China’s NDRC Introduces New Anti-Monopoly Regulations

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Jan. 7 – On January 4, the National Development and Reform Commission, China’s top economic planner, published new regulations that aim to tackle monopolistic business behavior and price fixing. The new regulations supplement the country’s 2008 Anti-monopoly Law and will become effective beginning February 1, 2011.

Under the amendments, businesses that have dominant market shares will be prohibited from selling products at prices deemed unfairly high or buying products at prices seen to be unfairly low. To be considered dominant, a single party should have more than half of a market share, two parties should have more than two-thirds and three should have more than three-fourths.

The regulations apply to monopolistic behavior both inside China and abroad. Prohibited business practices include pricing goods below their production cost, using special rebates to force out competitors, and discriminatory pricing between similar customers.

Individual violators will face confiscation of illegal earnings and a fine of up to 10 percent of the previous year’s sales. Violating industry associations will be subject to fines of up to RMB500,000 and may be forced to break apart.

Since consumer prices rose 5.1 percent from a year earlier at the end of 2010, the Chinese government set ensuring price stability as a priority. Beijing has also vowed to bring competition and pricing practices closer to international standards.