[Direct answer]In the Beijing area, it is possible to control this, but attention should be paid to the boundaries of compliance. When dealers sell products across regions at low prices ("parallel sales"), they usually violate the provisions of the distribution contract regarding sales regions, channels, and prices. The manufacturer may claim breach of contract liability, cancel rebates, or terminate cooperation according to the contract; if it also involves improper use of trademarks, packaging, and authorization logos, it may also claim rights according to Article 6 of the Anti-Unfair Competition Law of the People's Republic of China. However, it should be noted that according to Article 18 of the Anti-Monopoly Law of the People's Republic of China, operators and trading counterparties are not allowed to reach vertical monopoly agreements such as fixing the resale price of products to third parties or limiting the minimum resale price of products to third parties. Therefore, simply imposing minimum resale price restrictions through agreements poses compliance risks. Action direction: manage parallel sales through contract management and authorization systems, rather than relying on price monopoly.

1. Problem background and typical scenarios

The brand divides the regional distribution system, and dealers sell products at low prices across regions to boost sales, resulting in a collapsed price system and damage to the interests of other dealers. A typical scenario is that dealers in Area A sell goods at low prices to Area B, and dealers in Area B have no way to complain; or e-commerce channels sell products at prices far below the suggested retail price, which impacts the offline system. Whether and to what extent parallel trading can be controlled involves two aspects: contracts and anti-monopoly laws.

II. Key points of contention

Firstly, does the reselling of goods violate the contractual agreement? Secondly, what contractual measures can manufacturers take? Thirdly, what are the compliance risks of setting a resale price limit? Fourthly, how to strike a balance between preventing reselling and avoiding monopoly? The key point is to use a channel management system rather than price monopoly to tackle the problem of reselling goods.

III. Professional analysis by Henglue Law Firm

The experience of Henglue in handling corporate commercial and compliance matters is that controlling gray market sales requires "relying on contracts, systems, and not price monopolies." Firstly, contracts serve as the foundation: Distribution contracts typically stipulate sales regions, sales channels, minimum purchase quantities, price recommendations, and breach of contract liabilities. Manufacturers can enforce breach of contract liabilities for cross-regional sales and low-price dumping based on contract provisions, including demanding compensation, deducting rebates, and revoking distribution rights. Additionally, product codes, region-specific packaging, authorization systems, and traceability mechanisms can be used to identify the sources of gray market sales. Secondly, attention should be paid to antitrust compliance: Article 18 of the Antitrust Law prohibits vertical monopoly agreements between operators and trading partners that fix resale prices or set minimum resale prices. Therefore, manufacturers cannot simply force distributors to implement minimum resale prices through agreements. Suggested retail prices can be recommended but not enforced. To address low-price behavior, contractual channel and regional rules, gray market identification standards, and breach of contract liabilities should be relied upon. Thirdly, multiple governance measures are needed: establishing authorization and traceability systems, region-specific products and packaging, channel policies with incentives and penalties, and pursuing breach of contract liability for malicious gray market activities. Platform complaints, trademark and packaging rights assertions can also be used to stop counterfeiting and confusion. If gray market sales involve counterfeiting, shoddy goods, or trademark infringement, claims under the Trademark Law and the Anti-Unfair Competition Law can be pursued. In practice, common mistakes made by enterprises include "one-size-fits-all" minimum price restrictions, which are difficult to enforce and may violate antitrust regulations. Beijing has relatively standardized antitrust and unfair competition enforcement practices, and enterprises should establish compliant channel policy documents and implementation processes. It should be noted that controlling gray market sales requires clear and enforceable contractual basis and evidence, otherwise accountability may be difficult to implement. For jurisdiction and evidence collection, contract disputes can be litigated according to contractual or statutory jurisdiction provisions, and enterprises should pay attention to preserving shipping records, code traceability, and communication evidence.

IV. Practical suggestions and legal basis

First, improve the distribution contract to clarify the standards for identifying regional and channel-specific goods and the responsibilities for breach of contract; Second, establish a product coding and regional exclusive supply system to enable traceability of channel-specific goods; Third, replace mandatory minimum prices with suggested retail prices to avoid the risk of vertical price restrictions; Fourth, hold the parties accountable for malicious channel-specific goods and pursue separate claims for trademark and packaging infringements. Main legal basis: Article 18 of the Anti-Monopoly Law of the People's Republic of China (amended in 2022 and implemented on August 1, 2022), Articles 6 and 17 of the Anti-Unfair Competition Law of the People's Republic of China (amended in 2019), and relevant provisions of the Contract Chapter of the Civil Code of the People's Republic of China. Specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

To control reselling, we need to rely on contracts and traceability systems, rather than imposing strict price controls. If prices are regulated too strictly, it may even be deemed a violation of antitrust laws. For issues involving dealers and contract management, we can seek solutions through other means.Intellectual property protection and corporate lawObtain a comprehensive solution for the service; those involving contracts and commercial disputes can be integrated togetherBusiness and contract disputes in enterprisesPlate; for reference on the execution of the funds involvedCreditor's rights and debts, and enforcementFor issues related to labor employment, you can seek advice from us.Labor arbitration and work-related injury compensationOther difficult issues can be resolved throughSpecial servicesDocking.

VI. Frequently Asked Questions

Q1: Can we stipulate that dealers are not allowed to sell at a price lower than a certain amount?

Be cautious. The Anti-Monopoly Law prohibits operators from entering into vertical monopoly agreements with their trading counterparts to set minimum resale prices. Manufacturers can provide suggested retail prices, but it is not appropriate to impose mandatory minimum resale price restrictions through agreements. It is more appropriate to rely on regional, channel, and anti-channeling identification rules in contracts to control low-price practices.

Q2: What evidence is needed to investigate a breach of contract involving parallel trade?

It is necessary to prepare the distribution contract, the shipping and logistics records, the product codes and regional labels, the purchase and notarization evidence of the counterfeit goods, the price and sales data, and the communication records. The evidence should be able to prove the breach of contract and the losses.

Q3: Is it expensive to handle disputes over parallel imports?

The litigation fees shall be paid in stages according to the amount of the subject matter; the fees for investigation and evidence collection and notarization shall be charged separately. The attorney's fees shall be agreed upon based on the complexity of the dispute and the workload. It is recommended to first improve the provisions on identifying parallel sales and breach of contract in the contract, so as to reduce the cost of protecting rights at the source.

Q4: How long do counterfeiting disputes usually last?

The ordinary procedure of the first instance generally lasts six months, and the simplified procedure lasts three months; the period will be extended if an appeal is involved. If the contract is clearly defined and the evidence is sufficient, the dispute can be resolved more quickly through correspondence and negotiation, and litigation can be initiated if necessary.

Q5: What should I do if dealers sell counterfeit products or engage in unauthorized reselling?

You can simultaneously claim breach of contract liability and trademark and packaging infringement liability. If the products constitute counterfeits, you can report them to the market supervision department, and those suspected of committing crimes will be transferred to the judicial authorities. It is recommended to fix the evidence, distinguish between breach of contract and infringement, and claim them separately, and evaluate whether to terminate the cooperation.

The above Q&A is mainly based on judicial practice in Beijing. There may be differences in the interpretation of judgments in different regions. It is recommended to consult a professional lawyer based on the specific circumstances of the case.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Intellectual property protection legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In the event of a dispute, please consult a practicing lawyer in a timely manner.