China's Safe Harbor for Vertical Monopoly Agreements Finally Lands—With Some Tweaks

Background

Chinese antitrust law presumes that vertical price-fixing, including RPM agreements, are anticompetitive unless proven otherwise. Non-price vertical restraints are subject to a rule of reason analysis requiring evidence of anticompetitive effects.

Against this backdrop, the safe harbor regime has been in China's legislative pipeline for a decade. Sector-specific safe harbors for intellectual property and automobiles were established in 2015 and 2019, respectively. In 2023, following AML amendments that authorized SAMR to establish general safe harbor thresholds for vertical agreements, SAMR issued the amended Provisions. The amended Provisions were surprisingly silent on the specifics of the safe harbor regime. (For more discussion on safe harbor under the 2022 AML amendments, please refer to our White Paper, "China Amends Anti-Monopoly Law: What You Need to Know.") In December 2025, SAMR amended the Provisions again to provide clearer standards for the safe harbor. 

Safe Harbor Thresholds

Unlike its earlier consultation draft in 2022, the December 2025 revised Provisions differentiate between price-related and non-price vertical restraints:

• For RPM and other agreements fixing or restricting resale prices, the safe harbor applies only if the company's market share in the relevant market is below 5% and the turnover of the covered goods is below RMB 100 million (approx. USD 14 million) during the term of the alleged vertical agreement.
• For all other vertical agreements, the safe harbor requires a market share below 15%, with no turnover condition.

All applications for the safe harbor must meet the following additional requirements: 

• Bilateral compliance. Both the upstream supplier and its counterparty (e.g., the downstream distributor or retailor) must meet the applicable thresholds.
• Aggregation. Where multiple counterparties operate in the same relevant market, market shares and turnover must be aggregated. For example, if an upstream supplier reached vertical agreements with multiple downstream distributors, the downstream revenues and market shares of the distributors will be aggregated for the purpose of the calculation.
• Ongoing substantiation. Eligibility must be demonstrated year by year during the term of the agreements in question with supporting documentation.

The burden of proof is on the investigated parties or defendants in private litigations to show their qualification for the safe harbor. In the case of administrative investigations, the enforcement agencies will decide whether the burden of proof is met.

Limitations to the Safe Harbor

Companies should note that the revised Provisions do not provide absolute immunity for qualifying companies. Instead, even qualifying agreements may be penalized if the enforcement authorities or the courts, based on further evidence, find that the agreement gives rise to anticompetitive effects. In such cases, the enforcement agencies or private plaintiffs must prove that the challenged restraint had anticompetitive effects despite meeting the safe harbor thresholds.

In the case of administrative investigations, the agencies have the discretion to decide, supported by sufficient evidence, that a qualified agreement is nonetheless anticompetitive. The investigated party may then challenge the agency’s finding in the courts. 

The final safe harbor rules significantly narrow the safe harbor for RPM, imposing tighter scrutiny due to its potential harm while providing clearer compliance pathways for lower-risk non-price restraints. Companies should review existing vertical arrangements, particularly distribution agreements involving resale prices, for compliance ahead of the February 2026 effective date.