Global menu

Our global pages


MOFCOM intensifies action against companies for failure to file under its anti-monopoly law

  • Europe
  • Competition, EU and Trade - Competition e-briefings


China’s Ministry of Commerce (“MOFCOM”) has fined six companies between 150,000 and 200,000 RMB ($23,572 - $31,468) each in four recent cases for failing to notify acquisitions and newly created joint ventures for government approval, as required under the Anti-Monopoly Law (“AML”). These cases include the first time that MOFCOM has published a decision against a foreign company for failing to notify a Sino-foreign transaction and come less than 12 months after the regulator published its first penalty decision against a Chinese company for failure to file.

As reported in our previous article, which can be read here, a fine of 300,000 RMB ($47,211) was imposed on state owned Tsinghua Unigroup (“Tsinghua”) for failing to notify its acquisition of RDA Microelectronics (“RDA”). As the relevant financial thresholds[i] for notification had been triggered due to the size of the parties’ respective turnovers, Tsinghua’s purchase of RDA should have received clearance from MOFCOM prior to completion and this failure to notify was therefore a direct breach of Article 21 of the AML.

MOFCOM’s heightened action on failure to report

MOFCOM recently announced that it had concluded four cases against companies for failing to file transactions which required notification under the AML, fining six companies in the process. Several different industries have been affected by these decisions, with companies from the pharmaceutical, electronics, media and transport industries all receiving penalties.

Global technology giant Microsoft Corporation was penalised after failing to notify its joint venture with Chinese partner Shanghai Oriental Pearl Media Co (known as BesTV), which was concluded in September 2013, with both companies receiving penalties of 200,000 RMB ($31,468).

Canadian train maker Bombardier Transportation and CSR Nanjing Puzhen Co. Ltd, a local unit of state owned CSR Corporation, were also amongst the sanctioned companies for failing to obtain government approval. Although the two companies failed to notify antitrust regulators prior to the conclusion of the joint venture in November 2014, a notification was made in December 2014, which led to the companies receiving a slightly lower fine of 150,000 RMB ($23,572) each.

Fosun Pharmaceutical Development Co. Ltd (“Fosun”) and Fujian Electronic Information (Group) Co. Ltd (“Fujian”) have also been implicated for failing to obtain clearance prior to their respective share acquisitions. Last year, Fosun, a unit of Shanghai Fosun Pharmaceutical Group, agreed to purchase a 65% stake in Suzhou Erye Pharma, however Fosun acquired 35% of the company prior to obtaining governmental approval. Fujian’s penalty also came as a result of similar circumstances, with Fujian acquiring control over Shenzhen CHINO-E Communication Co. Ltd without receiving the appropriate clearance.

The penalties issued by MOFCOM in these four cases totalled 1,050,000 RMB ($165,000).

In all of the above cases, MOFCOM concluded, after assessing the effects of the joint ventures and mergers, that they would not have the effect of eliminating or restricting competition and therefore no other penalties were imposed other than a modest fine in each case. However, had MOFCOM concluded that the concentrations were anti-competitive then it could have required them to be unwound.



If a joint venture or merger is deemed to be a business concentration under Article 20 of the Anti-Monopoly Law, the parties will need to notify the transaction prior to the implementation of the concentration in accordance with Article 3 of MOFCOM’s “Provisions of the State Council on the Standard for Declaration of Concentration of Business Operators".

Companies failing to notify MOFCOM where a pre-merger notification is necessary may be subject to various penalties; MOFCOM may order that implementation of the concentration is ceased, require parties to dispose of shares or assets, transfer businesses within a given time limit and adopt other necessary measures to restore the market situation to that before the implementation of the concentration. MOFCOM also has the power to impose a fine of up to 500,000 RMB ($80,000).

By issuing penalties to a number of companies across a range of industries, MOFCOM is clearly demonstrating an intention to strengthen its enforcement of the Anti-Monopoly Law. Despite concluding in each case that the concentrations would not have an effect on competition, MOFCOM has nonetheless imposed penalties in an attempt to encourage companies to take its notification procedure more seriously.

For information on the merger control requirements in key international jurisdictions, please click here to access the Eversheds Guide to International Merger Control.

[i] Transactions will require notification to MOFCOM where:

  • combined worldwide annual turnover of all the parties exceeds 10,000 million RMB (approximately $1,570 million) and annual turnover in China of each of at least two parties exceeds 400 million RMB (approximately $63 million) in the previous financial year; or 
  • combined annual turnover in China of all the parties exceeds 2,000 million RMB (approximately $314 million) and the annual turnover in China of each of at least two of the parties exceeds 400 million RMB (approximately $63 million) in the previous financial year.