Recently, the National Development and Reform Commission issued the “Guidelines on Price Behavior of Industry Associations” (hereinafter referred to as the “Guidelines”) in the form of a public notice. Recently, a relevant official from the Price Monitoring Bureau of the National Development and Reform Commission answered reporters’ questions on issues related to the “Guidelines.”

　　Q: Why did the National Development and Reform Commission issue a special guideline on the pricing behavior of industry associations?

　　Answer: Industry associations are an important force in China’s economic development and social progress. As China’s economic system reform continues to deepen, industry associations are playing an increasingly significant role in economic activities and exerting greater influence. The pricing practices they implement often have industry-wide, regional, or even nationwide impacts on market price order.

　　In recent years, during our work on price regulation and antitrust enforcement, we have found that industry associations frequently and repeatedly violate price and antitrust laws and regulations, thereby undermining the order of market competition, increasing the burden on enterprises, and drawing strong reactions from various sectors of society. First, as price reforms deepen and an increasing number of goods and services are freed to be priced by the market, in certain industries characterized by insufficient competition or high barriers to entry, industry associations often use mechanisms such as issuing industry-guided prices and benchmark prices to guide and control the overall price levels of the industry, thereby infringing upon operators’ autonomy in setting prices. Second, industry associations still lack a proper understanding of self-regulation within their industries, treating the encouragement and guidance of operators within the industry toward reaching price-fixing agreements as the primary form of price self-regulation. Some industry associations even organize production restrictions aimed at maintaining prices, which objectively protect outdated and inefficient production capacities. Third, in providing services such as training, consulting, and trade shows to the public, some industry associations show a marked lack of awareness of rules, with instances of coercive service acceptance and arbitrary fee collection remaining relatively prevalent.

　　To further guide and regulate the pricing behavior of industry associations, enable them to play a better and greater role in China’s economic transformation and upgrading, and ensure their healthy and sustainable development, our Commission has issued the “Guidelines on Pricing Behavior of Industry Associations,” based on the requirement in the “Several Opinions of the CPC Central Committee and the State Council on Promoting Price Mechanism Reform” (Zhong Fa [2015] No. 28) to “improve rules governing market pricing behavior,” as well as the State Council’s directives on clearing up and standardizing fees levied on enterprises. The Guidelines are also informed by practical experience in price regulation and antitrust enforcement.

　　Q: What positive impacts will the release of the “Guidelines” have on regulating market price order?

　　Answer: In brief, the “Guidelines” will largely address the current issue of insufficiently detailed regulations on price behavior for industry associations—special entities—under existing pricing and anti-monopoly laws and regulations, guiding industry associations to comply with the law and assisting price authorities in enforcement.

　　Although the Price Law and the Anti-Monopoly Law contain certain provisions regulating the pricing activities of industry associations, these provisions are relatively general. For example, Article 17 of the Price Law stipulates that “industry organizations shall abide by price laws and regulations, strengthen self-discipline in pricing, and accept guidance from the government’s price authorities.” However, the law does not provide more detailed rules on how industry associations should enhance their price self-discipline or on how to distinguish between lawful and unlawful conduct in price self-regulation. Similarly, Article 16 of the Anti-Monopoly Law prohibits industry associations from organizing operators within their industries to engage in monopolistic practices prohibited under this chapter; yet it fails to specify the concrete forms through which industry associations might organize operators to reach monopolistic agreements. As a result of the lack of more specific legal guidance, industry associations often remain uncertain about which actions they can and cannot take. The issuance of the Guidelines provides industry associations with concrete, actionable legal guidance on pricing behavior, and also offers crucial direction for enforcement efforts by the government’s price authorities. This represents an important approach to addressing the current high incidence of illegal pricing activities by industry associations, as well as a key measure for strengthening ex-ante and ex-post supervision of these associations.

　　Q: What are the main contents of the “Guidelines”?

　　Answer: The “Guidelines” systematically review the pricing behaviors of industry associations in their efforts to carry out legal publicity, safeguard industry interests, implement self-regulation, release industry information, and organize industry activities. Through a checklist-based classification, the Guidelines specify in detail: eight behaviors that pose no legal risk; five behaviors with relatively low legal risk; four behaviors with moderate legal risk; four behaviors with high legal risk; and twelve behaviors with extremely high legal risk. Specifically, Article 5 of the Guidelines explicitly lists eight actions—such as reporting situations to government price authorities, submitting opinions and suggestions, and filing complaints—that industry associations undertake in the course of safeguarding industry interests and which carry no legal risk and play a positive role in protecting industry interests. Article 6 of the Guidelines lists five behaviors—such as promoting new forms of clearly marked prices and advising or prohibiting members from exchanging price information among themselves—that generally pose little or no legal risk. Article 7 of the Guidelines analyzes from four perspectives how the release of price information by industry associations may have adverse effects on public price expectations, disrupt the normal market price order, and thus entail significant legal risks. Article 8 of the Guidelines identifies four specific scenarios in which the release of price information by industry associations poses very high legal risks. Article 9 of the Guidelines specifies seven behaviors—such as industry associations organizing operators to reach price monopoly agreements—that carry extremely high legal risks. Article 10 of the Guidelines identifies four scenarios in which industry associations fabricate and disseminate information about price increases to drive up prices, all of which pose extremely high legal risks. Finally, Article 12 of the Guidelines cautions that when industry associations provide paid services such as training, consulting, or trade shows, failure to comply with relevant price and anti-monopoly laws and regulations applicable to business operators can result in extremely high legal risks.

　　Q: In terms of implementing price practices, what legal risks do industry associations particularly need to avoid?

　　Answer: In recent years, there has been a rapid increase in cases where industry associations, through measures such as formulating industry standards, developing price calculation formulas, publishing industry-guided prices or benchmark prices, and exchanging sensitive price information, have guided operators within the industry to enter into price-fixing agreements. These actions by industry associations, while outwardly cloaked in the legal guise of industry self-regulation, in reality serve—albeit in a more indirect and concealed manner—to guide and organize operators into reaching price-fixing agreements, thereby causing significant damage to operators’ pricing autonomy and the overall order of market competition. The “Guidelines” explicitly classify these behaviors as highly risky and extremely high-risk, and industry associations should pay particular attention to avoiding them.

　　The Guidelines also emphasize that when industry associations provide paid services such as consulting, training, and trade shows to external parties, they shall be treated as business operators. This means that industry associations must abide by the principles of fairness, legality, and honesty and good faith as stipulated in price and anti-monopoly laws and regulations, strictly fulfill all legal obligations of business operators, and must not exploit their advantageous position—gained through self-regulation and industry management—to impose arbitrary charges.

　　Q: In terms of strengthening the regulatory oversight of price behaviors by industry associations, what specific measures does the “Guideline” outline?

　　Answer: The Guidelines explicitly state that if industry associations engage in activities flagged by these Guidelines as posing legal risks, law enforcement authorities will conduct investigations and impose administrative penalties in accordance with the law. This will enable industry associations to have a clearer understanding of the consequences of their actions and encourage them to exercise greater caution when making pricing decisions. Furthermore, if operators participate, under the organization of industry associations, in activities flagged by these Guidelines as posing legal risks, they should be aware that their legal responsibilities will not be reduced simply because the industry association itself bears legal responsibility. In particular, operators playing a leading or organizing role will face even heavier penalties. The Guidelines also warn industry associations that violations of price control and antitrust laws may result in their inclusion on a list of discredited entities. Relevant departments will then carry out joint punitive measures in accordance with the law, making it extremely difficult for industry associations that have committed serious violations to operate.