Recently, the Beijing Intellectual Property Court published on China Judgments Online its administrative ruling in Beijing Tobishi Pharmaceutical Co., Ltd. v. State Administration for Market Regulation (Defendant) and Simcere Pharmaceutical Group Limited (Third Party).[1] 

 

As the first judicial review case of a concentration of undertakings since China's Anti-Monopoly Law took effect in 2008, this landmark ruling represents the first time a SAMR merger review decision has undergone judicial proceedings and received a legally effective court judgment. Notably, the judgment clarified several key merger review principles, including SAMR's authority to impose conditional approvals on voluntarily notified transactions, that prohibition is neither a statutory nor preferred remedy, and that the primary purpose of review is to address competition concerns arising from the concentration. 

 

This case also marks China's first conditional approval of a below-threshold concentration[2], involving both structural and behavioral remedies with fallback options. For the first time in behavioral remedies, the "crown jewel" principle[3] was applied as an alternative. During judicial review, the Court comprehensively evaluated the remedy package's effectiveness, feasibility and timeliness. After multiple hearings with active evidence presentation and debate, the Court ultimately upheld the legality of SAMR's conditional approval based on Simcere's proposed remedies, ruling that both the contested decision and reconsideration decision were factually sound, legally correct and procedurally proper, thereby dismissing Tobishi's claims. As Tobishi did not appeal within the statutory period, the judgment has now taken full effect. 

 

Tian Yuan represented Simcere Pharmaceutical Group Limited, the notifying party and third party in the administrative reconsideration and litigation, providing end-to-end antitrust legal services that effectively safeguarded the client's best interests. 

 

Notes: 

[1] Case No.: (2024) Jing 73 Xing Chu 5180. 

[2] SAMR Announcement on Conditionally Approving Simcere Pharmaceutical Group Limited's Acquisition of Equity in Beijing Tobishi Pharmaceutical Co., Ltd.: 

https://www.samr.gov.cn/fldes/tzgg/ftj/art/2023/art_90a71deadd224689b026920807c0389c.html 

[3] The "crown jewel" principle (or "alternative divestiture solution"), reflected in Article 41 of the Provisions on the Review of Concentrations of Undertakings, states: "Where the proposed remedy carries implementation risks, the undertakings concerned may submit an alternative remedy. The alternative remedy shall take effect if the primary remedy fails and must impose stricter conditions than the primary remedy."