China Released Penalty Benchmarks for Illicit Concentrations

1. Introduction

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

On August 1, 2022, the AML raised the capped fine amount from RMB 500 thousand (approx. USD70,000) to RMB 5 million (approx. USD700,000) for concentrations without an  effect, and 10% of the company’s sales in the previous year for concentrations that have or may have an anticompetitive effect.  Incremental penalties in aggravating cases were also introduced and those fines could increase to 2-5 times of the 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 the fines will be calculated have not been specified.

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

There is no surprise that, in addition to traditional failure to file and gun-jumping cases, a failure to file a transaction that is below the threshold but has been called in² by SAMR will be penalized under the Benchmark. Violation of remedies imposed or prohibition decisions are also in their scope.  This mirrors SAMR’s recent enforcements, for example on December 9, 2024, SAMR issued a public announcement³ that it would investigate NVIDIA’s suspected violation of commitments in Mellanox/ NVIDIA (2020).

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

3. Fine calculation methods

3.1 Concentrations without Anticompetitive Effect

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

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

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

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

Step 1  Determination of the Base Fine

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

Table 1  Base fine, lighter circumstances and heavier circumstances

Step 2  Adjustment of the Base Fine

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

Table 2  Adjustment range, mitigating circumstances and aggravating circumstances

 Step 3  Determination of the Final Fine

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

3.2 Illicit concentrations that Have or May Have Anticompetitive Effects

For illicit concentrations that have or may have anticompetitive effects, SAMR will refer to the approaches and factors listed above but no specific approach is provided.  There is only one case involving illicit concentrations with anticompetitive effects since the 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 the complexity of such cases.

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

4. The Value of a Company’s Antitrust Compliance Systems

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

The Benchmark provides seven sample cases further illustrating the provisions, which are of great reference value for a company’s practice.  The sample cases are relatively straightforward, and do not cover complex scenarios such as how to determine the base fine when there 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