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Guiding opinions on the investigation and punishment of illegal acts of price gouging Featured

Monday, 13 June 2022 15:59

Determination of price gouging violations:

Where a business operator has one of the following acts of promoting or may promote excessively rapid or excessively high commodity prices, the market supervision department may determine that it constitutes an illegal act of price gouging as provided for in Item 1 of Article 6 of the Provisions on Administrative Punishment for Illegal Price Violations:

  1. Fabricating production and purchase cost information and disseminating it;
  2. Fabricating and disseminating information on tight supply or surge in market demand;
  3. Fabricating information that other business operators have or are preparing to raise prices and disseminating them;
  4. Disseminating information contains urgent terms or inducing terms such as "about to raise prices in an all-round way" and "price increase tide", pushing up price expectations;
  5. Disseminating information to induce other business operators to raise prices;
  6. Fabricating or disseminating other information that promotes or may promote the price of commodities to rise too fast or too high.

 

Where business operators have one of the following acts of promoting or may promote excessively rapid or excessively high commodity prices, the market supervision department may determine that it constitutes an illegal act of price gouging as provided for in Item 2 of Article 6 of the Provisions on Administrative Penalties for Illegal Price Violations:

  1. The operator of the production link, without a legitimate reason, does not sell the products that have been produced to the outside world in a timely manner, exceeds the normal storage quantity or storage cycle, hoards a large number of commodities with tight market supply and abnormal price fluctuations, and continues to hoard after being warned by the market supervision department;
  2. Production link operators, in addition to production for their own use, exceed the normal storage quantity or storage cycle, hoard a large number of raw materials with tight market supply and abnormal price fluctuations, and continue to hoard after being warned by the market supervision department;
  3. Circulation operators, without legitimate reasons, do not sell commodities to the outside world in a timely manner, exceed the normal storage quantity or storage cycle, and hoard a large number of commodities with tight market supply and abnormal price fluctuations, and continue to hoard after being warned by the market supervision department.

 

Where a business operator has the circumstances provided for in the preceding paragraph, but can prove that his conduct is material reserve or allocation in accordance with the requirements of the government or relevant government departments, it does not constitute an illegal act of price gouging.

 

Where business operators have one of the following acts of promoting excessively rapid or excessively high increase in commodity prices, the market supervision department may determine that it constitutes an illegal act of price gouging as provided for in Item 3 of Article 6 of the Provisions on Administrative Penalties for Price Violations:

  1. In the process of selling commodities, forced tying up the sale of commodities, disguised to greatly increase the price of commodities;
  2. Not raising the price of commodities, but unreasonably raising transportation costs or charging other unreasonable fees;
  3. Substantially increasing the price of commodities when the costs have not increased significantly, or although the costs have increased, the increase in commodity prices is significantly higher than the increase in costs;
  4. Using other means to inflate prices and promote excessively rapid and excessively high commodity prices.

 

The "substantial increase" and "significantly higher than" in the preceding paragraph are to be determined by the market supervision department by comprehensively considering factors such as the actual operating conditions of the business operators, subjective malice, the type of goods, and the degree of social harm of the illegal acts, and in the process of investigating and handling the case, combined with actual conditions.

 

 

Mike Chang

Partner

mikechang@shanghaiinvest.com

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