Heightened scrutiny of RPM continues

Heightened scrutiny of RPM continues

Antitrust enforcement are continuing to crack down on outlawed resale price maintenance (RPM), with a multinational dental medical device manufacturer’s Chinese entity recently fined RMB9.12 million (USD1.35 million).

The fine was imposed on 9 February 2022 for RPM “price fixing” violations from 2008 to 2020, representing 3% of its total 2020 China-wide revenue.

The company was found to have included a resale pricing clause in its distribution agreements and – through face-to-face meetings, WeChat and verbal communications – required its distributors to implement minimum resale prices. It also set distributor key performance indicator policies, monitored distributors’ resale prices, and rewarded and penalised distributors who did or did not follow its RPM requirements.

This ruling follows several record fines in 2021, and another case in the medical device sector in 2016, reinforcing that RPM continues to be a top antitrust enforcement priority in China – particularly in the healthcare/medical sector, where the majority of antitrust fines by penalty amount have involved RPM cases.

Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Howard Wu (Shanghai) at howard.wu@bakermckenzie.com