The State Administration for Market Regulation Issued the Anti-Unfair Competition Law of the People’s Republic of China (Revised Draft for Comments)

January 2023

Di Wu and Teresa Huang

For the purpose of implementing the decisions and arrangements of the CPC Central Committee and the State Council and further improve the fair competition system, the State Administration for Market Regulation (hereinafter referred to as “SAMR”) issued the Anti-Unfair Competition Law of the People’s Republic of China (Revised Draft for Comments) (hereinafter referred to as the “Draft for Comments”) on November 22, 2022.

The main context of this revision is to deal with and regulate new unfair competition acts committed by using data, algorithms and platform rules in the new economy, new formats and new modes; to build a “National Unified Market” with high efficiency, standardization, fair competition and full openness; and to strengthen the competition regulation and law enforcement over the whole chain in key industries and fields so as to ensure fair competition through fair regulation.  In addition, the Draft for Comments also includes the regulation of some prominent anti-unfair competition issues that still exist in practice, as well as the coordination of the conflict and coincidence between the anti-unfair competition law and some provisions of other laws[1].

The revision mainly includes the following four aspects[2]:

(1) Improving the anti-unfair competition rules in the digital economy to regulate and govern the acts that disturb competition order emerged in the development of new economy, new formats and new modes

The Draft for Comments specifically provides that business operators shall not use data and algorithm, technology and capital advantages, and platform rules to engage in unfair competition acts, and defines various new types of unfair competition acts in Chapter 2 “Unfair Competition Acts”, and provides for the factors to be considered in judging unfair competition acts in Article 21.  In addition, the competition compliance management obligations of platform operators have been added in the Draft for Comments.

(2) Supplementing and improving the manifestation of existing unfair competition acts in response to the outstanding problems in the practice of regulation and law enforcement

As to the existing articles concerning commercial confusion, commercial bribery, false propaganda and trade secret protection, the Draft for Comments has refined and supplemented the contents, with special emphasis on the prohibition of accepting bribes in transactions and the inclusion of commercial defamation in the scope of regulation.

(3) Filling the legal gap to add new types of unfair competition acts

First, adding the acts that damage fair trade so as to strengthen the protection of the legitimate rights and interests of small and medium-sized market players.  Specifically, any business operator with a relatively dominant position is prohibited from imposing unreasonable restrictions or adding unreasonable conditions on the business activities of any counterparty without justifiable reasons, such as a platform requiring merchants to “choose one from two”.  Second, adding the malicious transaction acts, which means that any act that causes any other business operator not to be able to operate normally by intentionally implementing malicious transaction shall be prohibited.

(4) Improving the legal liability in accordance with the requirements of strengthening anti-unfair competition

The provisions in this regard mainly include adding the legal liability for new types of violations, reducing the lower limit of the penalty for false propaganda and increasing the penalty for acts that damage fair trade and network unfair competition acts if the circumstances are particularly serious.  In addition, the Draft for Comments especially adds the administrative penalties for knowingly selling confused goods, or intentionally helping others to implement confusion acts; and increases penalties for accepting bribes in commercial bribery.

Overall, the Draft for Comments seeks to adapt to the needs of the new era, and proposes a regulatory approach for new types of unfair competition acts in the current market, which provides enterprises a basis to follow when defending their rights and interests.

[1] SAMR’s Explanation on the Anti-Unfair Competition Law of the People’s Republic of China (Revised Draft for Comments)

[2] Ibid.

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