Provisions on Administrative Sanctions Against Price-related Illegal Activities (Revised in 2010)

Order of the State Council No. 585

December 4, 2010

(Approved by the State Council on July 10, 1999, firstly revised by the State Development and Planning Commission on August 1, 1999 in accordance with the Decision of the State Council on the Revision of the Provisions on Administrative Penalties Against Price-related Illegal Activities on February 21, 2006, secondly revised in accordance with the Decision of the State Council on the Revision of the Provisions on Administrative Penalties Against Price-related Illegal Activities on January 13, 2008 and thirdly revised in accordance with the Decision of the State Council on the Revision of the Provisions on Administrative Penalties Against Price-related Illegal Activities on December 4, 2010.)

Article 1 For the purposes of legally penalizing price-related violation of laws, maintaining a normal price order and protecting the legal rights and interests of consumers and business operators, these Rules are formulated in accordance with relevant provisions of the Pricing Law of the People's Republic of China (hereinafter referred to as the Pricing Law).

Article 2 The designated price administration authorities in the People's Governments at levels higher than counties' shall conduct supervisions and inspections of pricing in accordance with the law and make decisions on the administrative sanctions on illegal activities relating to price.

Article 3 The decisions on administrative sanctions on illegal activities relating to price shall be made by the designated price administration authorities of the local People's Governments with jurisdiction over the place where the illegal (price) activities occur. Where a regulation of the price administration of the State Council provides that the decision shall be made by the price administration at a higher level, such regulations shall be enforced.

Article 4 Should an operator be found indulging in any of the following illegalities, the relevant authorities shall order the operator to make corrections, confiscate his or her illegal gains, and may impose a fine of not more than five times the total of the illegal gains. If no illegal gains are involved, a warning may be issued, and a fine of not less than RMB100, 000 but not more RMB1,000, 000 may be additionally imposed. Where the circumstances are serious, the operator shall be ordered to suspend business for internal rectification, or the business license shall be revoked by the state administration of industry and commerce:
1. Disrupting the normal order of production and operation process to the detriment of the lawful rights and interests of the Sate or other consumers and operators, which results from distributing or supplying goods at a price lower than the market price which has been determined by the forces of demand and supply or otherwise, for the purpose of ousting competitors or monopolizing the market unless the price reduction is for disposal of fresh, seasonal, or overstocked goods; or
2. Practicing price discriminations against other operators who are under the same transaction conditions when supplying the same goods and or services.

Article 5 Business operators who, in violation of Article 14 of the Pricing Law, collude with each other to manipulate market price and cause the commodity prices largely rise, shall be ordered to take remedial action, and be confiscated their illegal gains and imposed with a penalty of less than five times of their illegal gains; or where there is no illegal gain, be imposed with a penalty of more than RMB100, 000 and less than RMB1, 000, 000 or more than RMB1, 000, 000 and less than RMB5, 000, 000 in case the circumstance is relatively serious; where the circumstance is serious, they shall be ordered to cease operation for reorganization or be canceled of their business licenses by the administrative authority for industry and commerce.
In addition to the foregoing circumstances, business operators who collude with each other to manipulate the market price and impair the legal rights and interests of other operators or consumers, shall be penalized in accordance with Article 4 hereof.
Where an industrial society or other units organize business operators to collude with each other and manipulate the market price, the said business operators shall be penalized in accordance with the foregoing two paragraphs and the industrial society or other units shall be imposed with a penalty of less than RMB500, 000 and be deregistered or be canceled of the business license by the registration authority in accordance with law in case of a serious circumstance.

Article 6 Any business operator who, in violation of Article 14 of the Pricing Law, conducts any of the following acts that pushes the commodity prices to rise too rapidly or too high, shall be ordered to take remedial action, and be confiscated its illegal gains and imposed with a penalty of less than five times of its illegal gains; or where there is no illegal gain, be imposed with a penalty of more than RMB50, 000 and less than RMB500, 000 or more than RMB500, 000 and less than RMB3, 000, 000 in case the circumstance is relatively serious; where the circumstance is serious, it shall be ordered to cease operation for reorganization or be canceled of its business license by the administrative authority for industry and commerce:
1. Makes up and spreads information that prices will go up so as to disturb the order of market price;
2. Hoards, not for the purpose of production and self-use, a large number of commodities that are in short supplies and whose prices are fluctuating abnormally and continue to hoard said commodities after it has been warned by the price authority; or
3. Drives up prices by other means and causes the commodity prices to go up too rapidly or too high.
Any industrial society or other entities providing services for commodity trade that conducts any illegal acts provided in the foregoing paragraph may be imposed with a penalty of less than RMB500, 000 and be deregistered or be canceled of the business license by the registration authority in accordance with law in case of a serious circumstance.
In respect of entities other than those specified in the foregoing two paragraphs which spread false information that price will go up to disturb the order of market price and which shall be investigated and penalized by other competent authorities in accordance with law, the price authority may put forth suggestions on legal penalty and relevant competent authorities shall penalize in accordance with law.

Article 7 Any business operator who, in violation of Article 14 of the Pricing Law, entices consumers or other business operators to do business with it by means of false or misleading price, shall be ordered to take remedial action, and be confiscated its illegal gains and imposed with a penalty of less than five times of its illegal gains; or where there is no illegal gain, be imposed with a penalty of more than RMB50, 000 and less than RMB500, 000; where the circumstance is serious, it shall be ordered to cease operation for reorganization or be canceled of its business license by the administrative authority for industry and commerce.

Article 8 Should and operator, contrary to the provisions in Article 14 of the Pricing Law, increases or reduces prices in disguised form by adjusting the grade to sell and purchase goods or provide services, the delegated authorities shall order the operator to make corrections for such improprieties, confiscate the illegal gains, and may impose a fine of no more than five times the total of the illegal gains. If no illegal gains are involved, a fine of not less than RMB20, 000 but not more RMB200, 000 may be awarded. Where the circumstances are serious, the operator shall be ordered to suspend business for internal rectification, or the business license shall be revoked by the administration of industry and commerce.

Article 9 Should and operator fail to implement the government's approved or stipulated price policy in any of the following circumstances, the delegated authorities shall order the operator to make corrections, confiscate the illegal gains, and may impose a fine not more than five times of the illegal gains. If no illegal gains are involved, be imposed with a penalty of more than RMB50, 000 and less than RMB500, 000 or more than RMB500, 000 and less than RMB2, 000, 000 in case the circumstance is relatively serious. Where the circumstances are serious, the operator shall be ordered to suspend business for internal rectification:
1. Fixing a price beyond the floating range of the government's approved one;
2. Fixing a price higher or lower than the price level approved by the government;
3. Fixing without authorization the price of goods or services within the range of the government's approved or stipulated price level;
4. Developing or retarding the implementation of the government's approved or stipulated price level;
5. Setting up items of charge or charging standard prices without authorization;
6. Raising the charging standards in disguised form by dividing items of charge, repeating charges, extending the range of charge or other means;
7. Continuing trading goods or services which have been replaced by the government through public proclamation;
8. Charging fees, in violation of the relevant regulations, within specific margins, mortgage or other disguised forms;
9. Providing and charging for compulsory or disguised compulsory services and;
10. Charging fees without offering services in accordance with the relevant regulations; or
11. Other activities hindering the implementation of the government's pricing policy.

Article 10 Should and operator fail to implement the statutory approved price policy measures or urgent measures in any of the following circumstances, the delegated authorities shall order the operator to make corrections for such improprieties, confiscate the illegal gains, and may impose a fine of not more than five times the total of the illegal gains. If no illegal gains are involved, be imposed with a penalty of more than RMB100, 000 and less than RMB1, 000, 000 or more than RMB1, 000, 000 and less than RMB5, 000, 000 in case the circumstance is relatively serious. Where the circumstances are serious, the operator shall be ordered to suspend business for internal rectification:
1. Failing to implement the government approved price adjustment policy;
2. Fixing a price beyond the approved one for profits or differences;
3. Failing to implement the approved minimum price range policy;
4. Failing to implement the measures of centralized pricing policy;
5. Failing to implement the measures of price freezing; or
6. Other activities hindering the implementation of the statutory price intervention measures.

Article 11 In case the business operators provided in Article 4, Articles 7 to 9 hereof are individuals, they may be imposed with a penalty of less than RMB100, 000 in respect of their price-related violation of laws without illegal gains.
In case the business operators provided in Articles 5, 6 and 10 hereof are individuals, they shall be penalized in accordance with the foregoing paragraph in respect of their price-related violation of laws without illegal gains; and be imposed with a penalty of more than RMB100, 000 and less than RMB500, 000 in case of a serious circumstance.

Article 12 Should an operator violate any of the laws to make an unreasonable profits, the delegated authorities shall order the operator to make corrections for such improprieties, confiscate the illegal gains, and may impose a fine of no more than five times the total of the illegal gains. Where the circumstances are serious, the operator shall be ordered to suspend business for internal rectification, or the business license shall be revoked by the administration of industry and commerce.

Article 13 Should and operator in violation of the pricing policy laws operate under any of the following circumstances adjusting(increasing or decreasing) the government approved price range, the delegated authorities shall order him or her to make corrections for such improprieties, confiscate the illegal gains, and may impose a fine not more than RMB5000:
1. Failing to openly and exlusively mark prices;
2. Failing to mark prices in accordance with the approved methods;
3. Trading goods and services at a price higher than the marked price or charging fees which have not been marked; or
4. Other activities in violation of the regulations of marking prices openly.

Article 14 A warning shall be issued and a fine of not more than RMB100,000 may be awarded to any operator who fails to provide documents for price supervision and inspection or provide fictitious information and be sanctioned by the delegated disciplinary administrative authorities.

Article 15 When conducting price supervision and inspection, the price inspection administration may order an operator to suspend relevant operations in accordance with the provisions in Item 3 of Article 34 of the Pricing Law, should it be found that the operator is involved in the following concurrently:
1. Involvement in illegal activities which demand severe penalties;
2. Without suspension of the relevant operations, the illegal activities will continue, and
3. Without suspension of the relevant operations, the verification of the violations might be affected, and other measures are not sufficient to ensure the verification.
When conducting price supervision and inspection, at least two law enforcement officials shall be needed, who shall show to the operator,their identification documents.

Article 16 Should it be found that the illegal gains, as explained in article 4 was accrued from overpaid fees of consumers or other operators as mentioned in the Pricing Law, the operator shall be ordered to make a refund within a specified period of time. The operator shall be required to locate the consumers by public announcement should it be difficult to locate them by other means. The operator shall also bear the civil and legal liabilities should the consumers make a claim for their refund of the money paid in excess, as a result of the operator refusing to refund or refund within the time frame given with which the delegated price policy administration might have confiscated all the funds.

Article 17 Any operator involved in any of the instances as listed in Article 27 of the Law of the People's Republic of China on Administrative Penalties shall be imposed upon lenient or mitigated punishment in accordance with law.
In any of the following instances, the operator shall be punished severely:
1. Illegal activities relating to price with serious negative impact on the society;
2. Indulge in illegal activities repeatedly;
3. Falsify, alter, transfer, or destroy evidences;
4. Launder funds or goods realized from illegal activities;
5. Operators refuse to repay the fees overpaid by consumers or other operators in accordance with Paragraph 1 of Article 14 in these rules;
6. Other illegal activities relating to price which shall be punished severely.

Article 18 Where the amount of penalty is calculated based on the illegal gains provided herein and the illegal gains are not able to be determined, penalty shall be imposed in accordance with provisions on circumstances without illegal gains.

Article 19 In respect of any price-related violation of laws provided herein that seriously disturbs the market order and a crime has been committed, criminal liabilities shall be investigated and pursued in accordance with law.

Article 20 An operator shall file a lawsuit at a court of law to contest the decision of the price administration on punishment for him or her, should he or she consider an otherwise penalty.

Article 21 Where the fine is not paid within the specified time limit, 3% of the fine shall be added each day; whilst 0.2% of the illegal gains shall be added to the principal illegal gain each day, should an operator fail to hand them over within the specified time range.

Article 22 Where an institution or an individual conducting illegal activities listed in these Rules refuses to make corrections with the implications of their actions or activities being serious, the price administration may, in addition to imposing punishment in accordance with these Rules, announce the operator's illegal activities until the corrections have been made.

Article 23 Where the sanctions on the activities listed in Article 14 and the authorities implementing the sanctions are otherwise provided for in the relevant laws, such relevant laws may prevail.

Article 24 Pricing law enforcement officials who are found divulging the State's secrets or the operator's commercial secrets, or abusing their power, neglecting their duties, or engaging in fraud for personal gains shall be investigated for criminal liabilities, provided that their violations constitute a crime. Where the violations do not constitute a c crime, the offender shall be subjected to disciplinary sanctions.

Article 25 These rules are in full enforcement as of the date of issue.