SAMR to introduce long-awaited clarification on safe harbor rules for vertical agreements

On 3 June 2025, China’s State Administration for Market Regulation (SAMR) published for public comment its proposed revisions to the Provisions on the Prohibition of Anticompetitive Agreements (Provisions). These proposed amendments aim to clarify the safe harbor rules for vertical agreements introduced in the 2022 amendment to China’s Anti-Monopoly Law (AML), with the goal of reducing regulatory uncertainty and providing practical guidance for businesses and enforcement authorities alike. 

The 2022 amendment to the AML authorizes SAMR to establish safe harbor rules for vertical agreements, but no detailed guidance has been issued. In the draft Provisions published in June 2022, SAMR proposed a 15% market share threshold, which was ultimately dropped in the final version. 

The proposed amendment introduces cumulative market share and turnover thresholds that must be met for a vertical agreement to fall within the safe harbor. It also sets stricter standards for resale price maintenance (RPM), as summarized below. 

• For RPM, each party must have a market share of less than 5% in the relevant market, and the annual turnover of each party in that market must not exceed RMB100m (approximately US$14m).
• For non-price restrictions, each party must have a market share of less than 15%, and the annual turnover of each party in that market is capped at RMB300m (approximately US$42m).

Each party to the vertical agreement must individually meet the relevant thresholds. Where multiple counterparties operate in the same relevant market, their market shares should be aggregated. For example, if a supplier engages several downstream distributors for the same product, the combined market share of those distributors must not exceed the threshold. 

The proposed amendment also identifies two circumstances where the above safe harbor rules would not apply: firstly, where there is evidence of anticompetitive effects, and second, where other specific safe harbors apply. As to the second circumstance, existing guidelines for IP licensing and the automobile industry provide that non-RPM vertical agreements will generally not be deemed anticompetitive if the parties’ market share does not exceed 30% in any relevant market. This carve-out helps align the general safe harbor rules with those previously adopted by SAMR for non-price restrictions in specific sectors.

The proposed amendment establishes a procedure by which businesses under investigation may invoke the safe harbor rules as a defense. To do so, a business must submit:

• A written application,
• Details of the agreement and the parties’ competitive relationship (e.g., shareholding and control structure, market activity),
• Market share and revenue data during the implementation of the vertical agreement with calculation methodologies,
• Additional documents evidencing compliance with the safe harbor thresholds.

The application can be submitted regardless of whether a formal investigation has been launched. If the application is accepted, SAMR may choose not to launch a formal investigation, or may terminate the ongoing one.  

Key points of the draft proposal include: 

• RPM: For the first time, the proposal confirms that RPM may qualify for the safe harbor. However, the bar is set very high: the low market share (below 5%) and turnover (no more than RMB100m (approximately US$14m)) thresholds reflect SAMR’s continued strict stance on RPM, which has often been presumed anticompetitive in past enforcement cases. These thresholds are likely to be met only by small companies with limited market power. Since the amended AML was adopted in 2022, SAMR has published only three RPM-related decisions – likely due to uncertainty around whether and how RPM can be exempted. With the thresholds formalized, enforcement in this area is expected to resume, maintaining SAMR’s historically active posture.                                                                                                                                                   
• Non-price restrictions: While the proposed safe harbor for non-price restrictions is more permissive than for RPM, it remains more stringent than the European Commission’s approach. The EU’s Vertical Block Exemption Regulation applies a 30% market share threshold without a turnover cap. In contrast, SAMR’s proposal sets a 15% market share threshold and an additional RMB300m (approximately US$42m) turnover requirement. This divergence may create uncertainties and compliance challenges for multinational companies accustomed to EU standards. Agreements that are exempt in the EU may not qualify for safe harbor in China, even for companies with modest market shares. To date, SAMR has not published enforcement cases in which non-price restrictions were found to independently breach the AML. Instead, non-price restrictions such as customer or territorial restrictions have been found as means to facilitate RPM. It remains to be seen whether this area will attract greater regulatory attention going forward.

The public consultation period runs until 3 July 2025. While SAMR has not announced a timetable for final adoption, the amendments are expected to be confirmed and adopted in the near term. Once adopted, they are likely to have a significant impact on how businesses assess and manage compliance risks associated with vertical arrangements in China – and may shape enforcement practices for years to come.

*The authors are members of Freshfields RuiMin, a Joint Operation between Freshfields and RuiMin in China, which can engage directly with PRC regulators and offer formal Chinese law advice to both international and Chinese clients.