China:
China's Supreme Court Resets Resale Price Maintenance Analysis
18 September 2019
Jones Day
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In its first resale price maintenance ("RPM") ruling
since the passage of its Anti-Monopoly Law, China's highest
court held that Chinese antitrust enforcement agencies do not have
to prove that RPM has an anticompetitive effect before issuing
fines for RPM. RPM, also known as vertical price fixing, is an
agreement between a manufacturer and a distributor to set the price
at which a distributor will resell the manufacturer's products
to retailers. The Supreme People's Court ruling establishes a
presumption in public enforcement cases that RPM is unlawful, but
companies may offer evidence to refute the presumption or argue
that an exemption applies. Although the ruling provides businesses
with an opportunity to defend RPM in China, it offers little
guidance about the circumstances in which RPM in China is lawful.
Companies should therefore continue to approach RPM in China with
significant caution.
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