Overview on the Provisions on Clear Price Marking and Prohibition of Price Fraud

On 1 July 2022 the Provisions on Clear Price Marking and Prohibition of Price Fraud ("Provisions") promulgated by the State Administration for Market Regulation took effect.

The Provisions have replaced both the Regulations on Clear Marking of the Prices of Goods and Services and the Regulations on Prevention of Price Fraud. The Provisions further specify the rules on price marking and the prohibition of price fraud, improve the criteria for determining some price-related violations and provide for relevant legal consequences.

Below is an overview on the key content of the Provisions.

1.According to Article 2 of the Provisions, the term “Clear Price Marking” refers to the act of a business operator of publicly marking the prices and other information according to PRC law when selling or purchasing goods or providing services. The term “Price Fraud” refers to the act of a business operator of seducing consumers or other trading parties to conduct deals with such business operator by using false or misleading price methods.

2. Article 4 of the Provisions also imposes obligations on outlets, shopping malls, marketplaces and e-commerce platforms (collectively, “Providers of Trading Venues”). I.e., in case the Providers of Trading Venues find out that a business operator has violated the Provisions, they shall take necessary measures, keep the relevant information on record, and bear relevant obligations and responsibilities according to PRC law.

3. According to the Provisions, major rules on Clear Price Marking and prohibition of Price Fraud include the following:

a) As to Clear Price Marking, the Provisions further specify the main price elements to be marked and the pricing principles to be followed by a business operator when selling goods or providing services:

(1) Based on the characteristics of the goods or services, industries and regions, etc., Clear Price Marking should be authentic and accurate, the labels of goods should be in place, and the marks should be significantly noticeable.

(2) Business operators shall mark prices in a significantly noticeable manner and clearly mark the corresponding goods or services. The marked price shall be adjusted in a timely manner, if there is any change to the price of goods or services.

(3) In case of selling goods, business operators shall state the name, price and measurement unit of the goods. If different prices are adopted for the same brand or type of goods due to different characteristics such as color, shape, size, place of origin and grade, business operators shall mark the names of the goods separately for these different prices. In case of providing services, business operators shall mark the service project, content of services, prices or pricing methods.

(4) Business operators shall not sell goods or provide services at a price higher than the marked price. Business operators shall not charge a third party for the goods or services if the price is not marked.

(5) When selling goods and at the same time providing relevant supporting services, including, among others, distribution, moving, installation or commissioning (collectively, “Supporting Services”), business operators shall also publicly mark the prices of the Supporting Services if the Supporting Services are not provided for free. Further, in case the Supporting Services will not be provided by the business operator which sells the products, a mark or statement shall be made in a significantly noticeable manner.

(6) Unless otherwise stipulated under PRC law, business operators may publicly mark the prices in the form of price tags (including electronic price tags), price plates, price lists (booklets), display boards, electronic screens, display of goods or models, display of pictures or in any other effective form.

(7) If business operators conduct online sales or provide online services, they shall publicly mark the prices in the form of text or images, etc. on the webpages.

(8) If business operators make a price comparison when selling products or providing services, the information on the price which is used as the compared price shall be authentic and accurate.

(9) Without any justification, business operators shall not raise the marked price significantly on a temporary basis in advance in order to use it as the calculation benchmark for purpose of discount or reduction in price.

b) As to prohibition of Price Fraud, Article 19 of the Provisions specifies that business operators shall be prohibited from conducting the following Price Fraud related activities:

(1) Falsely claiming that the price of goods or services was determined by the State or set according to the guidance of the State;

(2) Seducing consumers or other business operators with low prices but settling with high prices;

(3) Selling goods or providing services through false discounts, price reductions or price comparisons or via other means;

(4) Selling goods or providing services by using deceptive or misleading language, text, figures, images or videos to indicate prices and other price-related information;

(5) Refusing to implement price commitments in total or in part without justifiable reasons; or

(6) Not marking or making the mark significantly obscure in respect of disadvantageous conditions for consumers or other trading parties in order to seduce them to conduct deals, etc.

4. Legal Consequences

a) If a business operator’s act is in violation of either the rules on Clear Price Marking or those on prohibition of Price Fraud, such business operator shall be subject to the supervision, investigation and/or punishments by the competent market supervision authority.

(1) In case of violations of the rules on Clear Price Marking, depending on the specific situations, the PRC Price Law and/or the Provisions on Administrative Sanctions Against Price-related Illegal Activities shall apply.

(2) In case of violations of the rules on Clear Price Marking or prohibition of Price Fraud, depending on the specific situations, the PRC Price Law, the PRC Anti-Unfair Competition Law, the PRC E-Commerce Law, and/or the Provisions on Administrative Sanctions Against Price-related Illegal Activities shall be applied.

b) If the act of a Provider of Trading Venues is in violation of the Provisions, unless otherwise stipulated under PRC law, the competent market supervision authority may impose the following administrative penalties: a fine of up to RMB 30,000; or a fine of between RMB 30,000 up to RMB 100,000, depending on the severity of the circumstances.

5. Conclusion

In summary, the Provisions provide a legal basis and contribute to safeguarding the legitimate rights and interests of consumers and business operators, regulating price order on the market, and, thus, building a unified domestic market with a more efficient and fair competition.