On August 12, 2009, the National Development and Reform Commission released the Draft Provisions on Anti-Monopolistic Pricing (the “Anti-Monopolistic Pricing Draft”) for public comment. The Anti-Monopolistic Pricing Draft would be applicable to monopolistic pricing acts conducted within the territory of China, and overseas monopolistic pricing acts that eliminate or restrict competition in China’s domestic market.

According to the Anti-Monopolistic Pricing Draft, pricing acts refer to (1) monopolistic pricing agreements and (2) acts abusing dominant market position, conducted by any business operator, any administrative agency or entity authorized to manage public affairs that abuses administrative power or market position to eliminate or restrict competition in relation to price.

  1. Monopolistic Pricing Agreements

A monopolistic pricing agreement is defined as an agreement, decision or other concerted act reached or agreed upon in oral or written form by two or more business operators to eliminate or restrict competition in relation to price. The following factors may be taken into account when determining the existence of a concerted act: (1) whether there is consistency among business operators’ pricing and (2) whether such consistency is the result of communication by relevant business operators.

The Anti-Monopolistic Pricing Draft also enumerates various types of prohibited monopolistic pricing agreements among competing business operators, including but not limited to agreements fixing or changing prices of commodities, the extent of price change, commissions or discounts that impact prices, applying a uniform price as the basis for negotiating with a third party, and an agreement that a price may not be changed without other business operators’ consent.

  1. Acts Involving Abuse of Dominant Market Position

A business operator with a dominant market position is prohibited from engaging in the following monopolistic pricing acts:

  • Selling commodities at an unfairly high price or purchasing commodities at an unfairly low price;
  • Selling commodities at a price lower than the cost without a justifiable reason;
  • Refusing in disguised form to enter into a transaction with transacting parties by requesting an excessively high price or an excessively low price without a justifiable reason;
  • Applying discriminatory treatment regarding a transaction price to transacting parties with same conditions without a justifiable reason;
  • Conducting any other monopolistic pricing acts as identified by the authorities.