Page 6 - The South China Business Journal

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China Clari es Safe Harbor Rules

for Price Resale Agreements -

New Draft Amendment

By Arendse Huld, China Brie昀椀ng

China’s market regulator has released a draft revision to to a third party (hereinafter, “price
regulations on monopoly agreements that seeks to strengthen agreements”). This allowance is also
the safe harbor rule by clarifying conditions under which stipulated in Article 17 of the Provisions.
companies are permitted to enter into vertical monopoly
agreements. The proposed amendments provide relief for small However, the “certain standard”
companies under China anti-monopoly regulations. and “other conditions” were not
de昀椀ned in the AML or the Regulation.
The draft revision to the Provisions
n June 3, 2025, the State the draft revision protects smaller amends Article 17 to clarify that, in
OAdministration for Market companies with limited ability to order to enter into a price agreement,
Regulation (SAMR) issued engage in monopolistic behavior from the company must prove that its
the Provisions on Prohibition of antitrust investigations and penalties. market share in the relevant market
Monopoly Agreements (Draft for is less than 5 percent and meets the
Comments) (hereinafter, the “draft DEFINING MARKET SHARE following conditions:
revision”), soliciting public feedback THRESHOLDS FOR THE SAFE
until July 3, 2025. HARBOR EXCEPTION 1. The market share of the transaction
counterparty in the relevant market is
The draft revision amends one Under Article 18 of the AML, also less than 5 percent; and
article and adds one new article to companies are prohibited from
strengthen the safe harbor clauses entering into monopoly agreements 2. The annual turnover of the
outlined in the original Provisions with transaction counterparties for operator and the transaction
on Prohibition of Monopoly the following purposes: counterparty in the relevant market
Agreements (the “Provisions”). does not exceed RMB 100 million
These Provisions, which came into 1. Fixing the price of goods resold to (US$13.9 million).
effect in 2023, were released to third parties;
supplement the Anti-Monopoly For companies entering into
Law (AML). Amended in 2022, the 2. Limiting the minimum price of a different type of monopoly
AML permits companies to enter into goods resold to third parties; and agreement (that is, “Any other
a resale pricing agreement with a monopoly agreements recognized by
vertical entity under certain market 3. Any other monopoly agreements the State Council Anti-monopoly Law
share conditions. However, neither recognized by the State Council Anti- Enforcement Agency”, as stipulated
the AML nor the original Provisions monopoly Law Enforcement Agency. in the third item of the 昀椀rst paragraph
de昀椀ned the speci昀椀c market share Nevertheless, the law also of Article 18 of the AML) and seeks to
and turnover parameters. stipulates that if company can apply the market share exception, the
prove that its market share in the market share and turnover thresholds
The amendments to the Provisions relevant sector is lower than a for the transaction party are no
clarify the market share and certain standard speci昀椀ed by the less than 15 percent and RMB 300
turnover thresholds under which a State Council Anti-monopoly Law million (US$41.8 million), respectively.
company is permitted to enter into Enforcement Agency and meets The market share threshold for the
a vertical agreement to 昀椀x or limit other conditions speci昀椀ed by the main business operator remains at 5
the price of resold goods and outline State Council Anti-monopoly Law percent in this scenario.
the application process for being Enforcement Agency, then it may
exempted from an antitrust probe. enter into an agreement to 昀椀x or limit Meanwhile, where there are multiple
By clearly de昀椀ning safe harbor rules, the minimum price of goods resold transaction counterparties, the market

3 AMCHAM SOUTH CHINA