Authored by Michael Gu (, Zhan Hao (

The Ministry of Commerce (“MOFCOM”) continues to play an active role in reviewing merger cases, supervising the concentration applications, and drafting implementing rules and guidance for enforcing the Anti-Monopoly Law (“AML”). The year 2012 witnessed 6 conditionally approved concentration decisions. This has been the most conditional approvals rendered by MOFCOM in a single year since the implementation of the AML in 2008. As of this writing, there have been a total of 16 cases conditionally approved by MOFCOM.

This article will review the key developments of 2012 and provide an analysis of the future trends of merger control enforcement and relevant AML supporting legislation in 2013.

Overview of MOFCOM’s Merger Control Review

According to a press conference held by MOFCOM on 27 December 2012[1], during the period between 1 January 2012 and 26 December 2012, MOFCOM received a total of 201 concentration filings, officially accepted 186 of them, and concluded 154 cases. 142 of these cases were approved without any conditions, accounting for 92% of all concluded cases. The number of received, accepted, and concluded cases has had no significant changes as compared with the 2011 figures. In addition to six conditionally approved cases, another six cases were voluntarily withdrawn after being accepted by MOFCOM in 2012.

The majority of merger case notifications involve horizontal concentrations between competitors. There are 80 such cases, accounting for 65% of all notifications. This is only a small change in the percentage of horizontal concentration cases out of total notifications. In 2011, there were 97 horizontal concentration cases accounting for 60% of all notifications.

In terms of the form of the concentration, 71 cases in 2012 involved equity acquisition (55% of concluded cases) while 36% of the total cases involved the establishment of a joint venture. Both the number and percentage of equity acquisition cases are slightly lower than those of 2011 during which the equity acquisition cases totaled 101, representing 62% of the concluded cases.

 Most of the concentrations occurred in the manufacturing industries, including petroleum, chemical, mechanical manufacture, automobile, shipping, aircraft, mining, etc.

 Key Characteristics of the Conditionally Approved Cases

 Lengthy Process of Review

 It took considerable time to satisfy MOFCOM’s requirements for acceptance of the concentration notification. The table below shows that the average period of time between filing and acceptance for the conditionally approved cases is more than 50 days. It is unlikely that this tendency will change in the near future.


Case Name[1]

Filing Date

Date of Acceptance


Henkel Hong Kong / Tiande Chemical JV



48 days

Western Digital / Hitachi



38 days

Google / Motorola



52 days

Goodrich / UTC



56 days

Walmart / Niuhai



61 days

Advanced RISCMachines / G&D / Gemalto



55 days


Unlike in 2011 where two of the four conditional clearance decisions were made during the second phase period, the remedies of the 6 conditionally approved cases in 2012 were all imposed during the third phase period, some of them even on the last day possible under the statutory time limit (i.e. 180 days).

The table below shows the review period of the all conditionally cleared cases in 2011 and 2012.


Case Name[2]

Acceptance Date

Date of Decision


Uralkali / Silvinit



78 days

Penelope /  Savio



56 days

GE / Shenhua Group



174 days

Seagate / Samsung



180 days

Henkel Hong Kong / Tiande Chemical JV



133 days

Western Digital / Hitachi



297 days[3]

Google / Motorola



180 days

Goodrich / UTC



130 days

Walmart / Niuhai



180 days

Advanced RISCMachines / G&D / Gemalto



179 days


MOFCOM seems to prefer behavioral remedies over structural remedies when imposing conditions.

Among the six cases, only one transaction (i.e. United Technologies’ acquisition of Goodrich) was required to divest its business. Another transaction (i.e. Western Digital’s acquisition of Hitachi) involved both divesture and behavioral obligations. The remaining four transactions had only behavioral remedies imposed on the parties. In contrast, the competition agencies in US and EU often use structural remedies, such as divestiture of assets and business, to restore market competition. Behavioral remedies are usually more acceptable to the relevant parties. However, this raises concerns as to the supervisory cost and the efficiency of implementing remedial measures. For example, in the Advanced RISCMachines/G&D/Gemalto case, the obligations imposed on ARM Holdings plc shall remain effective for eight years from the date of MOFCOM’s decision. ARM Holdings plc must report its performance of the obligations on an annual basis. It would be challenging for MOFCOM to supervise and inspect the performance of the remedies for such a long period of time. 

MOFCOM is confident enough to render independent and even creative remedies which differ from those imposed by its US or EU counterparts.

MOFCOM has accumulated extensive experience over the years and is establishing its reputation as an import antitrust agency in the world. Remedial measures imposed by MOFCOM are becoming more complicated and diversified. It used to be thought that MOFCOM would only impose conditions on a global transaction should other jurisdictions take the lead in attaching some conditions to the transaction. However, this is no longer the case.

Just like 2011, 2012 has witnessed the case which was unconditionally cleared in other jurisdictions but only conditionally cleared by MOFCOM on the grounds that the merger might adversely affect the interests of Chinese consumers. The recent example is Google’s acquisition of Motorola Mobility. In the Western Digital acquisition of Hitachi transaction, MOFCOM imposed very distinctive conditions in comparison to US and EU antitrust agencies. Therefore, it is highly recommended that the parties to a global transaction adopt the same attention and effort to their PRC concentration filings as they do to their filings in other jurisdictions. In particular, foreign parties should be willing to work out or accept China specific and commercially practical remedies under certain circumstances in order to get the deal done. 

MOFCOM is increasingly using economic methodologies to define the market and analyze the market competition.

As demonstrated in the United Technologies’ acquisition of Goodrich, MOFCOM used CR2 (84%), HHI (7158), and delta value (1728) to determine a very high level of market concentration in the aircraft AC power generation system market due to the merger. 

In the Wal-Mart acquisition of Niuhai Holding case, MOFCOM provided detailed analysis on the physical retail store market, online retail market and value-added telecommunication market. MOFCOM utilized its theory of harm due to “leverage effect” and concluded that after the merger, Wal-Mart would have the ability to extend its competitive advantage in physical retail store market to the online retail market and even to value-added telecommunication market.

Improved Transparency of the Merger Control Review

For the first time, MOFCOM has improved transparency by publishing the basic information on all 458 cases which were unconditionally approved as of 30 September 2012 since the AML came into force on August 1, 2008. Since MOFCOM is not required to disclose such information at all under the AML[4], such a change is definitely welcome although the information is very simple and only limited to the names of the transaction parties and the names of the transactions. Mr. Shang indicated that MOFCOM will disclose the basic information on unconditional clearance cases on a quarterly basis hereafter. However, whether the scope of information disclosure can be expanded is subject to further research.

Shortly after the first disclosure of the unconditional clearances on 15 November 2012, MOFCOM fulfilled its information disclosure commitment and published all unconditional clearances (59 cases) during the last quarter of 2012 at the beginning of 2013.

Legislative Developments

MOFCOM issued the Interim Measures on Investigation of Failure to File Concentration of Undertakings (“Investigation Measures”) on 30 December 2011. The Investigation Measures, which came into effect on 1 February 2012, clarified the criteria for non-declared concentration of undertakings and the procedure involved in the investigation of non-declared concentration of undertakings. This piece of legislation shows MOFCOM’s determination to regulate non-declared concentration of undertakings. Therefore, businesses should be more cautious in assessing whether a concentration has reached the thresholds for filing a notification in China.

As discussed above, MOFCOM has been closely monitoring non-declared concentrations of undertakings since the implementation of the Investigation Measures. As of December 27, 2012, MOFCOM has received three complaints regarding the failure to notify a concentration, and two of these complaints have been verified. Since these two transactions have not yet been implemented, the relevant parties were given the opportunity to submit the notification in a timely manner. MOFCOM is currently investigating another non-declared transaction discovered during the pre-filing consultation process. It will be interesting to see whether MOFCOM decides to impose sanctions for such non-compliance. 

MOFCOM also introduced an amended merger filing form in July 2012 to replace the old form adopted in January 2009. The scope of information required under the new form is significantly expanded and parties are required to provide more detailed information and competition analysis. For example, the amended form requires the parties to use HHI/CRn index before and after the concentration and delta value to describe the market competition status. Parties are required to disclose other outstanding non-compliance issues which may not be directly relevant to the antitrust review, such as industry policy, establishment, operation, and tax issues. These new requirements would substantially increase the burden of information collection and filing preparation on applicants.

Another notable change is that the new form clarifies certain practical issues, such as the definitions for the “notifying party” and “participating undertaking” and the concept of “neighboring market.” These improvements to the new form will facilitate filing parties in effectively preparing the notification. The introduction of the amended filing form indicates MOFCOM’s efforts to standardize the notification content and format in order to reduce the requests for supplemental information before case acceptance and thus increase the transparency and predictability of the merger filing procedure.

Trends and Outlook

Simplified Procedure of Merger Control Review

According to Mr Shang Ming[5], the Director General of the Anti-Monopoly Bureau of MOFCOM, there were around 200 cases in total in 2012. Without additional headcount, it will soon be necessary to improve efficiency of merger review. Mr. Shang confirmed that MOFCOM will begin to adopt a simplified procedure or “fast track” in its review of concentration cases. The simplified procedure would be applicable to cases with little or no competition concerns, such as when the combined market share of the parties after the concentration is lower than 10%. Mr Shang also suggested that if the HHI index is lower than 800 or 1000, this would usually indicate the market concentration degree is low and therefore would not cause material harm to market competition in most cases. Mr Shang concluded that such cases shall also be reviewed under the simplified procedure without need to solicit comments or opinions from relevant stakeholders or to request onerous submission documents.  

The simplified procedure will substantially reduce MOFCOM’s workload and allow MOFCOM to focus its resource on the more important cases with real competition concerns. The average review period for concentration of undertakings will therefore be shortened accordingly. Mr Shang stated that MOFCOM aims to make decisions on notifications within 30 days of acceptance when using this simplified procedure.

Amendment to the Regulations on Imposing Restrictive Conditions

MOFCOM also intends to revise the 2010 version of Interim Provisions of the Ministry of Commerce on Implementing Assets or Business Divestment Related to Concentration of Undertakings. With the goal of utilizing experience gained in implementing these Interim Provisions and addressing discovered problems, MOFCOM has decided to enact new legislation to make a full range of regulation on the proposal, assessment, implementation, supervision, modification of restrictive conditions, and relevant liability issue. In particular, the newly proposed regulation will provide guidance on the behavioral remedies which were not covered in the Interim Provisions. According to Mr Shang, the draft regulation will be submitted for internal review by the legal department of MOFCOM and is expected to be passed in 2013.


August 2013 will mark the fifth anniversary of the implementation of the AML. The PRC merger control regime is gradually maturing, and MOFCOM is playing a positive and special role in maintaining competitive market order. Careful planning to ensure sufficient time for preparing the notification is essential. Realistic remedies may also help parties to achieve their commercial objectives.

In conclusion, we would suggest that multinationals adopt a “China First” strategy in order to secure a merger approval for a global transaction, particularly if the transaction contains substantial competition issues or if the parties have leading market shares in China.



[1] Cases in this table are all conditionally approved concentrations disclosed on the MOFCOM official website.


[2] Cases in this table are all conditionally approved concentrations. MOFCOM’s review process usually takes longer in conditionally approved cases than in unconditionally approved cases.


[3] This case was withdrawn by parties involved near the 180 day limit and then resubmitted. Therefore, in reality, MOFCOM did not exceed their statutory time limit.

[4] Under Article 30 of the AML, MOFCOM is only required to disclose information on the conditionally approved cases and prohibited cases.

[5] Please see the news release at