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China Antitrust Review 2019 (2/4): Gun-jumping Cases

Release time:2020-03-13

Since its establishment in March 2018, China’s State Administration for Market Regulation (“SAMR”) has issued 26 sanction decisions on concentrations of undertakings which meet the notification thresholds but failed to properly notify to and cleared by the antitrust enforcement authorities (“Gun-jumping Cases”). Since the Anti-Monopoly Law (“AML”) came into effect in 2008, the Chinese antitrust enforcement authorities have investigated and closed 50 such Gun-jumping Cases, with over half (52%) work done by SAMR within the last two years. Only in 2019, SAMR imposed fines on 18 Gun-jumping Cases. As indicated in Figure 1 below, beginning from 2014 when the first sanction decision on Gun-jumping Case was issued by the Ministry of Commerce (“MOFCOM”, the antitrust enforcement authority in charge of merger filing before SAMR was established)[1], more and more Gun-jumping Cases was caught and fined. In 2019, the number reached 18, more than any of that in the previous years.

Figure 1: The Number of Gun-jumping Cases in 2014-2019

Table 1: Overview of Gun-jumping Cases in 2019

Based on the administrative sanction decisions issued by SAMR in 2019, we found the following four highlights in those 18 Gun-jumping Cases:

I. Highlight 1: The average investigation duration is 224 days in 2019, law enforcement efficiency improved.

According to our preliminary research on all 50 sanction decisions on Gun-jumping Cases publicly available, 27 out of the 32 sanction decisions issued before 2019 revealed the date when the cases were docketed. By calculating the time intervals between the case docketing and the date of the decision, we could see it takes 244 days on average to close an investigation against Gun-jumping Case, ranging from 56 days[20] to 465 days[21].

For the 18 cases listed in Table 1, if we similarly calculate the time intervals between the case docketing and the date of decision, we could see that those cases are closed in an average of 224 days, ranging from 94 days[22] to 418 days[23]. That’s to say, in 2019, even though with the highest number of closed investigations on Gun-jumping Cases, the average investigation time was 20 days shorter than before, showing that the antitrust law enforcement is more efficient recently.

Focusing only on the 18 administrative sanction decisions issued in 2019, we could see that the maximum difference in investigation duration was over 320 days from case to case. Why so large? In accordance with Article 6, Article 7 and Article 8 of the Provisional Measures on Investigation and Disposition of Concentration of Undertakings Without Notification as Required by Law (“Investigation Measures”)[24], which was issued by MOFCOM on December 30, 2011, the timeline of investigations on Gun-jumping Cases was specifically stipulated. An investigation is usually formally initiated when it is docketed by the antitrust enforcement authority (SAMR, or previously MOFCOM). After that, within 30 days of receiving the case docketing notice, the investigated undertakings should submit documents and materials to SAMR to explain (i) whether the investigated transaction constitutes a concentration of undertakings, (ii) whether the investigated transaction meets notification thresholds, (iii) whether the investigated transaction has been implemented but not notified, etc.. Within 60 days after receiving the documents and materials submitted as required under Article 6 of the Investigation Measures, SAMR shall complete preliminary investigation and determine whether the investigated transaction constituted gun-jumping. If the answer is yes, then the investigated undertakings shall file notifications materials in accordance with the Measures on Notification Filing in Connection With Concentration of Undertakings (“Notification Measures”), and SAMR shall complete a further investigation within 180 days from the date of receipt of documents and materials which meet the requirements the under Notification Measures. To illustrate the whole process provided under the Investigation Measures, we prepared Figure 2 as follows:

Figure 2: Timeline of Investigations on Gun-jumping Cases

As it can be seen in Figure 2 above, it seems that an investigation on Gun-jumping Cases should be concluded within 300 (30+60+30+180) days since case docketing. However, in practice, the investigations usually last much longer than that. Based on our observation and practical experience, the time it takes to complete an investigation depends on the specific situations and the complexity of different cases. What’s more, the starting point of each stage of investigation is not always clear under the Investigation Measures, which makes it even harder to anticipate the exact duration of an investigation. For example, in accordance with the Investigation Measures, SAMR should complete further investigation “within 180 days from the date of receipt of documents and materials which meet the requirements under the Notification Measures”. As for whether the notification documents and materials meet the requirements under the Notification Measures or not, SAMR has great discretion on determining that. In practice, the investigated undertakings usually need to submit several rounds of supplementary materials or other explanatory documents, and the time for such process would not be included when calculating the investigation period. As a result, it is not surprising to see an investigation last longer than 300 days.

II. Highlight 2: Allocation of state-owned assets and equity without consideration can lead to Gun-jumping investigation.

Generally, what is critical to decide whether a transaction constitutes a concentration of undertakings regulated by the AML is the change of controls, regardless of the particular form of the transaction. Article 20 of the AML, transaction forms that may cause a concentration of undertakings includes: merger, acquisition of the controlling stake through acquiring equity or assets, establishment of joint venture, acquisition of the controlling stake or obtaining the ability to impose decisive influence through contractual arrangements, etc. Taking 2019 as an example, among the 18 investigated Gun-jumping Cases, 13 of them (over 3/4) involved equity acquisition, 4 of them involved establishment of joint ventures, and only 1 of them is in the form of allocating state-owned assets and equity without consideration. That is to say, in 2019, most of the concentration of undertakings are completed through acquisition of control stake.

The concentration of undertakings completed in the form of allocating state-owned assets and equity without consideration mentioned above is listed as Case No.16 in the above Table 1.[25]On December 20, 2017, the State-owned Assets Supervision and Administration Commission of Dalian and Yingkou separately signed the Agreement of Allocating State-owned Assets and Equity Without Consideration with Liaoning Port. According to the agreements, 100% of the equity shares in Dalian Port and Yingkou Port would be transferred to Liaoning Port without consideration. Later, Liaoning Port completed the registration of equity transfer without filing a notification to and obtained clearance from SAMR. Upon investigation, SAMR found that the transaction constituted concertation of undertakings for the following reasons: (1) the undertakings’ turnover in the previous fiscal year met the notification threshold, and (2) there existed change of control since Liaoning Port acquired control of Dalian Port and Yingkou Port. In the end, SAMR found that the proposed allocation of state-owned assets and equity without consideration constituted a concentration of undertakings and is subject to notification filing in China. This case shows that even the relevant transaction involved the allocation of state-owned assets and equity without consideration, as long as the transaction meets the thresholds of merger filing but failed to file notification, it would be subject to the risk of Gun-jumping Cases.

III. Highlight 3: Even if a transaction has been closed for years, it still may be investigated by SAMR.

Among the 18 cases, the case involving the joint venture of Pierburg and Xingfu Motorcycle traced back to a transaction closed six years ago – the “oldest” one that SAMR investigated in 2019. On March 1, 2013, Pierburg and Xingfu Motorcycle agreed to establish a joint venture, each of them holding 50% of the shares. On June 18, 2013, the joint venture was officially established. On March 11, 2019, SAMR formally initiated its investigation on the transaction though it has been closed for six years.[26]

This is not the first time for SAMR to investigate a transaction closed many years ago. On June 5, 2010, China Merchants Qingdao and Qingdao Port Group entered into an agreement to establish a joint venture with China Merchants Qingdao holding 49% of the shares and Qingdao Port Group holding the rest. On June 9, 2010, the joint venture was officially established. Seven years later, in August 2017, MOFCOM formally initiated an investigation into the transaction and issued its sanction decision in April 2018.[27]

By looking back into the above two cases, we could see that SAMR would investigate transactions closed six or seven years ago. It is generally agreed that any concentration of undertakings happens after the AML entering into force could be investigated as long as it meets the merger filing thresholds in accordance with the law, because there is no relevant statute of limitation provisions under the AML.

IV. Highlight 4: The amount of fine for Gun-jumping Case is rising, but is still with limited deterrence.

In accordance with Article 48 of the AML, the upper limit of the fine is 500,000 yuan for Gun-jumping Cases. In addition to that, the anti-monopoly law enforcement agency may also “order the cessation of concentration, disposal of the relevant equity or assets within the prescribed time limit, transfer of business within the prescribed time limit, and take other necessary measures to restore the pre-concentration status” which, however, has never been imposed in a real case.

In terms of the amount of fine for Gun-jumping Cases, we found most of the imposed fine was around CNY 150,000 to 200,000 in the cases investigated before April 2018. However, when it comes to 2019, the fines imposed go up to around CNY 300,000 to 400,000, except for the acquisition of Inad by Yinli Media[28], in which Yinli Media was fined only CNY 200,000. By observing the trend of fines imposed in all investigated Gun-jumping Cases, it seems that the average amount of fine applied for Gun-jumping Cases is on the rise.

Despite the increase of fine mentioned above, the amount of fine for Gun-jumping Cases in China is relatively low and with limited deterrence, which can be seen in the acquisition of partial equity shares in Xingyuan Environment by New Hope Investment[29]. On March 29, 2019, New Hope Investment and Xingyuan Environment entered into an agreement that New Hope Investment would acquire 23.6% of equity shares in Xingyuan Environment. According to the Public Statement for Simple Cases of Concentrations of Undertakings[30] released by SAMR, SAMR docketed the filing on April 9, 2019, and the publicity period would end on April 18. It could be reasonably inferred that New Hope Investment has filed the notification right after they signed the agreement, and it is very likely that SAMR would approve the acquisition in late April (supposing no third parties raise any red flag, as a regular simple case usually goes this way). However, New Hope Investment closed the transaction and registered those equity shares on April 17, a day before the end of the publicity period (see Figure 3).

Figure 3: Timeline of New Hope Investment's acquisition of partial equity shares in Xingyuan Environment

If we compare the amount of fine for Gun-jumping Cases imposed by SAMR in China with that in other countries, we could appreciate this character more easily. Here we took how the antitrust enforcement authority in China, United States, European Commission dealt with the acquisition of shares in Toshiba Medical Systems by Canon as an example. On December 16, 2016, MOFCOM issued its sanction decision on Canon for its failure to file notification for its acquisition of shares in Toshiba Medical Systems.[31]On June 10, 2019, the Department of Justice of United States (“DOJ”) issued a press release saying that Canon and Toshiba Medical Systems would pay USD 2.5 million each to settle the charges for violating the premerger notification and waiting period requirements of the Hart-Scott-Rodino Act when Canon acquired Toshiba Medical Systems Corporation from Toshiba in 2016, which made the total settlement for this case be USD 5 million (or CNY 35 million).[32]On June 27, 2019, the European Commission released its decision, announcing that it had fined Canon EUR 28 million for partially implementing its acquisition of Toshiba Medical Systems before notification and obtaining merger control approval.[33]When comparing the fines imposed in the three jurisdictions, we could surprisingly see that the settlement payment required by DOJ is 116.7 times of the fine imposed by MOFCOM, and the fine imposed by European Commission is 720 times of the one imposed by MOFCOM.

Recently, SAMR is trying to solve this problem. On January 2, 2020, SAMR released the Draft Amendment to the Anti-monopoly Law (“Draft Amendment”) to solicit comments from the public. In accordance with Article 55 of the Draft Amendment, if the relevant concentration of undertakings is implemented without notification, the antitrust enforcement authority shall impose a fine of less than 10% of the amount of sales for the preceding year.[34]It could be expected that the amount of fine on Gun-jumping Cases will be skyrocketing and the deterrent effect of the law on relevant anti-monopoly behavior will be greatly enhanced if the revision is approved.


[1]Before the 2018 institutional reform of the State Council, MOFCOM is responsible for reviewing the notification of concentration of undertakings and investigating into gun-jumping violations.



















[20]The penalty decision on the acquisition of equity shares in Toshiba Medical Systems by Canon was released by MOFCOM in 2016. See

[21]The penalty decision on the acquisition of equity shares in PanAust by Guangdong Rising was released by MOFCOM in 2017. See

[22]The penalty decision on the acquisition of equity shares in Hongda Power by Tianneng Battery was released by SAMR in 2019. See

[23]The penalty decision on the acquisition of equity shares in Chengdu Wolaila by China Post Capital was released by SAMR in 2019. See









[32]Canon Inc., Toshiba Corporation Agree to Pay $5 Million for Violating Federal Antitrust Laws,

[33]Mergers: Commission fines Canon €28 million for partially implementing its acquisition of Toshiba Medical Systems Corporation before notification and merger control approval,



China Antitrust Review 2019 (1/4): Investigations

China Antitrust Review 2019 (3/4): Conditional Approvals of Merger Filings

China Antitrust Review 2019 (4/4): Litigations

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