Recent amendments to the anti-pricing monopoly and rules on administrative enforcement procedures will put pressure on in-house legal teams to ensure their corporate compliance systems are exhaustive, and will challenge private-practice lawyers, according to expert in the area.
Issued by China’s National Development and Reform Commission (NDRC), the new anti-pricing monopoly rules and provisions will take effect from 1 February. The rules formulate detailed regulations against price monopolies which forbid enterprises from entering into price-fixing agreements and other price collusion activities.
"The rules are designed to protect fair competition and will impact companies that have dominant market share,” said Michael Shu, general counsel at Adidas China. "We have not seen any adverse impact on Adidas yet, but we are researching and reviewing any price-related policies to see whether there are any aspects which don’t fit within the new anti-pricing monopoly rules."
Just as in-house counsels are busy reviewing their company’s price-related policies, so too are private-practice lawyers busy preparing advice on the new rules for clients. But the work being generated for law firms here stems from the ambiguity of some of the new requirements. "The intention of the new anti-pricing monopoly rules is good in theory, but it is not so easy to enforce in practice,” said Zhan Hao (pictured), executive partner at Grandall and an anti-trust and competition expert.
"For instance, the new rules mention that selling commodities at high prices or low prices can be considered an abuse of dominance, but what exactly is meant by ‘high price’ and ‘low price’? Because a price can be involved in so many issues such as marketing costs, human resources costs, and advertising, it is hard to judge," he said. However, lawyers that ALB China spoke to believe these points will be clarified in the months ahead. ALB
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