reserved business and managing in the best interest of the divested business; • not committing any act that may have an adverse impact on the divested business, including employing key staff of the divested business, or obtaining the trade secrets or other confidential information of the divested business; • designating a special manager to manage the divested business; • ensuring potential buyers have access to suf - ficient information about the divested busi - ness in a fair and reasonable manner so as to evaluate the value and commercial potential of the divested business; • providing necessary support as requested by the buyer to ensure the smooth takeover and stable operation of the divested business; and • handing over the divested business to the buyer and performing relevant legal proce - dures. If the parties fail to perform their obligations under the remedies, SAMR may ask them to make corrections within a specified timeframe. In serious cases, SAMR may impose the follow - ing sanctions on the parties:
Parties may propose remedies either before or after SAMR informs the parties that the concen - tration has or may have anti-competitive effects. SAMR may propose remedies to the parties, but it cannot force them to accept. SAMR will evalu - ate the remedies proposed by the parties and inform them of the result. Only when the parties and SAMR agree on the proposed remedies can such remedies be imposed on the transaction’s approval. Parties can voluntarily propose remedies to and negotiate with SAMR at any stage of the review process, including Phase I, Phase II and Phase III. Parties can also propose remedies if SAMR raises competition concerns in Phase II. In prac - tice, the negotiation of the proposed remedies between SAMR and the parties usually occurs in Phase III. 5.5 Conditions and Timing for Divestitures According to Article 38 of the Provisions on Con - centration Review, during the review process, SAMR may inform the parties of competition concerns and ask the parties to submit a written remedy proposal within a specified timeframe. SAMR may solicit public opinions on the remedy proposal from government authorities, industry associations and consumers before it publicly announces the decision. SAMR may require the parties to entrust a trustee to supervise the implementation of the remedies. With respect to the timing of divestitures, the parties are required to complete the divestiture within the timeframe specified by SAMR or, where no timeframe has been specified, within six months from the date on which the decision
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