The Ministry of Commerce of the People’s Republic of China (the “Ministry of Commerce”) has received the application from Wal-Mart on the lifting of additional restrictive conditions against Announcement [2012] No. 49. The Ministry of Commerce has conducted a review of the application and announced relevant matters as follows:

I. Background and Review Procedures

On August 13, 2012, the Ministry of Commerce issued a conditional approval of Wal-Mart’s acquisition of 33.6% stake in Niuhai Holdings Ltd. under Announcement [2012] No. 49, requiring Wal-Mart to fulfill the following obligations: firstly, the acquisition of Yihaodian (No.1 Store) Online Shopping Platform owned by Shanghai Yishiduo E-commerce Co. Ltd. (Yishiduo) by Niuhai Information Technology (Shanghai) Co., Ltd. (Niuhai Shanghai) indirectly held by Wal-Mart shall be limited to the division directly engaged in sales of goods through its own online platform; secondly, without the permit for value-added telecommunication business, Niuhai Shanghai may not provide online services for other transaction parties through its own online platform after this acquisition; thirdly, upon the settlement of the deal, Wal-Mart may not be engaged in value-added telecommunication services previously operated by Yishiduo through VIE architecture. In July 2015, Wal-Mart submitted an application for the lifting of additional restrictive conditions against Announcement [2012] No. 49.

During the assessment, the Ministry of Commerce had talks with the Parties and required them to submit supplemental information, while asked for the comments from relevant departments in seminars and in writing. Pursuant to the Antitrust Law and Provisions on Additional Restrictive Conditions for Business Concentration (Trail), the Ministry of Commerce focused on the implementation of Announcement [2012] No.49, studied the market competition variations and assessed comprehensively the grounds and impacts for lifting the restrictive conditions.

II. Announcement Implementation

The Ministry of Commerce carried out supervision and assessment to Wal-Mart for its obligation fulfillment against Announcement [2012] No.49. During the implementation period, Wal-Mart has established a special committee to conduct compliance supervision and review of the company’s operation; maintained the independent operation of the online direct marketing and value-added telecommunication business of Yihaodian; submitted regularly reports on the obligations fulfillment to the Ministry of Commerce. During the supervision and inspection, the Ministry of Commerce found no indication that Wal-Mart had provided online services for other transaction parties through its Yihaodian online platform or been engaging in the value-added telecommunication services previously operated by Yishiduo, nor received any report on Wal-Mart’s violation against Announcement [2012] No.49. The Ministry of Commerce believes, after assessment, that Wal-Mart has fulfilled all obligations as defined under Announcement [2012] No.49 during the implementation period.

III. Competition Analysis

Pursuant to the Antitrust Law and the Provisions on Additional Restrictive Conditions for Business Concentration (Trail) as well as requirements specified in Announcement [2012] No.49, the Ministry of Commerce focused on the assessment of impacts on market competition against a lifting of the restrictive conditions.

According to the assessment, after the publication of the Announcement, especially from 2014, the entry threshold for China’s value-added telecommunication market has been decreasing, facilitating the entry of new competitors. On June 19, 2015, the Ministry of Industry and Information Technology issued a Circular on the Liberation of Foreign Stake Holding Restrictions for Online Data Processing and Transaction Processing Businesses, which liberated the foreign stake holding restrictions for online data processing and transaction processing businesses, stating that the foreign stake holding can be as high as 100%. The policy helps more competitors enter into the value-added telecommunication market. Meanwhile, during the implementation of the Announcement, the retail market in China was expanding and maintained a rapid growth rate. Main rivals in relevant markets developed rapidly and established warehousing and distribution systems and supplier channels servicing the online retail business, with their market impacts and competitiveness further enhanced; some rivals carried out comprehensive online supermarket business, greatly improved in commodity types, delivery locations and supply chain management, and further homogenized with the business of Yihaodian, leading to more intense market competition. Before 2012, Yihaodian developed faster in supermarket E-commerce sector; during the implementation of the Announcement, the strength of Yihaodian faded gradually, with sales growth slowing down accordingly. According to third party statistics, during the implementation of the Announcement, there was no substantial market share growth of Yihaodian, which is controlled by the party concerned, with its growth rate lagging behind its main rivals. The assessment noted that, the relevant market competition status had changed substantially, and it was a challenge to eliminate and/or limit the competition of relevant markets by way of lifting the additional restrictive conditions under Announcement [2012] No.49.

IV. Review Decision

Pursuant to Article 27 of the Antitrust Law and Articles 25, 26, 27 and 28 of the Provisions on Additional Restrictive Conditions for Business Concentration (Trail), the Ministry of Commerce has decided to lift the additional restrictive conditions under Announcement [2012] No.49.

The Announcement shall be effective from the date of its publication.

Ministry of Commerce of the People's Republic of China