NDRC consults on draft automotive guidelines: implications for all

China’s National Development and Reform Commission ("NDRC") published a consultation draft of the antitrust guidelines applicable to the automotive industry ("Consultation Paper") on 23 March 2016. This Consultation Paper, although focused on the automotive industry, summarises the NDRC’s vast enforcement experiences across different industries and indicates the approaches likely to be taken in future actions. It is therefore a very useful reference for the business community more generally, regarding issues like channel management and after-sales. Notably, the Consultation Paper speaks to three key aspects:

  • potential exemptions from resale price maintenance (which has been generally considered as a per se violation of the Chinese competition law);
  • more guidance on other forms of vertical constraints (e.g. customer or territory constraints), including a (limited) exemption for businesses with market shares below 25-30%; and
  • branding as an important factor in market definition in aftermarkets and potential abusive restrictions as regards aftermarkets.

The Consultation Paper once finalised will be applicable to all three enforcement authorities in China, including their local branches, and is also expected to have impacts on private litigation.

Considering the significant implications of the draft guidelines, we have prepared an article to summarise the key proposed rules in the Consultation Paper, and discuss issues for which further guidance may still be required and what to expect next.

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