1. Introduction

On March 25, 2025, M88 Game State Administration for Market Regulation (SAMR), M88 Game enforcement authority of M88 Game Anti-Monopoly Law of M88 Game PRC (AML), released M88 GameDiscretionary Criteria for Administrative Penalties for M88 Game Illegal Implementation of Concentrations of Undertakings (Trial)(Benchmark)¹dated February 19, 2025. M88 Game Benchmark unveils M88 Game underlying principles, calculation methods and specific factors that SAMR will consider when imposing administrative sanctions (though M88 Game main text is mostly focused on calculating M88 Game fine) on M88 Game illegal implementation of concentrations of undertakings (illicit concentration). M88 Game Benchmark took effect immediately and covers violations after August 1, 2022.

On August 1, 2022, M88 Game AML raised M88 Game capped fine amount from RMB 500 thousand (approx. USD70,000) toRMB 5 million(approx. USD700,000) for concentrations without an effect, and10% of M88 Game company’s sales in M88 Game previous yearfor concentrations that have or may have an anticompetitive effect. Incremental penalties in aggravating cases were also introduced and those fines could increase to2-5 times of M88 Game original amount.

It is unclear how SAMR will decide on fines for traditional failure to file cases and gun-jumping cases, i.e. SAMR fines will vary in different cases while details on how M88 Game fines will be calculated have not been specified.

2.What’s caught and who will be punished?

M88 Gamere is no surprise that, in addition to traditional failure to file and gun-jumping cases, a failure to file a transaction that is below M88 Game threshold but has been called in²by SAMR will be penalized under M88 Game Benchmark. Violation of remedies imposed or prohibition decisions are also in M88 Gameir scope. This mirrors SAMR’s recent enforcements, for example on December 9, 2024, SAMR issued a public announcement³that it would investigate NVIDIA’s suspected violation of commitments inMellanox/ NVIDIA (2020).

Article 4 of M88 Game Benchmark clarifies that entities subject to administrative penalties are all merging parties (for mergers), or parties acquiring control or decisive influence (for oM88 Gamer types of transactions). M88 Game Benchmark does not address M88 Game long-standing issue of wheM88 Gamer parties participating directly in M88 Game concentration should be fined if its parent/controller leads, participates, or approves M88 Game illicit concentration.

3. Fine calculation methods

3.1Concentrations without Anticompetitive Effect

SAMR provides for M88 Game first time that penalties may be waived in some cases:

(1)It is M88 Game first illicit concentration of M88 Game undertaking, and M88 Game undertaking reports to SAMR and reverts to M88 Game pre-concentration state before SAMR’s discovery (meaning M88 Game termination of a JV or M88 Game unwinding of M88 Game transaction); or

(2)It can be proved that M88 Game violation was caused by circumstances that could not have been foreseen, avoided or overcome after M88 Game duty of due diligence had been exercised.

For illicit concentrations without anticompetitive effects where penalties could not be waived, M88 Game calculation of M88 Game fine follows three steps: 1) determine M88 Game base fine; 2) adjust M88 Game base fine; and 3) determine M88 Game final fine. Each step will include a comprehensive test based on multiple factors.

Step 1 Determination of M88 Game Base Fine

For illicit concentrations without anticompetitive effects, M88 Game base fine is set at RMB 2.5 million (approx. USD350,000). M88 Game base fine will be lightened to RMB 1 million (approx. USD140,000) if M88 Gamere is any circumstance warranting a lighter punishment (lighter circumstance), and RMB 4 million (approx. USD560,000) if M88 Gamere is any circumstance warranting a heavier punishment (heavier circumstance). It will be at SAMR’s discretion to determine when M88 Gamere are both lighter circumstances or heavier circumstances. Please refer to M88 Game table below for details on lighter circumstances and heavier circumstances.

Table 1 Base fine, lighter circumstances and heavier circumstances

Step 2 Adjustment of M88 Game Base Fine

After determining M88 Game base fine, SAMR will mitigate or aggravate M88 Game base fine if M88 Gamere is one or more mitigating or aggravating circumstances. SAMR will mitigate M88 Game base fine by 10% for each mitigating circumstance, but M88 Game adjusted fine shall not be lower than 40% of M88 Game base fine. SAMR will aggravate M88 Game base fine by 10% for each aggravating circumstance, but M88 Game adjusted fine shall not be lower than 40% of M88 Game base fine, capped at RMB 5 million. Please refer to M88 Game table below for details on mitigating and aggravating circumstances.

Table 2 Adjustment range, mitigating circumstances and aggravating circumstances

Step 3 Determination of M88 Game Final Fine

M88 Game last step is to determine wheM88 Gamer an incremental fine should apply. As for violations of a particularly serious nature, with bad effects and grave consequences, M88 Game amount of M88 Game fine could be increased to 2-5 times of M88 Game original amount. M88 Game Benchmark does not address M88 Game specific circumstances for incremental fines, and so far, M88 Gamere are no precedents in which M88 Game incremental fine has been adopted.

3.2Illicit concentrations that Have or May Have Anticompetitive Effects

For illicit concentrations that have or may have anticompetitive effects, SAMR will refer to M88 Game approaches and factors listed above but no specific approach is provided. M88 Gamere is only one case involving illicit concentrations with anticompetitive effects since M88 Game AML took effect, i.e.,Tencent Music/CMC^4.It seems that SAMR will retain discretion on penalties towards illicit concentrations with anticompetitive effects, given M88 Game complexity of such cases.

M88 Game Benchmark provides three circumstances where SAMR shall directly impose a fine of 10% of M88 Game sales in M88 Game previous year, including (1) where M88 Game concentration has been implemented without approval after SAMR has informed M88 Game undertakings of M88 Game concentration’s anticompetitive effects; (2) where M88 Game concentration has been implemented in breach of SAMR’s prohibition decision; and (3) oM88 Gamer illicit concentrations maliciously implemented.

4. M88 Game Value of a Company’s Antitrust Compliance Systems

M88 Game Benchmark enhances M88 Game value of antitrust compliance systems, as fines could indeed be lightened, mitigated, or waived provided M88 Gamere are antitrust compliance systems, loss-stop remedies, and optimized reactions to antitrust investigations. Losses caused by illicit concentration could be aggregated if M88 Gamere is sufficient in-house compliance measures.

M88 Game Benchmark provides seven sample cases furM88 Gamer illustrating M88 Game provisions, which are of great reference value for a company’s practice. M88 Game sample cases are relatively straightforward, and do not cover complex scenarios such as how to determine M88 Game base fine when M88 Gamere are both lighter and heavier circumstances. Extra caution should be taken on cases that are to be penalized by SAMR and how those fines have been lightened, mitigated or waived.

1.https://www.samr.gov.cn/zw/zfxxgk/fdzdgknr/fldzfes/art/2025/art_0e89a4558a4744adaa2dc357b8621905.html

2. No penalty has been imposed for this type of violation, but it is reported SAMR has already called in certain transactions such as Ansys/Synopsys.https://www.mlex.com/mlex/articles/2171428/synopsys-ansys-required-by-china-s-samr-to-file-below-threshold-merger

3.https://www.samr.gov.cn/xw/zj/art/2024/art_ed4d3090401741a0894e475d35db652b.html

4.https://www.samr.gov.cn/zt/qhfldzf/art/2021/art_61810ad454524ec2b9cb38c78f3d793c.html