8 November, 2016
With fines totalling RMB 1.15 million imposed on five companies (including multinational, Chinese state-owned and domestic privately-owned companies) in three separate merger transactions, the Ministry of Commerce (“MOFCOM”) has continued to crack-down on failures to notify merger transactions.
Notably, MOFCOM continues its inquiry into the high-profile Didi/Uber China acquisition, which is intended to combine two of the largest online taxi service platforms in China. The transaction was completed in 2 August 2016 without notification to MOFCOM. Later, a complaint was reportedly filed with MOFCOM alleging that the Didi/Uber China transaction did not comply with merger filing requirements. It is understood MOFCOM has at least twice spoken with the relevant personnel of Didi and required the provision of transaction details and the reasons for non-notification. This case is significant as it involves a number of controversial issues, including the calculation of turnover for platform-operating companies, the treatment of variable interest entity (VIE) structures, and whether MOFCOM will exercise its residual jurisdiction to look into a below- threshold merger on the basis of potential competition concerns. It is unclear whether MOFCOM has launched a formal investigation or if its inquiry is only of a preliminary nature at this stage.
MOFCOM’s continued monitoring of allegedly missed filings reaffirms its message to the business community that companies should take their filing obligations seriously. In addition, companies should be aware that the risk of detection increases significantly if a complaint is lodged with MOFCOM.
For further information, please contact:
Fay Zhou, Partner, Linklaters
fay.zhou@linklaters.com
