China Finalises Safe Harbour Rules For Vertical Restraints

In December 2025, China's State Administration for Market Regulation (SAMR) issued the Amended Provisions on the Prohibition of Monopoly Agreements (Amended Provisions). Most notably, the Amended Provisions provide details of the long-awaited thresholds of the safe harbours for resale price maintenance (RPM) and other non-price related vertical restraints (such as customer and geographical restraints).

Historically, SAMR has taken a strict approach towards RPM, and has generally viewed such arrangements with a presumption that they are anti-competitive. However, in the 2022 revision of China's competition law statute, the Anti-Monopoly Law (2022 AML), SAMR introduced a safe harbour exemption for RPM and other types of vertical restraints, but left the specific thresholds to be determined in subsequent regulation.

Finally, after nearly three years—and several rounds of both public and private consultation—SAMR has now filled this gap with the Amended Provisions, which came into effect on 1 February 2026. 

Safe Harbour Thresholds 

The Amended Provisions distinguish between price-related (e.g. RPM) and non-price related vertical restraints (e.g. customer or geographical restraints), and set out separate safe harbour thresholds for each type of restraint. 

• For price-related vertical restraints (i.e. RPM), the safe harbour will apply if: 
  • Each party (both the upstream undertaking and its downstream counterparty) has a market share below 5% in the relevant market; and

  • The combined annual turnover of the products involved is below RMB 100 million (approx. USD 14 million).*

    *Where multiple counterparties operate in the same relevant market, market shares and turnover must be aggregated. 

• For non-price related vertical restraints, the safe harbour will apply if:

  • Each party’s market share in the relevant market is below 15%.**

    **Where multiple counterparties operate in the same relevant market, market shares must be aggregated.

These thresholds are to be assessed on an annual basis during the term of the relevant arrangement.

Interestingly, no turnover threshold applies to the assessment of non-price related vertical restraints, which is a departure from an earlier consultation draft of the Amended Provisions. 

No absolute immunity 

One important point to note is that the safe harbours do not provide absolute immunity. 

In the case of a price-related vertical restraint, if SAMR can demonstrate that it has the effect of excluding or restricting competition, the safe harbour regime will not operate to preclude a finding of infringement, even where the thresholds are satisfied. 

The approach is similar for non-price related vertical restraints: Article 16 of the Amended Provisions confirms that a restraint may still infringe the 2022 AML if, notwithstanding the thresholds being satisfied, SAMR can demonstrate that it has the effect of excluding or restricting competition. Conversely, where an undertaking exceeds the applicable market‑share thresholds and is therefore unable to rely on the safe harbour, non‑price vertical restraints are not presumed to be unlawful, and are instead subject to an effects analysis. 

These principles are reflected in the context of private enforcement. Whether the agreement does or does not exclude or restrict competition is key, and the burden of proof shifts depending on the type of vertical restraint at issue. The Supreme People’s Court’s Interpretation on Several Issues Concerning the Application of Law in the Trial of Monopoly Civil Dispute Cases (the Judicial Interpretation) makes it clear that. in the case of price-related vertical restraints, the defendant bears the burden of proving that the agreement does not exclude or restrict competition. By contrast, in the case of non‑price vertical restraints, the plaintiff must demonstrate competitive harm.

Interaction with Existing Safe Harbours

The Amended Provisions state that, where safe harbour rules for non-price related vertical restraints are provided for under other legal provisions applicable in specific sectors, those rules shall prevail.

Currently, safe harbour rules exist only in the Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude or Restrict Competition (IP Provisions) and the Anti-Monopoly Guidelines on the IP Field issued by the Anti-Monopoly Commission of the State Council (IP Guidelines), which apply to arrangements involving intellectual property rights.

The IP Guidelines establish the following safe harbour for vertical non-price agreements involving IP. The safe harbour will apply where: 

• Each party’s market share does not exceed 30% in any relevant market affected by the agreement; or
• If market share cannot be reliably obtained or does not accurately reflect market power, there exist four or more independent, reasonably accessible alternative technologies in the relevant market (other than those controlled by the parties).

In addition to the IP Guidelines, SAMR's Antimonopoly Guidelines on the Automobile Sector (Auto Sector Guidelines) also refer to certain market share thresholds that companies in the auto sector may rely on as creating a rebuttable presumption that non-price restraints will not be viewed as anti-competitive, akin to a safe harbour. However, the Auto Sector Guidelines are not binding legal provisions and do not carry the same legal effect as the Amended Provisions or the IP Provisions. Therefore, any future development may concern the alignment or clarification of sector‑specific guidance with the existing statutory safe harbour framework. 

Practical takeaways 

While the Amended Provisions provide greater clarity on China’s treatment of vertical restraints, businesses should not treat safe harbours as complete shields. Key challenges remain when seeking to rely on the safe harbours:

• Market definition and market share calculation: 

  While closely related, distinct uncertainties arise at both the market definition and market share calculation stages. SAMR has significant discretion in determining the appropriate market definition to be applied in an investigation, and further uncertainty exists as to how market shares should be calculated within that market. Businesses should take a cautious approach and consider all plausible market definitions that may be applied to the relevant products to identify whether the market share thresholds could be exceeded. Further, where a downstream reseller sells multiple brands of competing products, it is unclear whether the market share calculation should be limited to the products from the supplier imposing the vertical restrictions, or if the downstream reseller's market share would need to encompass other competing products.

• Proving (or disproving) competitive effects

  Although Article 18 of the 2022 AML provides a potential exemption pathway for price‑related restraints where the operator can prove the absence of anticompetitive effects, there is limited guidance from SAMR as to how this can be achieved. 

In light of the above, businesses seeking to rely on the safe harbours should proceed with caution. Businesses will need to undertake robust market share analyses, including considering any plausible alternative market definitions. 

Given the context of China’s broader initiative to establish a unified national market, undertakings with market shares exceeding 15% should carefully evaluate the risks and feasibility of implementing non‑price vertical restrictions in light of the Amended Provisions and the Judicial Interpretation.

For businesses seeking to rely on the safe harbour for RPM arrangements, auditable annual records of sales and products covered by the agreement should also be maintained that can prove that the turnover thresholds are not exceeded.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.