IELTS course sold for just 1 yuan leads to a 400,000 yuan fine for New Oriental

Compiled from: Southern Metropolis Daily
 
Case review
According to the Beijing Municipal Market Supervision Administration, Beijing New Oriental Xuncheng Network Technology Co., Ltd. was recently fined 400,000 yuan by the Haidian District Market Supervision Administration for allegedly using false or misleading pricing tactics to induce consumer transactions.

 
 

According to the administrative penalty information, an investigation revealed that Beijing New Oriental Xuncheng Network Technology Co., Ltd., acting through its agent Beijing Maiya Chengzhang Technology Co., Ltd., published an advertisement on the Jinri Toutiao app from April 21, 2021 to April 28, 2021 for “New Oriental - 1 Yuan IELTS Course,” stating “Preparing for IELTS in Haidian, a premium course originally priced at 399 yuan is only 1 yuan on April 27.” The course content and teaching arrangements were publicly disclosed on the official website, the New Oriental Online app, and the New Oriental Online WeChat public account; the course was named “New Oriental IELTS Course” and priced at 1 yuan. Upon verification, the original price of 399 yuan for the aforementioned product had never actually been sold, there were no relevant sales records, and it was not indicated on the sales page.
 
The Beijing Haidian District Market Supervision Administration determined that the above conduct violated Article 14, Paragraph 1, Item (4) of the Price Law of the People's Republic of China, which provides that business operators shall not employ false or misleading pricing methods to induce consumers or other business operators to transact with them. Pursuant to Article 40, Paragraph 1 of the Price Law of the People's Republic of China and Article 7 of the Provisions on Administrative Penalties for Price Violations, the Beijing Haidian District Market Supervision Administration imposed a fine of 400,000 yuan on the company.

 
 

 
Price Law of the People's Republic of China
Article 14
Business operators shall not engage in the following unfair pricing practices:
……
(4) Using false or misleading pricing methods to deceive consumers or other business operators into transactions.  
……
 
Article 40  
If a business operator commits any of the acts listed in Article 14 of this Law, it shall be ordered to correct the act, have its illegal gains confiscated, and may also be fined up to five times the amount of the illegal gains; if there are no illegal gains, a warning shall be issued, and a fine may also be imposed; if the circumstances are serious, the business operator shall be ordered to suspend business for rectification, or its business license shall be revoked by the administrative authority for industry and commerce. If other laws provide otherwise for the penalties and the authorities imposing penalties for the acts listed in Article 14 of this Law, the provisions of those laws may be followed. Acts listed in Items (1) and (2) of Article 14 of this Law that are nationwide in scope shall be determined by the price authority under the State Council; those that are regional at the provincial level or below shall be determined by the price authority of the relevant province, autonomous region, or municipality directly under the Central Government.

 
 

 
[1] The author's perspective
It can be seen that Article 14 of the Price Law is specifically aimed at regulating不正当 pricing behaviors of business operators. It violates the basic principles of good faith and fairness; normal social and economic activities are interchangeable with fair market competition. It mainly refers to behaviors where business operators engage in fraud in the pricing field, deceiving others in transactions to obtain illegitimate benefits. The Price Law refers to the use of false or misleading pricing methods, which take many forms, such as falsely listing production and operating costs to inflate prices and deceive others; first raising the base price and then claiming discounts; selling goods under the guise of clearance sales while actually selling at original prices; misleading the other party with false pricing information, and once a transaction is concluded, forcing the other party to accept a high price; creating price misunderstandings through product packaging and labeling, etc. The purpose of business operators engaging in these behaviors is to deceive consumers or other business operators, lure them into transactions, and then obtain illegitimate benefits from the transactions.
 
The不正当 pricing behaviors of business operators violate the basic norms of pricing activities. By adopting unfair competition methods, business operators infringe upon the legitimate rights and interests of consumers and other business operators, disrupting normal pricing order. Such behaviors are harmful to normal social and economic life, fair market competition, and the stability of the national economy, and are detrimental to the healthy development of the socialist market economy. Therefore, such不正当 pricing behaviors must be prohibited.