The recently held executive meeting of the State Council discussed and adopted in principle the Price Law of the People's Republic of China (Draft Amendment), and proposed that low-price and disorderly competition should be controlled in accordance with laws and regulations. This marks an important step for the price legal system to adapt to the new situation, and will provide a more solid legal basis for in-depth rectification of "involution" competition and maintenance of fair competition market order.
The core of controlling low-price and disorderly competition is not to oppose price cuts and deny high quality and low prices, but to prevent vicious competition in accordance with laws and regulations, regardless of cost, for the purpose of squeezing out opponents and monopolizing the market. For a period of time, homogeneous low-price involution has occurred in some fields. A small number of business entities rely on their capital and traffic advantages to continue to seize the market at prices below cost. Some platforms rely on algorithmic rules and traffic allocation mechanisms to force merchants to participate in the lowest price competition and automatically compare and follow prices. Once the price signal is distorted, the market survival of the fittest mechanism will fail: the profits of companies that are pragmatic in technology and quality improvement will continue to be squeezed, and they will be unable to invest in innovation and upgrading; the industry will fall into a cycle of subsidies and low prices, and long-term development momentum will be damaged. Vicious low-price competition also harms the long-term rights and interests of consumers. It may seem like they are buying low-priced goods, but in fact it is accompanied by shrinking quality and weakened after-sales service, which affects the user experience. Regulating low-price and disorderly competition is essentially to correct market failures, maintain the bottom line of fair competition, and guide the shift from "fighting for low prices" to "fighting for value, innovation, and service."
In recent years, a series of governance measures have been implemented steadily and achieved phased results. At the institutional level, the "four beams and eight pillars" of the national unified market have been basically established. Blocking points that hindered fair access and independent operation of enterprises, restricted the free flow of commodity factors, and set up hidden barriers to bidding have been accelerated, and the market order of fair competition has continued to be consolidated. At the law enforcement level, regulatory authorities have carried out special rectifications focusing on key areas such as the platform economy, people's livelihood, and technological innovation, and investigated and dealt with a number of typical cases of unfair price competition, forming a strong deterrent to low-price dumping and price coercion, and the industry's compliance awareness has been significantly improved. At the market level, some industries that were deeply "involved" in the early stage have gradually emerged from pure price wars, and their profit margins have been restored. Many companies have redirected resources to technology iteration and quality upgrades, and the market perception of high quality and low price is being rebuilt. Practice has proven that governance is not about “ruling away”, but rather clearing obstacles for healthy competition and leaving room for survival and growth for enterprises that devote themselves to innovation.
The "Draft Amendment" adapts to the new situation and changes, further improves the price governance mechanism, improves government pricing procedures, and clarifies the standards and legal responsibilities for identifying unfair price behaviors. The continuous improvement of the legal framework means that the governance of low-price and disorderly competition has entered a new stage of normalization and refinement. The next step is to adhere to the guidance of the rule of law, implement systematic policies, and transform institutional advantages into governance efficiency.
To control low-price and disorderly competition in accordance with laws and regulations, it is essential to improve supporting rules such as industry cost surveys and prohibition of low-price dumping. Price supervision should not only look at the surface price, but also conduct thorough verification of the cost structure and pricing basis to distinguish between normal profit-sharing promotions and malicious low-price dumping: price reductions brought about by companies based on technological progress and efficiency improvements are a reflection of market vitality; low-price dumping regardless of cost and with the purpose of squeezing out competitors will destroy the industrial ecology and ultimately harm the long-term interests of consumers. The improvement of supporting rules is precisely to draw a clear boundary, so as not to interfere with the normal operation and pricing of enterprises, but also to accurately curb vicious competition.
At the same time, we must continue to regulate price competition in the platform economy. Online transactions spread quickly and have wide coverage, and low-price "involution" within the platform is more likely to spread quickly, and even trigger the entire industry to follow suit and lower prices. Supervision should be based on platform scenarios, consolidate the responsibilities of platform entities, and standardize relevant price behaviors. In addition to supervision, we must adhere to equal emphasis on regulatory norms and promotion of development, guide enterprises to focus on technological innovation and service quality improvement, and rely on value creation to obtain market returns. Industry associations should play a bridging role, improve self-discipline conventions, and guide the formation of a consensus on rational competition.
The price mechanism is the core of the market mechanism. As the price legal system continues to improve and supervision becomes more precise and precise, a fair and orderly market environment will continue to mature, allowing entities that abide by the law and innovate to create excellence to have returns and space, allowing prices to truly reflect costs, supply and demand, and value, continue to stimulate market vitality, and inject lasting power into high-quality economic development. (Source of this article: Economic Daily Author: Jin Guanping)
