Laws of the People's Republic of China

The State Development and Reform Commission

Decree of the State Development and Reform Commission of the People's Republic of China

No.3

The Interim Provisions on Preventing the Acts of Price Monopoly are formulated in accordance with the Price Law of the People's Republic of China, which have been adopted at the executive meeting of the directors of the State Development and Reform Commission, and as promulgated, it shall enter into force as of November 1, 2003.

Director of the State Development and Reform Commission Ma Kai

June 18, 2003

Interim Provisions on Preventing the Acts of Price Monopoly

Article 1

In order to prevent acts of price monopoly, to promote fair competition and to protect the legal rights and interests of the operators and consumers, the Provisions have been formulated in accordance with the Price Law of the People's Republic of China (hereinafter referred to as the Price Law).

Article 2

The "acts of price monopoly" herein refer to the acts that by means of collusion or abuse of the market predominance, the operators control the market prices, disturb the normal production and operation order, impair the legal rights and interests of the other operators and consumers, or harm the interests of the public.

Article 3

The determination of market predominance shall be mainly based on the market shares of the operators in the relevant markets, the substitutability of the commodities and difficulty of the new competitors to enter into the market.

Article 4

Operators shall not conduct any of the following acts of price monopoly through agreements, decisions or coordination:

(1)

Uniformly determining, maintaining or changing prices;

(2)

Controlling prices by limiting the production or supply quantities;

(3)

Controlling prices in bid invitation and bid tendering, or auction;

(4)

Other acts of controlling prices.

Article 5

An operator shall not rely on its market predominance to compulsorily define the resale price when supplying commodities to its distributors.

Article 6

No business operator may rely on its market predominance to seek sudden huge profits in violation of the laws and regulations of the state.

Article 7

No business operator may rely on the market predominance to anti-dump commodities at the price lower than the costs for the purposes of supplanting and impairing their competitors; or to make the actual sales prices lower the costs of the commodities themselves by means of lowering the prices under the disguises of kickbacks, subsidies and donations.

Article 8

No operator may, when providing same commodities or services, rely on its market predominance to treat the same transaction objects differently in the aspect of transaction price.

Article 9

Whether an operator has any of the acts of price monopoly listed in the Provisions or not, it shall be subject to the determination of the administrative department for price of the government.

Article 10

Where an operator has any of the acts of monopoly as described in the present Provisions, it shall be punished by the administrative departments for price of the government in accordance with Article 40 of the Price Law and Article 4 of the Administrative Punishments on the Illegal Price Acts.

Article 11

Where it is otherwise provided for in any other regulation or ministerial rule regarding the punishment for the acts as described in Articles 6 and 7 of the Provisions or the state organ for imposing punishments, the provisions of such regulations and ministerial rules may apply.

Article 12

The government and its subordinate departments shall protect the operator's rights in lawfully setting prices at their own will, and shall not illegally interfere with the market prices.

Article 13

The government encourages all kind of organizations and individuals to supervise the acts of price monopoly. The administrative departments for price of the government may give awards to the informers of the acts of price monopoly and shall keep the informers confidential.

Article 14

Trade associations shall strengthen self-regulation on price, and may not engage in any act in violation of the Provisions.

Article 15

The power to interpret the present Provisions shall remain with the State Development and Reform Commission.

Article 16

The Provisions shall enter into force as of November 1, 2003.