To implement the authorization in Article 18, Paragraph 3 of the Anti-Monopoly Law regarding the “safe harbor” regime and to clarify its applicable standards and conditions, the SAMR released the Provisions on Prohibiting Monopoly Agreements (Draft Revision) (hereinafter the “Draft Revision”) on June 3, 2025, and opened it for public comment until July 3, 2025.
The Provisions on Prohibiting Monopoly Agreements (hereinafter referred to as the “Provisions”) were formulated and issued by the State Administration for Market Regulation (hereinafter the “SAMR”), and came into effect on April 15, 2023. As an integral part of China’s anti-monopoly enforcement framework, the Provisions aim to concretely elaborate and implement the prohibitive clauses of the Anti-Monopoly Law of the People’s Republic of China (hereinafter the “Anti-Monopoly Law”) concerning horizontal and vertical monopoly agreements. Among these, the regulation of vertical monopoly agreements under Article 17 of the Provisions has long been a focal point of both enforcement and academic debate due to its complex determination and controversial application. The Draft Revision amends the original Article 17 and introduces a new Article 18. By clarifying the thresholds, supplementary conditions, and review procedures for the application of the safe harbor, it further optimizes the analytical framework for enforcement against vertical agreements, provides clear compliance guidelines for business operators, and lays a systematic foundation for effective regulatory supervision.
This article will provide a legal analysis of these revised provisions.
I. What is the “Safe Harbor” Regime
In the field of anti-monopoly law, a safe harbor regime typically establishes specific economic thresholds—such as market share or turnover—below which agreements or conduct with minimal or insufficient competitive impact are excluded from enforcement scrutiny. This allows regulatory resources to be focused on cases that are more likely to exclude or restrict competition.In China, the 2022 amendment to the Anti-Monopoly Law introduced the safe harbor regime for the first time in Article 18, Paragraph 3, authorizing the State Council's anti-monopoly enforcement agency to set specific standards and applicable conditions.
II. Content and Interpretation of the Draft Revision
The Draft Revision substantially amends the original Article 17 and adds a new Article 18, systematically establishing the thresholds, evaluation criteria, and procedural arrangements for the application of the safe harbor regime. The main revisions are reflected in the following five aspects:
(1) Specification of Market Share Thresholds for Business Operators
The Draft Revision sets differentiated market share thresholds based on the potential competitive harm posed by different types of vertical agreements, embodying the principle of proportionality and differentiated supervision. Specifically:
1. For resale price maintenance (RPM) agreements—fixing or setting minimum resale prices (corresponding to Article 18, Paragraph 1, Items 1 and 2 of the Anti-Monopoly Law)—the business operator’s market share in the relevant market must be less than 5%.2. For other types of vertical agreements (e.g., exclusive arrangements, territorial restrictions—corresponding to Item 3), the market share threshold is set at 15%.
This classification not only reflects the varying competition risks of different agreement types but also enhances the precision and predictability of the regime’s design, helping enterprises assess the legal boundaries of their commercial conduct in accordance with the law.
(2) Specification of Additional Conditions Beyond Market Share
To comprehensively assess the competitive impact of a business operator’s conduct, the Draft Revision introduces turnover as a supplementary criterion:
1. For agreements involving fixed or minimum resale prices, the operator’s turnover in the relevant market must not exceed RMB 100 million.2. For other vertical agreements, the threshold is RMB 300 million.
Turnover, as a key indicator of market activity and scale, complements the market share threshold, enabling more accurate identification of market dominance risks. Moreover, given that vertical agreements involve both upstream and downstream markets, and to mitigate data asymmetries, the Draft Revision requires both the operator and the counterparty to independently meet the market share and turnover criteria, ensuring a comprehensive assessment of the agreement’s overall competitive impact.
(3) Clarification of Exceptions to Safe Harbor Application
Given that the safe harbor regime essentially presumes the legality of conduct under certain conditions, the Draft Revision prudently provides for two categories of exceptions:
1. Agreements with substantial anti-competitive effects: Even if formal thresholds are met, if there is evidence of significant harm to competition, the agreement must still be prohibited by law.2. Specific industries, sectors, or agreement types: Recognizing the sensitivity or regulatory uniqueness of certain industries, enforcement authorities retain the discretion to formulate separate rules for specific scenarios.
These exceptions ensure that the safe harbor regime remains broadly applicable while preventing misuse or abuse, thereby enhancing the regime’s targeted effectiveness and institutional flexibility.
(4) Specification of Burden of Proof and Documentation Requirements
Pursuant to the Anti-Monopoly Law, invoking the safe harbor constitutes a defense right of business operators. Article 18 of the Draft Revision further clarifies the procedural obligations:
1. The burden of proof lies solely with the business operator, who must proactively raise the defense;2. Evidence must be submitted in writing and after a formal investigation has been initiated;3. The materials must fully demonstrate the market share and turnover of both the operator and the counterparty in the relevant market and must be truthful, complete, and verifiable.
These provisions enhance procedural clarity and operability, providing enterprises with a clear pathway for compliance assertions while facilitating more efficient case handling by enforcement agencies.
(5) Specification of Enforcement Procedures and Legal Consequences
To ensure the effective implementation and orderly operation of the safe harbor regime, the Draft Revision also improves the corresponding enforcement procedures:
1. Where the conditions for safe harbor application are met, enforcement agencies may decide not to open a case or to terminate an ongoing investigation during the clue verification or investigation phases;2. If the operator provides false, misleading, or incomplete information when claiming the safe harbor, or if significant changes occur in relevant market facts, the enforcement agency is entitled to reinitiate the investigation and take action according to law.
These procedural rules establish a relatively complete operational mechanism that safeguards efficiency and fairness while enhancing the legal regime’s capacity to adapt dynamically to evolving market realities.
III. Impact of the Draft Revision’s Implementation
Based on the 2022 amendment of the Anti-Monopoly Law which introduced the safe harbor regime, the Draft Revision represents a systematic supplement and substantive enhancement of the relevant clauses in the original Provisions. The revision is expected to have a profound impact in both legislative and enforcement/compliance practices, as outlined below:
(1) Compliance Guidance for Enterprises
By clearly defining dual thresholds for market share and turnover, and imposing symmetrical requirements on the counterparty, the Draft Revision makes the safe harbor regime highly measurable and operable. This significantly improves enterprises’ ability to ensure compliance when formulating business strategies, drafting contractual terms, and assessing transactional risks.
(2) Optimization of Anti-Monopoly Enforcement Efficiency
By establishing clear thresholds and exception clauses, the Draft Revision channels enforcement resources toward conduct with actual competitive harm, avoiding unnecessary intervention in low-risk vertical agreements. The inclusion of exceptions (e.g., substantial competitive harm, industry-specific rules) and sanctions for false claims ensures that enforcement authorities maintain appropriate discretion and corrective mechanisms, reinforcing regulatory seriousness and adaptability in complex markets.
(3) Stabilization and Optimization of the Competitive Policy Environment
The safe harbor regime essentially represents a tolerance mechanism for low-risk market behavior. Its legal basis stems from the principle of proportionality and the philosophy of minimal market intervention. The introduction of the Draft Revision sends a clear signal that China’s competition policy is rational, predictable, and outcome-oriented, thereby providing institutional support for a stable, fair, and transparent competitive environment.
Conclusion
In summary, the Draft Revision comprehensively refines the thresholds, procedural rules, and exception mechanisms for implementing the safe harbor regime. It offers enterprises a clear compliance roadmap. Against the backdrop of a progressively mature anti-monopoly legal framework, the release of the Draft Revision will further promote the standardization, precision, and efficiency of China’s anti-monopoly enforcement and contribute to the formation of a fair and orderly competitive market landscape.
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