On March 25, 2025, the State Administration for Market Regulation (SAMR) issued a notice regarding the Benchmark for Discretion over Administrative Penalties for the Illegal Implementation of Concentrations of Undertakings (for Trial Implementation).
The said Benchmark contains 18 provisions and seven examples, and the illegal implementation of the concentration of undertakings refers to actions as follows: 1) the undertaking concentration reaches the declaration standard but fails to declare in advance in accordance with the law prior to the implementation thereof; 2) upon the declaration of the undertaking concentration, implementing the operator concentration without getting approval; 3) where the undertaking concentration does not meet the criteria for declaration, but there is evidence that it has or may have the effect of excluding or restricting competition and the undertaking fails to declare the implementation of the undertaking concentration in accordance with the requirements of the SAMR; 4) where the undertaking violates the decision on review of the additional restrictive conditions; 5) where the undertaking violates the decision on review of the prohibition of the undertaking concentration.
In terms of imposing a fine upon illegal implementation of an undertaking concentration that does not have the effect of excluding or restricting competition, the SAMR shall impose a fine of no more than RMB 5 million according to the following steps:1) Determining the initial amount of the fine based on article 6 of this benchmark, which provides that “…, the initial fine shall be RMB 2.5 million. If Article 7 of the Benchmark is met, the initial fine shall be RMB 1 million; if Article 8 of the Benchmark is met, the initial fine shall be RMB 4 million; if Articles 7 and 8 of the Benchmark are met at the same time, the SAMR shall determine the amount of the initial fine after taking into account the specific circumstances of the case.”2) Adjusting the initial fine by taking into account the factors set out in Articles 9 and 10 of this Benchmark;3) Determining the final amount of the fine in accordance with Articles 12 and 14 of this Benchmark.
Among the Articles referred to above, Article 7 provides circumstances that can determine a less severed initial fine, which are “1) reporting on its own initiative before the SAMR grasps the illegal implementation of the undertaking concentration; 2) taking measures on its own initiative to eliminate or mitigate the consequences of the illegal implementation of the undertaking concentration; 3) being coerced or induced by others to implement the undertaking concentration in violation of the law; 4) any other cases that should be given a lighter penalty in accordance with the law.”; whereas Article 8 provides circumstances that can determine a more-severed initial fine, which are “1) abetting, coercing or inducing other undertakings to carry out the undertaking concentration in violation of law; 2) repeating the act of carrying out the undertaking concentration in violation of law within one year from the date of receiving an administrative penalty for carrying out the illegal undertaking concentration; 3) obstructing or refusing to cooperate with the administrative law enforcement officers in the execution of their duties in accordance with law, or retaliating against the administrative law enforcement officers; 4) falsifying, concealing, destroying or transferring the evidences; 5) any other acts which can be punished more severely in accordance with law.”
Further, Articles 9 and 10, respectively, provide the circumstances that the SAMR may reduce or increase the fine on the basis of the initial fine. The former includes, but is not limited to, “the entity has not yet operated after the concentration, or has not yet put into production upon operation, or has not yet practically exercised the right of control after acquiring the equity, assets, or business; the first time being subjected to administrative penalties for unlawful implementation of the undertaking concentration; etc.,” whereas the latter includes, but is not limited to, “providing misleading or untrue materials or information to the SAMR; taking delays, slackness, evasion, and other negative ways not to cooperate with the investigation of the SAMR or not providingg the relevant materials; etc.”
In terms of the illegal implementation of the undertaking concentration that has or may have the effect of excluding or restricting competition, the SAMR may “order the cessation of the implementation of the concentration, the disposal of shares or assets within a certain period of time, the transfer of business within a certain period of time, and the taking of other necessary measures to restore the state before the concentration, and impose a fine of not more than ten percent of the previous year's sales.”
It is also worth noting that the Benchmark set up a maximum fine of RMB 5 million for the illegal implementation of undertaking concentration that does not have the effect of excluding or restricting competition and a maximum fine of not more than ten percent of the previous year's sales for the illegal implementation of undertaking concentration that has or may have the effect of excluding or restricting competition.
It is reported that this is the first time for the SAMR to issue discretionary benchmarks to further standardize the administrative penalties for illegal implementation of the undertaking concentration. According to the officer from the SAMR, “the Benchmark will help to refine and clarify the basis and standards for the imposition of penalties, ensure the uniformity and transparency of the enforcement criteria for the illegal implementation of the concentration of undertakings, and will conducive to better protecting the legitimate rights and interests of undertakings, stabilizing the expectations of undertakings, and further stimulating the vitality of the market.”
It is noted that the Benchmark herein only applies to the undertaking concentration illegally implemented after August 1, 2022, and it is not applicable to those penalties that have been made prior to the enforcement of the Benchmark on March 25, 2025.
The said Benchmark contains 18 provisions and seven examples, and the illegal implementation of the concentration of undertakings refers to actions as follows: 1) the undertaking concentration reaches the declaration standard but fails to declare in advance in accordance with the law prior to the implementation thereof; 2) upon the declaration of the undertaking concentration, implementing the operator concentration without getting approval; 3) where the undertaking concentration does not meet the criteria for declaration, but there is evidence that it has or may have the effect of excluding or restricting competition and the undertaking fails to declare the implementation of the undertaking concentration in accordance with the requirements of the SAMR; 4) where the undertaking violates the decision on review of the additional restrictive conditions; 5) where the undertaking violates the decision on review of the prohibition of the undertaking concentration.
In terms of imposing a fine upon illegal implementation of an undertaking concentration that does not have the effect of excluding or restricting competition, the SAMR shall impose a fine of no more than RMB 5 million according to the following steps:1) Determining the initial amount of the fine based on article 6 of this benchmark, which provides that “…, the initial fine shall be RMB 2.5 million. If Article 7 of the Benchmark is met, the initial fine shall be RMB 1 million; if Article 8 of the Benchmark is met, the initial fine shall be RMB 4 million; if Articles 7 and 8 of the Benchmark are met at the same time, the SAMR shall determine the amount of the initial fine after taking into account the specific circumstances of the case.”2) Adjusting the initial fine by taking into account the factors set out in Articles 9 and 10 of this Benchmark;3) Determining the final amount of the fine in accordance with Articles 12 and 14 of this Benchmark.
Among the Articles referred to above, Article 7 provides circumstances that can determine a less severed initial fine, which are “1) reporting on its own initiative before the SAMR grasps the illegal implementation of the undertaking concentration; 2) taking measures on its own initiative to eliminate or mitigate the consequences of the illegal implementation of the undertaking concentration; 3) being coerced or induced by others to implement the undertaking concentration in violation of the law; 4) any other cases that should be given a lighter penalty in accordance with the law.”; whereas Article 8 provides circumstances that can determine a more-severed initial fine, which are “1) abetting, coercing or inducing other undertakings to carry out the undertaking concentration in violation of law; 2) repeating the act of carrying out the undertaking concentration in violation of law within one year from the date of receiving an administrative penalty for carrying out the illegal undertaking concentration; 3) obstructing or refusing to cooperate with the administrative law enforcement officers in the execution of their duties in accordance with law, or retaliating against the administrative law enforcement officers; 4) falsifying, concealing, destroying or transferring the evidences; 5) any other acts which can be punished more severely in accordance with law.”
Further, Articles 9 and 10, respectively, provide the circumstances that the SAMR may reduce or increase the fine on the basis of the initial fine. The former includes, but is not limited to, “the entity has not yet operated after the concentration, or has not yet put into production upon operation, or has not yet practically exercised the right of control after acquiring the equity, assets, or business; the first time being subjected to administrative penalties for unlawful implementation of the undertaking concentration; etc.,” whereas the latter includes, but is not limited to, “providing misleading or untrue materials or information to the SAMR; taking delays, slackness, evasion, and other negative ways not to cooperate with the investigation of the SAMR or not providingg the relevant materials; etc.”
In terms of the illegal implementation of the undertaking concentration that has or may have the effect of excluding or restricting competition, the SAMR may “order the cessation of the implementation of the concentration, the disposal of shares or assets within a certain period of time, the transfer of business within a certain period of time, and the taking of other necessary measures to restore the state before the concentration, and impose a fine of not more than ten percent of the previous year's sales.”
It is also worth noting that the Benchmark set up a maximum fine of RMB 5 million for the illegal implementation of undertaking concentration that does not have the effect of excluding or restricting competition and a maximum fine of not more than ten percent of the previous year's sales for the illegal implementation of undertaking concentration that has or may have the effect of excluding or restricting competition.
It is reported that this is the first time for the SAMR to issue discretionary benchmarks to further standardize the administrative penalties for illegal implementation of the undertaking concentration. According to the officer from the SAMR, “the Benchmark will help to refine and clarify the basis and standards for the imposition of penalties, ensure the uniformity and transparency of the enforcement criteria for the illegal implementation of the concentration of undertakings, and will conducive to better protecting the legitimate rights and interests of undertakings, stabilizing the expectations of undertakings, and further stimulating the vitality of the market.”
It is noted that the Benchmark herein only applies to the undertaking concentration illegally implemented after August 1, 2022, and it is not applicable to those penalties that have been made prior to the enforcement of the Benchmark on March 25, 2025.