China's Supreme Court Resets Resale Price Maintenance Analysis
In its first resale price maintenance ("RPM") ruling since the passage of its Anti-Monopoly Law, China's highest court held that Chinese antitrust enforcement agencies do not have to prove that RPM has an anticompetitive effect before issuing fines for RPM. RPM, also known as vertical price fixing, is an agreement between a manufacturer and a distributor to set the price at which a distributor will resell the manufacturer's products to retailers. The Supreme People's Court ruling establishes a presumption in public enforcement cases that RPM is unlawful, but companies may offer evidence to refute the presumption or argue that an exemption applies. Although the ruling provides businesses with an opportunity to defend RPM in China, it offers little guidance about the circumstances in which RPM in China is lawful. Companies should therefore continue to approach RPM in China with significant caution.
