State Council modifies legislation to stabilize commodity prices

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State Council modifies legislation to stabilize commodity prices, 国务院修改法规力稳物价

On 4 December 2010 the State Council released the Amendment of the Administrative Penalties for Illegal Pricing Provisions Decision. This revision to the Provisions is a major legal initiative aimed at stabilizing commodity prices following the earlier publication of the State Council Stabilizing General Consumer Price Levels and Safeguarding the Basic Livelihood of Residents Notice (known as the “16 regulations” of the State Council). The revision highlights the following major areas.

Crackdown on collusion

To deal with collusion between business operators to manipulate market prices, which result in a rise in commodity prices, a new discrete clause on penalties was separated from article four of the original Provisions. The maximum fine has also been increased from RMB1 million (US$152,000) to RMB5 million.

Malicious hoarding defined

The original Provisions did not define “malicious hoarding”. In the revised Provisions, “malicious hoarding” is defined as “the hoarding of commodities which are in short supply in the market and are subject to exceptional price fluctuations, in a large quantity beyond the normal amount or duration of storage, except for production or own use, and such hoarding continues despite warnings from the commodity price authorities”. This helps to distinguish the storage of commodities by enterprises for normal commercial needs from malicious hoarding.

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Business Law Digest is compiled with the assistance of Haiwen & Partners. The authors can be emailed at baochen@haiwen-law.com. Readers should not act on this information without seeking professional legal advice.