Authored by Dr. Zhan Hao (zhanhao@anjielaw.com)

On 13th August of 2012, MOFCOM granted a conditional approval on the concentration between Wal-Mart and f Niuhai Holdings Ltd (hereinafter referred to as NH) after a nearly 6-month review

MOFCOM received the concentration filing as early as Dec 16th,2011, and officially accepted the case on Feb 16th, 2012 after the supplemental filing. Through self-assessment and consultation with relevant governmental departments, industry association and main competitors, MOFCOM concluded that concerning concentration may lead to the effect of eliminating or restricting effective competition in the relevant market.

In this connection, Wal-Mart submitted proposed commitments to MOFCOM on July 3rd, 2012, who considered they can clear MOFCOM’s competition concerns after comprehensive assessment. In the end, Wal-Mart obtained the conditional approval from MOFCOM regarding its acquisition control on NH.

According to the concentration agreement concluded among the related parties, Wal-Mart shall increase its shareholding ratio over NH from 17.7% to 51.3% through its wholly–owned subsidiary company, GEC 2. NH shall take in hand the direct–sale business of online shopping platform Yihaodian of Shanghai Yishiduo E-commerce (hereinafter as YSD Yihaodian) through its wholly–owned subsidiary companies, Xingangling Hongkong Co. Ltd and NH Shanghai Corporation. Upon completion of the deal, Wal-Mart shall become the dominant shareholder of NH and take control of the direct-sale business of YSD Yihaodian through the intermediate, NH.

In light of Wal-Mart’s commitments, MOFCOM granted approval of the concentration under restrictive conditions. Wal-Mart shall fulfill the following obligations:

(1) NH Shanghai is limited to direct-sales through its own network platform.

(2) Before obtain the license for value-added telecom business, NH Shanghai after this concentration shall not provide network services for other dealers through its own network platform.

(3) Upon completion of the deal, Wal-Mart shall not undertake the value–added telecom business previously operated by Shanghai Yishiduo E-commerce Co. Ltd through VIE model.