On 11 February 2014, the Chinese Ministry of Commerce ("MOFCOM") released the Tentative Provisions on the Criteria Applicable to Simple Cases of Concentration of Business Operators (the "Simple Case Criteria") which shall take effect from 12 February 2014.

This is a major step towards more efficient document management. The Simple Case Criteria separate “simple deals” which do not raise competition concerns in China from other transactions worthy of closer antitrust scrutiny. They provide companies involved in simple transactions with the opportunity to be subjected to a simplified procedure, the so-called “summary procedure”. In this way the situation of a swelling caseload and the resulting lengthy review periods in the past will be improved and MOFCOM´s review process will be considerably expedited.  

Article 2 of the Simple Case Criteria specifies the following six categories of concentration transactions [?] as simple cases subject to the summary procedure:

1. The combined market share of all the parties competing within the same relevant market is less than 15%;
2. There is a “vertical” relationship (e. g. supplier-customer) between the businesses of the transaction parties, and the market share of the parties in each of the upstream and the downstream markets is less than 25%;
3. There is no competitive overlap or vertical relationship between the parties’ businesses, and the market share of each of the parties to the transaction is less than 25%;
4. The parties establish a joint venture outside of China that does not engage in any business activity in China;
5. The parties acquire equity interests or assets of an overseas entity which does not engage in any business activity in China; or
6. The transaction involves a joint venture under the joint control of two or more parties becoming controlled by one or more of the same controlling shareholders.

However, under Article 3 of the Simple Case Criteria, if any of the following circumstances exist in concentration transactions, a case meeting the aforementioned criteria will not be entitled to benefit from the summary procedure anymore:

1. A joint venture under the joint control of two or more parties becomes controlled by one of the parties as a result of the transaction and the acquiring party is a competitor of the joint venture in the same relevant market;
2. The relevant markets related to the transaction are difficult to define;
3. The transaction may adversely affect market entry and technological progress;
4. The transaction may adversely affect consumers and other relevant business operators;
5. The transaction may adversely affect the national economy; or
6. MOFCOM believes there are other circumstances that may adversely affect market competition.

MOFCOM can also revoke its decision of a case being subject to the summary procedure if:

1. the declaring party withholds important data or provides false materials or misleading information;
2. a third party claims that the concentration of business operators leads to or may lead to eliminating or restricting competition and it can provide relevant proof thereof; or
3. MOFCOM finds a substantial change of circumstances in the concentrated trading situation or in the relevant market competition.

As supporting rules for the Simple Case Criteria, the Anti-Monopoly Bureau of MOFCOM on 18 April 2014 announced the Guiding Opinions on the Declaration for Concentration of Operators Subject to Summary Procedure (for Trial Implementation) (the "Guiding Opinions"). The Guiding Opinions shall take effect on the date of announcement. They contain specific provisions on the materials required to be submitted and the procedures for the declaration of concentration of operators subject to summary procedure. According to the Guiding Opinions, operators may, before making formal declarations, apply for consultation with the Anti-Monopoly Bureau regarding issues such as whether the transactions proposed to be declared meet the standards for simple cases subject to summary procedure. However, the consultation is not a mandatory procedure for the declaration of concentration of operators subject to summary procedure, and operators may decide at their own discretion whether to apply for consultation or not.

Despite all of the positive signs of the development in China´s merger review process, there are still some uncertainties about the concrete procedures which will need to be clarified by MOFCOM.

Li Li, LL.M. and Antao Zhao, LL.M.