China: China’s Anti-Monopoly Law Enforcement Authorities Issue Long-Awaited Regulations For Implementing The Anti-Monopoly Law

Last Updated: 10 August 2011
Article by David A. Livdahl, Huiyuan Li and Jenny Sheng

In late 2010, the National Development and Reform Commission ("NDRC") and the State Administration for Industry and Commerce ("SAIC"), two of the three key Anti-Monopoly Law Enforcement Authorities ("Enforcement Authorities") in the People's Republic of China ("PRC"), formally issued five (5) long-awaited implementing set of rules in relation to the enforcement of the PRC Anti-Monopoly Law ("PRC AML"), which respectively address the enforcement policies against pricing monopolies and prohibition of abuse of market dominance and monopoly agreements. All these rules were announced during the first week of 2011 and took effect on February 1, 2011. It is worth noting that the PRC AML and these implementing rules are applicable to business activities occurring both within and outside the territory of China that may have the effect of eliminating or restricting competition in the China market. Multinational companies will need to pay close attention to the implementation and enforcement of these implementing rules and review their respective PRC-related business transactions carefully to ensure compliance, in particular, when restructuring their global purchase and supply channels or entering into business collaborations or setting pricing policies.

Under the PRC AML, the Enforcement Authorities designated three ministries, namely, NDRC, SAIC, and the Ministry of Commerce ("MOFCOM"). NDRC primarily oversees monopoly pricing concerns, SAIC is mainly responsible for regulating abuse of market dominance and monopoly agreements, while the Anti-Monopoly Bureau in MOFCOM is mainly in charge of merger control review. MOFCOM has promulgated several implementing rules regulating merger control review and premerger filings during the past two years after the PRC AML took effect on August 1, 2010. The promulgation of these five new implementing rules by NDRC and SAIC indicates that the PRC AML Enforcement Authorities are making joint efforts to facilitate the enforcement of the PRC AML. Below is our summary of these new implementing rules:

NDRC's Two Rules Related to Anti- Price Monopoly

Prohibition of Tacit Collusion between/among Competing Parties on Pricing

NDRC's two new rules, namely, the Anti- Price Monopoly Regulations and Anti-Price Monopoly Administrative Enforcement Procedural Regulations (the "NDRC Regulations") aim to crackdown on price fixing and make transparent the enforcement procedures by NDRC. The NDRC Regulations prohibit coordinated activities and tacit collusion between competing parties to implement any monopoly agreements, in particular price manipulation and conspiracies to fix, control or change prices.

Furthermore, the NDRC Regulations prohibit trade associations from formulating internal rules, decisions and notices eliminating or restricting competition on pricing and from soliciting and consulting with members to fix or restrict prices.

The new NDRC Regulations also contain so called "whistle-blower" provisions allowing those who first expose violations to be exempted from punishment. The first company to report to the NDRC and its local counterparts and produce evidence of tacit collusion or pricing coordination may avoid punishment, and any companies that follow the first reporting company by reporting and providing evidence in price-fixing cases may have their punishment reduced. However, such protection is not guaranteed, which means that the NDRC has discretion to decide the actual level of punishment.

Cracking-Down on Price Fixing between Trading Partners

In addition, the NDRC Regulations also bar vertical trading partners from fixing or restricting resale prices. The NDRC Regulations prohibit business operators who are in competition with each other from reaching various types of monopolistic pricing agreements, including the following:

  • fixing or changing the prices of products/services;
  • fixing or changing price variance; and
  • fixing or changing commission charges, discounts and other fees that impact on prices, and agreeing a price calculation formula.

Also, the NDRC has discretion to determine what other types of agreements are objectionable.

Furthermore, the NDRC Regulations bar horizontal trading partners from reaching pricing agreements that will fix resale prices or restrict minimum resale prices.

Abusing Market Dominant Position

Companies that have dominant market share will be barred by the NDRC Regulations from charging "unfairly high prices" for their products and from paying "unfairly low prices" for supplies, or for selling products at a price lower than cost without appropriate reasons allowed by the same regulations. The definition of "dominant position" under the NDRC Regulations mirrors the one in the PRC AML, whereby a company may be presumed to have market dominance position if meets one of the following conditions:

  • one business operator has a market share of at least one half in the relevant market;
  • two business operators have a total market share of at least two-thirds in the relevant market; or
  • three business operators have a total market share of at least three-fourths in the relevant market.

However, in circumstances under items (ii) or (iii) above, if the market share of one business operator is less than one-tenth, the business operators would not be presumed to have a market dominant position.

Notably, the NDRC Regulations specify the factors for determining whether a company has an "appropriate reason" for engaging in what would otherwise be an abuse of a dominant market position. These factors differ depending on the particular abuse. For example, the "appropriate reasons" for selling products at a price lower than cost include the following:

  • selling fresh or live commodities, seasonal commodities and fragile or fresh commodities or over-stocked supplies;
  • reducing the price of commodities for sale due to debt repayment obligations, property transfers or because of a discontinuation of business; and
  • adopting sales promotions for the purpose of promoting new products.

SAIC's Regulations on Abuse of Dominant Market Position and Anti- Monopoly Agreements

It appears that the NDRC and SAIC are coordinating with each other in the issuance of the new implementing rules for the enforcement of the PRC AML. Three days after NDRC's announcement of the NDRC Regulations, SAIC announced the formal promulgation of three rules, i.e., Regulations on Prohibiting Monopoly Agreements ("Monopoly Agreement Regulations"), Regulations on Prohibiting Abuse of Dominant Market Positions ("Market Dominance Abuse Regulations") and Regulations on Curbing Abuse of Administrative Power to Eliminate or Restrict Competition ("Administrative Power Abuse Regulations") (collectively, the "SAIC Regulations"). These three SAIC Regulations were finalized after two rounds of revisions in 2009 and 2010, and by soliciting public comments on the drafts of these regulations.

Monopoly Agreement Regulations

The SAIC's Monopoly Agreements Regulations provide more detailed definitions than the ones in the PRC AML regarding the definitions of monopoly agreements. In addition to the identification of several prohibited monopoly agreements that restrict production volume, allocate sales markets and/or material markets, or restrict the purchase, use of and/or investment in new technology and new products, etc., the Monopoly Agreement Regulations also provide the SAIC with broad administrative discretion to identify and determine whether any other non-price-related monopoly agreements or activities not enumerated in the regulations constitute monopoly agreements that eliminate or restrict competition. Also, the Monopoly Agreement Regulations provide specific examples of each of the above category of monopoly agreements.

Under the Monopoly Agreement Regulations, monopoly agreements may be in written or oral form, or may consist of collaborative acts. The following factors should be taken into account when determining if coordinated activity or tacit collusion exists:

  • Whether there is a uniform pattern between or among competitors' collective behavior;
  • Whether competitors have engaged in communications or the exchange of information; and
  • Whether the competitors can provide reasonable explanations with regard to any apparent uniform pattern of behavior.

Similar to the NDRC Regulations, more specific guidelines are given regarding trade associations and prohibited conduct.

In accordance with the Monopoly Agreement Regulations, business operators who reach and implement monopoly agreements will be assessed a fine in the range of one percent (1%) to ten percent (10%) of their sales volume in the preceding year and their income resulting from the monopoly agreements will be confiscated by the SAIC or its local counterparts. Even if the aforementioned business operators do not actually implement any monopoly agreement, they can be assessed a fine up to RMB500,000.

Market Dominance Abuse Regulations

The Market Dominance Abuse Regulations specifically define dominant market position to mean a situation in which a company or certain companies has or have control over the price, quality or other transactional terms and conditions for a product or service in a relevant market, or has a position which enables such company or companies to hinder or influence the ability of other business operators to enter into the relevant market. The Market Dominance Abuse Regulations also set out specific examples of behavior prohibited under the PRC AML as abuse of market dominance. For example, a company is prohibited, without legitimate reasons, from giving different treatment to parties with equivalent circumstances, attaching unreasonable transactional terms, and refusing transactions with trading counterparties.

The regulations also list the specific elements that SAIC will consider in determining whether market dominance exists, such as the following:

  • market share;
  • ability of a company to control sales or supply markets;
  • financial and technical capabilities; and
  • level of difficulties for other business operators to enter into the relevant market.

Detailed sets of factors which can be applied in analyzing the aforementioned specific elements are also provided under each of the elements. For example, when analyzing the ability of a company to control sales or the supply market, the SAIC should consider the company's ability to:

  • control sales channels or supply channels;
  • impact the trading terms and conditions (such as price, quantities and contract terms); and
  • obtain priority access to materials, components and other relevant equipment necessary for the company's operations and production.

These factors are not included in either the AML or the NDRC Regulations. However, we anticipate that when the SAIC considers these various elements, market share may be the key element to determine the existence of market dominance since, in practice, it may require greater effort and be more complicated to collect information supporting the other elements mentioned above.

Administrative Power Abuse Regulations

These regulations specifically prohibit administrative behavior such as limiting the supply of products or other business transactions through delaying or refusing to issue licenses, setting barriers by adopting different standards for products from external sources to enter into the local market, etc. These regulations may be a basis for multinational companies to lobby against local protectionism in certain geographic areas or industries.

Our Observations

Simultaneously with the announcement of the NDRC Regulations, the NDRC cracked-down on a pricing monopoly which involved a Zhejiang paper manufacturing association arranging joint price fixing by member companies on packaging paper. The offenders were fined RMB500,000. In 2010, NDRC also punished several price-fixing activities in agriculture. There does not seem to be a requirement for any formal announcement of initiation of an anti-price monopoly investigation. That means the NDRC can carry out an unannounced inspection of business premises. Furthermore, the SAIC is also increasingly supervising the nature of competition in China's overall markets. Based on our review of these cases and other cases involving PRC companies being sued in US courts for anti-competitive behavior, it is apparent that the PRC authorities are recently more aware of the efforts other countries are giving to controlling price fixing and other monopoly activities. We believe the PRC authorities will focus not only on PRC domestic companies' business in China but also on foreign entities' transactions that may impact on the China market.

Multinational companies need to be prudent in communications with their competitors and trading counterparties and establish internal reporting rules related to setting and receiving communications from competitors and business partners. Also, other types of business cooperation or cross-ownership arrangements between competing parties may trigger possible anti-monopoly agreement issues. For example, there is a possibility that an interlocking directorate arrangement between two competing companies that have cross-ownership structures may be deemed to be a coordinated activity, though there are no specific prohibitions against interlocking directorates under PRC law.

In practice, if a manufacturing or trading company has its own manufacturing or sales affiliates in China, and if such company also exports to China, through offshore or onshore third party trading partners, products that are the same as the ones sold by its China affiliates, the Enforcement Authorities are concerned that such multinational company seek arrangement to protect its own affiliates' sales in China from being jeopardized by the third party trading partner's sales in China. Such arrangements may be deemed to be a disguised form of fixing resale prices under the NDRC Regulations unless there are any legitimate grounds deemed by the Enforcement Authorities as reasonable and acceptable based on the broad administrative latitude provided by the NDRC Regulations.

Given the increasing disputes between upstream and downstream business operators in certain industries (such as commercial retailing and wholesale and IT-related industries), multinational companies engaged in these industries should pay more attention to the conditions and terms for their respective upstream and downstream operators, to prevent challenges against such conditions and terms on the grounds of unfair treatment and/or abuse of market dominance.

In summary, in order to be in compliance with the newly promulgated regulations, multinational companies need to:

  • develop internal measures to avoid anti-monopoly behavior;
  • carefully review their distribution and sales agreements (especially if they are dominant in a "relevant market"); and
  • screen basic policies and behavior regarding sales, management and marketing.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific 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.

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”

Mondaq Advice Centre (MACs)
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.