Can an Overseas Brand Set a Minimum Resale Price for Its Chinese Distributor?

1. Before you send a pricing circular, check the dealer model

This guide addresses independent distributors buying goods for resale in mainland China. A price set for a brand's own sale is not the same as a price imposed on an independent reseller. Inspect the end-customer contract, invoicing, stock ownership, returns, credit losses and sales investment. In civil cases, Article 23 of the Supreme People's Court (SPC) interpretation distinguishes genuine agency agreements where the agent bears no substantive commercial or operational risk. A dealership does not become such an agency simply by changing its title.

The location of headquarters, signature or chosen contract law does not settle competition-law exposure. Article 2 of the PRC Anti-Monopoly Law (AML) also reaches conduct outside mainland China that has an exclusionary or restrictive effect on competition in its domestic market.

2. Check what actually happens when a dealer discounts

AML Article 18(1) prohibits agreements fixing resale prices or setting a minimum. Articles 14 and 15 of SAMR's Provisions on Prohibiting Monopoly Agreements cover indirect constraints through margins, discounts or fees and technology-enabled pricing controls. Review actual agreement and implementation, not just the language in the master contract.

• A recommendation should be genuinely optional. Compare the written policy with sales calls, rebate approvals and supply decisions: can the distributor discount independently without retaliation?
• A minimum advertised price, promotional approval, coupon restriction or maximum price deserves closer scrutiny if it effectively fixes or floors the actual resale price. Changing the label does not resolve the issue.
• A price-linked penalty is a warning sign. If the commercial objective is better service or wider promotion, assess objectively measurable service, volume or campaign-cost incentives that do not depend on a retail floor. Check those terms separately for other competition issues.

3. Build the annual safe-harbour file before relying on the thresholds

Under Article 17 of the revised SAMR Provisions, effective 1 February 2026, fixed and minimum resale-price agreements generally require the operator and counterparties to be below 5% in their respective relevant markets in every year of the agreement, and annual turnover of the goods covered by the agreement to be below RMB 100 million. Both thresholds are strict. Where multiple counterparties are in the same relevant market, aggregate their shares and covered turnover as prescribed. Special sector, field or agreement-type rules may override the general test.

Build one worksheet for every agreement year. Identify the products and geography using evidence of alternatives, the parties and control relationships, the basis for the numerator and denominator at each market level, the covered goods' turnover, and the dealer aggregation. A contractual territory, a brand-only sales spreadsheet or an unsupported national market estimate is not a reliable substitute for market evidence.

Hypothetical: two dealers in the same relevant market have shares of 2% and 3%. If aggregation is required, the combined 5% is not below the threshold even if the brand has 4% and turnover is below RMB 100 million. The 15% test for other vertical agreements does not cover the resale floor just because it sits beside an exclusivity clause.

4. Separate the safe harbour from an effects defence

Failure to substantiate the safe harbour is not itself the final liability determination. Under AML Article 18(2) an operator can show that a fixed or minimum resale price does not exclude or restrict competition. In civil proceedings, SPC Articles 21 and 22 put this burden on the defendant and identify market power, cumulative effects, barriers, intra- and inter-brand competition and necessary benefits as relevant factors. A desire to protect the brand is not evidence of necessity. AML Article 20 exemptions have separate conditions.

For a SAMR investigation, Articles 18 and 19 of the Provisions require an application to the enforcement authority supported by the agreement and how it operated, ownership and control, annual shares and covered turnover with calculation bases. Verified eligibility can lead to no case being opened or to termination of an investigation; contrary evidence of restrictive effects defeats that route. Incomplete or untrue information or materially changed facts may lead to investigation. Internal screening is not regulatory clearance.

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5. If a dispute or investigation has started, protect the dates first

Observe any response date in a regulatory notice and retain complete records before revising policies. Administrative enforcement under AML Article 56 and civil liability under Article 60 serve different purposes; an enforcement decision is not payment of compensation or restoration of rebates.

A qualifying civil monopoly claim may be filed without waiting for an administrative penalty. Under SPC Articles 2–4, first-instance jurisdiction is with intellectual property courts or designated intermediate courts, and a contract arbitration clause alone does not defeat a civil monopoly action. Separately assess ordinary invoice and settlement claims under their forum clauses. Articles 43–45 and 48 address cessation, loss and validity. Prove causation and quantify the loss; invalidity of a pricing clause does not automatically void all commercial obligations, but closely linked or facilitating terms may be affected.

The ordinary damages limitation is generally three years from actual or constructive knowledge of the injury and obligor under Civil Code Article 188 and SPC Article 49, subject to special rules. Reporting the conduct to the antitrust authority can interrupt time under Article 49, with statutory restart triggers tied to the investigation outcome. Do not equate a platform complaint or commercial negotiation with that reporting rule. Record separate dates for invoices, termination and procedural steps, and check the rules applicable to conduct before or spanning 1 February 2026.

6. What to send for a targeted contract review

If a discount has triggered proposed suspension, non-renewal or a rebate deduction, pause the proposed measure for review. Align contract terms, commercial manuals, sales messages, platform settings and rebate approvals; retain earlier versions and effective dates.

• Model file: executed agreements, customer invoices, funds and return flows, stock and credit risks.
• Conduct file: price sheets, messages, discount approvals, platform controls, rebate decisions and supply notices, in chronological order.
• Market file: substitutes, geography, annual market data, covered turnover, dealer aggregation and any evidence supporting necessity and competitive benefits.
• Remedy file: notices and service dates, unpaid invoices, rebate statements, lost sales or costs, and evidence separating price-based measures from other causes. Flag the earliest deadline.