CNR:

The recently revised Provisions of the State Council on the Declaration Standards for the Concentration of Business Operators have come into force. Could you please provide some background information and the main content of this revision? Moreover, what positive effects will it have in terms of stimulating the vitality of business entities? Thank you.

Xu Lefu:

Thank you for your concern about antitrust work. The declaration standards for business concentration are an important part of the antitrust review system. The Provisions of the State Council on the Declaration Standards for the Concentration of Business Operators, promulgated and implemented in 2008, set specific turnover thresholds for declaring business concentration. This has played a key role in clarifying businesses' obligations to declare, defining the scope of supervision, screening for competition risks, and improving the efficiency of antitrust reviews. As of the end of 2023, antitrust enforcement agencies under the State Council have concluded reviews of 5,789 cases of business concentration. Among these, three cases were prohibited, and 61 cases were approved with additional restrictive conditions, effectively preventing monopolistic behavior, maintaining a market environment of fair competition, and promoting the healthy development of the socialist market economy.

Over the past decade, as China's economy has continued to flourish, the turnover declaration criteria established in 2008 have become inadequate for promoting high-quality development. From 2008 to 2022, China's GDP grew from 31 trillion yuan to 121 trillion yuan, the number of corporate entities increased from 4.96 million to over 28 million, and the number of enterprises with annual turnover exceeding 400 million yuan rose from 32,800 to over 90,000. The number of business concentration declarations surged, reaching 867 in 2022, a tenfold increase from the 77 declarations in 2009. As a result, some small- and medium-sized business concentrations, which clearly did not have exclusionary or restrictive effects on competition, were included in the declaration scope, raising the institutional transaction costs of business concentration. Therefore, it is necessary to raise the declaration criteria. 

The new regulations have increased the global aggregate turnover threshold for participating operators in the concentration in the previous fiscal year from above 10 billion yuan to above 12 billion yuan, the aggregate turnover threshold in China from over 2 billion yuan to over 4 billion yuan, and the unilateral turnover threshold in China from above 400 million yuan to above 800 million yuan. Additionally, it is stipulated that the implementation of the revised standards will be evaluated in light of the economic development situation.

The new declaration criteria will offer at least two benefits to businesses. First, they will help reduce the costs of investment and merger and acquisition transactions for companies. According to estimates, the threshold increase will result in an annual average reduction of over 200 declarations for small- and medium-sized M&As, accounting for over 30% of all declarations. Second, the criteria will contribute to improving the overall efficiency of economic operations. With the higher declaration criteria, the efficiency of corporate investment and M&A activities will significantly improve, boosting market confidence and stimulating the vitality of business entities. This will further consolidate and enhance the positive momentum of China's economic recovery.

In the next step, the SAMR will focus on promoting and implementing the new regulations. While facilitating business declarations, it will efficiently conclude concentration cases with no anticompetition behavior in accordance with the law and address the adverse effects of concentrations on competition. This will help create a level playing field for various types of business entities, providing strong support for building a new development paradigm and promoting high-quality development.