Price wars are often used to promote products by competitors in the same business field. A price war started by 360buy.com in August 2012 has again aroused public concern and debate about price wars in China. In the short run, price wars are good for Internet customers to get products at lower prices and good for big e-commerce companies to enhance their corporate image. However, some behaviors in a price war may lead e-business to its doom in the long run. The behaviors in the price war between 360buy.com and other online retailers show that price fraud is illegal under the Price Law. The online retailers which conduct price fraud are subject to punitive damages under the Law on the Protection of Consumer Rights and Interest. False advertisements that mislead customers in the course of a price war are prohibited under the Advertisement Law. Retailers are also potentially liable under the Law against Unfair Competition and Anti-Monopoly Law. These legal risks arising from a price war are lessons to all of the online retailers that are interested in adopting this strategy. Price wars could play a positive role in the development of the e-business industry on the condition that the e-business companies act strictly in accordance with the laws.
Lifeng, TAO, "Price Wars: Innovation or Doom for E-business Development? --Legal Analysis of the Price War among Internet Retailers in the PRC" (2013). WHICEB 2013 Proceedings. 89.