Determinations of price gouging infringements under the Price Law (PL) were clarified in detailed rules set by the State Administration for Market Regulation (SAMR) on10 June 2022.
The SAMR previously proposed a steep increase in penalties for PL violations in 2021, but this rule has not yet been finalised.
Price gouging concerns arise where a business increases the price to profit from shortages of goods caused by its hoarding, or a climate of fear in the market arising from it fabricating or disseminating price increase information.
Price gouging could also be spotting an extraordinarily high price for tie-in sales, unreasonably steep increases in shipping charges or other fees, or even higher price increases than cost increases.
There is some convergence between PL and antitrust violations. However, unlike competition law, which focuses on abusive pricing behaviour, a PL violation is not conditional upon a dominant market position.
It means that even businesses that are not dominant will face PL risks. The SAMR can also more easily enforce against price violations under the PL, as it requires a lower burden of proof.
A platform operator has already been fined for its “choose one from two” exclusive arrangement in violation of the Anti-Unfair Competition Law, despite not being dominant (and which therefore could not be pursued under the Anti-Monopoly Law).
As such, in addition to Anti-Monopoly Law risk analysis, a PL risk assessment is now also strongly recommended for pricing conduct in China.
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
