China: China Issues Rules for Price-Related Antitrust Enforcement

On January 4, 2011, the National Development and Reform Commission ("NDRC"), one of China's three antitrust agencies, published two sets of implementing rules detailing how it intends to handle enforcement against price-related conduct under the Chinese Anti-Monopoly Law ("AML"). These new Anti-Price Monopoly Rules, covering both substantive prohibitions and procedure, become effective on February 1. They provide additional detail on price-related enforcement, which should make enforcement policies and procedures more transparent and assist companies in complying with the law.

The new Anti-Price Monopoly Rules

The substantive rules address so-called "price monopolies," which include (1) anticompetitive agreements relating to price, (2) abuses of dominant market position through conduct relating to the price of the firm's goods or services, and (3) "administrative monopolies relating to price," that is, anticompetitive conduct undertaken or coordinated by governmental entities. (For a general overview of the AML, see our prior alert here.

The procedural rules elaborate on several aspects of price-related AML enforcement, including leniency for cooperating price-fixing cartel participants, reporting of potential violations, investigation methods, and possible commitments by companies under investigation.

The NDRC is charged with enforcing the provisions of the AML applicable to price-related, non-merger monopolistic conduct, and enforcing the earlier Price Law. The other two AML enforcement agencies are the State Administration of Industry and Commerce ("SAIC"), responsible for non-price, non-merger enforcement, and the Ministry of Commerce ("MOFCOM"), responsible for merger control. In May 2010, SAIC published for public comment three sets of draft rules addressing monopoly agreements, abuses of dominance, and administrative monopolies. (See our prior alert here.) Those rules reportedly will also be finalized soon.

The new Anti-Price Monopoly Rules apply to the activities of the NDRC, as well as to Development and Reform Commissions ("Local DRCs"), agencies of the provincial, autonomous regional, and municipal governments. Under Article 10 of the AML, the NDRC has the discretion to authorize Local DRCs to undertake AML enforcement activities; while the NDRC is in charge of anti-price monopoly conduct throughout the country and shall handle "important cases," Local DRCs shall be in charge of enforcement within their geographical jurisdictions.

Key points on price agreements

Prohibited horizontal price restraints. The new, substantive NDRC Anti-Price Monopoly Rules provide new detail about what price-related horizontal agreements are prohibited by Article 13 of the AML. The new rules broaden the definition of price-fixing to include agreements to:

  1. fix or change the prices of products and services
  2. fix or change the range of price changes
  3. fix or change fees, discounts or other charges that affect price
  4. set an agreed price as the basis for negotiating with third parties
  5. adopt a formula for calculating price
  6. not change price without consent
  7. fix of change price in disguised form by other means.

The final version removes prohibitions that were in the draft NDRC rules against indirectly fixing prices through output restriction or market allocation schemes. However, the final rules add a prohibition on "fixing or changing price in disguised form by other means," and they define "price monopoly agreements" to include those with the effect of "eliminating or restricting competition with regard to price," without specifying that the agreements themselves must involve price. The rules also leave open the possibility for NDRC to define other types of price monopoly agreements that violate the AML.
Vertical agreements. The substantive NDRC Anti-Price Monopoly Rules do not extend coverage of vertical restraints beyond what is specified in the AML itself, which prohibits fixing or setting resale prices.

Details on leniency. The NDRC procedural rules provide more detail on how leniency may be applied in cases involving anticompetitive agreements such as by cartels. Article 46 of the AML provides that a reduced penalty or exemption from penalty may be granted to a participant in a "monopoly agreement" that reports its monopolistic conduct to the enforcement agency and provides important evidence. The rules provide that the first participant to report a cartel and provide "important" evidence to NDRC "may" be fully exempted from any penalty; the second applicant may obtain a reduction of at least 50%; later applicants may be granted a reduction of penalties of at most 50%.

However, all such leniency appears to remain at NDRC's discretion, as made explicit in Article 46. The rules say NDRC "may" grant leniency, not "shall," leaving uncertainty about whether, for example, NDRC may choose to refuse a full exemption to the first leniency applicant, even if it satisfies all requirements of the rule. This lack of certainty, especially for first applicants, may reduce the incentives for cartel participants to self-report.

During the first two years of AML enforcement, no cases involving self-reported leniency applications have been publicized by NDRC or the other enforcement agencies. However, Local DRCs have granted exemptions from fines to violators who have cooperated with investigations, provided important evidence, and corrected their violations voluntarily, most notably in connection with an enforcement action against a local rice noodle price cartel taken under both the AML and the Price Law (see our prior alert here. Further details about how the leniency program will work and how frequently "first" applicants will be exempted in practice will be important determinants for companies deciding how to handle cartel matters affecting Chinese markets.

Key points on abuses of dominant market position

Finding dominant market positions. The new NDRC rules repeat the definition in Article 17 of the AML that a "dominant market position" means one in which an undertaking is able to control the price, output, or other transaction conditions of a product in the relevant market or to impede or prevent entry into the relevant market by other undertakings.

The rules explain that "other transaction conditions" include elements other than price and output that may substantially affect transactions, such as product grade, payment conditions, delivery method, after-sale service, transaction options, and technical constraints. The last two factors – impede or prevent entry – in particular may affect companies with unique products or technology, which could be found to have dominant positions even if their market shares would be low under standard market definition analysis.

Price-related abuses of dominance. The NDRC Anti-Price Monopoly Rules elaborate on the 6 forms of abuses of dominant market position listed in Article 17 of the AML, focusing on price-related violations:

  1. selling at "unfairly high" prices or buying at "unfairly low" prices
  2. selling at a price below cost, without valid justification
  3. refusing to deal with a trading counterparty in a disguised form by setting excessively high or low prices, without valid justification
  4. requiring exclusive dealing by means of a price discount, without valid justification
  5. imposing "unreasonable fees" in addition to price
  6. price discrimination between similarly-situated trading counterparties, without valid justification.

Some of these prohibitions could be troublesome to business. For example, selling at an unfairly high price is interpreted in the Rules to include (a) selling products at a price "obviously" higher than charged by other suppliers for the same kind of product, (b) price increases more than "normal" where costs are stable, and (c) price increases obviously greater than increases in costs. If strictly enforced, these might significantly limit "dominant" firms in pricing their products or services, making their pricing subject to competitors' pricing and tying price changes directly to costs.

Valid justifications for otherwise prohibited conduct. One helpful development is that the new rules provide "valid justifications" for most forms of abuse of dominance. This should allow undertakings to self-assess whether certain conduct may be justified by legitimate commercial reasons. For example, valid justifications for price discounts encouraging exclusive dealing include protection of product quality and safety, protection of brand image and level of service, and benefits from significant cost savings or improvement of efficiencies that will be shared by consumers.

Similarly, justifications for disguised forms of refusal to deal by charging high prices include poor credit history of the refused trading party, continuing deterioration of its operations, and existence of an alternative source of supply at a reasonable price (although the latter appears to be an application of an indispensability requirement akin to the EU Bronner decision rather than a business justification).

Early enforcement

Administrative enforcement actions and decisions under the AML are not regularly publicized. NDRC publishes selected enforcement actions and statistics through announcements or speeches, generally without disclosing details. According to the NDRC, 8 out of the 34 provincial Local DRCs have established specialized teams for AML enforcement. Local DRCs already have handled a dozen cases under the AML or the Price Law during the first two years of AML enforcement. Most involved price-fixing or similar cartels as well as trade or industry associations, although at least one case involved abuse of dominance by tying. Interestingly, some investigations appear to have been started because of media reports. (For further details about some recent enforcement actions, see our prior alert here.)

The two implementing Rules are available in Chinese at NDRC's website: and

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
13 Dec 2017, Seminar, Cleveland, United States

Jones Day partners Harold Gordon and Tony Dias, and Associate Courtney Snyder will explore the significant role New York's Attorney General and its Department of Financial Services (DFS) play in the financial services industry and why these two state-level agencies will continue to exert significant power over the financial services industry, especially with federal oversight potentially shrinking.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions