Editing by David Du

The State Administration for Market Regulation (SAMR), China’s market regulator, recently drafted a bill to impose a heavier penalty for price jacking and other antitrust violations. This move will have a big effect on the semiconductor industry as the current chip shortage is causing price hikes.  

The bill, introduced this July, was to amend the existing law (the Rules on Administrative Sanctions against Price-related Illegal Activities or《价格违法行为行政处罚规定》) and add new clauses to crackdown on unfair pricing practice. 

SAMR carried out an investigation earlier this month into car chip distributors suspected of unfairly raising prices. Chip prices in the Chinese automotive industry have gone up as carmakers and chip distributors stockpiled supplies in the face of a global shortage of chips, according to Reuters. 

The Chinese antitrust authority said it would continue monitoring the chip market and punish illegal acts. These acts, which could drive up prices or force buyers to accept products they don’t need, include hoarding, price gouging, and typing, among others.

The draft bill highlights some important changes to the current law. Specifically, it introduced a fine of up to five times the amount of illicit income, along with removing or confiscating the proceeds. Additionally, wrongdoers may face up to an RMB5 million (about $770,000) fine or have their business license or registration revoked, depending on the severity of their illegal acts. 

The Chinese government also set out a five-year blueprint on the rule of law (《法治政府建设实施纲要（2021-2025年）》) this month. The blueprint placed great importance on addressing antitrust and anti-unfair competition issues.