The Failure-to-File Antitrust Risks Rise Sharply For The VIEs

On 20 April 2020, China's State Administration for Market Regulation ("SAMR") made public the case concerning a new joint venture between Shanghai Mingcha Zhegang Management Consulting Co., Ltd. ("Mingcha Zhegang") and Huansheng Information Technology (Shanghai) Co., Ltd. ("Huangsheng") (hereafter "the Mingcha Zhegang case"). It is clearly mentioned in the public statement that Mingcha Zhegang is controlled by a Cayman company "through related entities based on a series of agreements, which means this company has a VIE structure (namely, variable interest entity). From a practical perspective, this case serves as a landmark in the history of China's merger review and suggests the failure-to-file antitrust risks rise sharply for the VIEs.