Top market regulator clarifies exemptions on anti-competitive agreements

China's top market regulator revised its rules on anti-competitive agreements, setting clearer marketshare thresholds under which certain vertical agreements will not be prohibited, the State Administration for Market Regulation said on Friday.

Under the new rules, vertical agreements that fix or restrict resale prices will not be prohibited if the operator's marketshare in the relevant market remains below 5 percent and turnover is less than 100 million yuan ($13 million).

The changes follow a 2022 revision to China's anti-monopoly law, which introduced a new mechanism allowing vertical agreements to be exempted from prohibition if the parties involved hold marketshares below specified thresholds and meet relevant conditions.

For other types of vertical agreements, the exemption applies if the operator's marketshare stays below 15 percent, with no turnover requirement.

In drafting the rules, the regulator said it drew on international experience while taking into account China's vast market size, domestic business models and competitive dynamics, as well as local market data and industrial structures, to better align the system with the country's high-quality development goals.

It added that the changes would give small and micro-sized firms greater flexibility to grow, support innovation, and strengthen the internal drivers of sustainable economic growth.