On 28 February 2022, the State Administration for Market Regulation (SAMR) published an administrative penalty decision against Geistlich Trading (Beijing) Co Ltd for engaging in monopoly agreements of resale price maintenance.

The case was initiated by the Beijing Administration for Market Regulation (Beijing AMR) in July 2021 and the decision was made on 9 February 2022. An investigation revealed that, from 2008 to 2020, Geistlich Trading (Beijing) reached and implemented monopoly agreements with its trading counterparties to restrict product prices in areas across mainland China, where it conducts sales.

Such conduct eliminated and restricted market competition and harmed consumer interests, as well as social and public interests. From 2008 to 2020, Geistlich Trading (Beijing) and its trade counterparties reached monopoly agreements to restrict prices by:

  • signing contracts;
  • negotiating at meetings;
  • communicating via WeChat; and
  • other forms of verbal communications during resale.

Meanwhile, Geistlich Trading (Beijing) further promoted their implementation by:

  • formulating distributor management rules;
  • establishing an assessment and evaluation system;
  • monitoring the implementation of resale price policies; and
  • punishing its violators.

In this case, the company and its trade counterparties were not connected in terms of shareholding structure, actual control or any other aspect. The monopoly agreements reached and implemented by them eliminated and restricted market competition and harmed the interests of consumers and the public. When deciding on penalties, the authority noted that Geistlich Trading (Beijing) met the conditions for mitigated punishment as it:

  • proactively cooperated with the investigation;
  • provided evidence that was unknown to the law enforcement agency;
  • rectified and eliminated the consequences of its conduct;
  • revised the distribution contracts and assessment system;
  • improved its anti-monopoly compliance system; and
  • reduced prices.

However, illegal gains earned by the company could not be calculated as it was impossible to ascertain prices before and after the implementation of the monopolistic conduct. The penalty amounts to 3% of the company's annual domestic sales in 2020 and 9,123,598 yuan ($1.4 million) in total.

For further information on this topic please contact Hao Zhan or Ying Song at AnJie Law Firm by telephone (+86 10 8567 5988) or email ([email protected] or [email protected]). The AnJie Law Firm website can be accessed at www.anjielaw.com.