On July 30, 2021, the State Administration for Market Regulation promulgated the Measures for the Administration of the List for Serious Violations of Law and Loss of Credit (the “Measures”), which will go into effect on September 1, 2021, and the Interim Measures for the Administration of the List of Enterprises with Serious Violations of Law and Loss of Credit that were previously promulgated via Directive No. 83 of the State Administration for Industry and Commerce on December 30, 2015 will be repealed. This article will briefly introduce the Measures from the following four aspects.
First, the newly amended Measures, in comparison with the 2015 version, more clearly explain the criteria to be included on the list.
Under Article 2 of the Measures, if a party violates laws and administrative regulations in a serious and malicious manner that causes relatively substantial harm to the public, and is subject to heavier administrative penalties by market regulation authorities, the market regulation authorities will add such party to the list. In particular, heavier administrative penalties include: (1) a fine imposed under the discretion standard for administrative penalties and the principle of applying heavier penalties and; (2) reduction of the qualification level, revocation of permits or business licenses; (3) restrictions on production and operation activities or suspension of production and business; and (4) other heavier administrative penalties under the law, administrative regulations and departmental regulations.
Second, the newly amended Measures specifically stipulate violations of law in food safety, drugs, medical devices, cosmetics, quality and safety, as well as acts that infringe on consumer rights and impair fair competition and the market order, will cause a party to be added to the list if the above criteria are satisfied.
Third, the newly amended Measures adjust the administrative measures against the parties on the list to enable more ways to impose disciplinary action.
Article 15 of the Measures stipulates the following administrative measures for those added to the list: (1) presence on the list shall be an important factor of consideration in reviewing administrative licenses, qualifications, contracting government procurement projects or project tenders pursuant to the law, administrative regulations, and the policy documents of the Party Central Committee and the State Council; (2) subject to focused regulatory supervision and increased inspection frequency; (3) ineligibility for the notification and commitment system; (4) will not receive recognitions or awards conferred by market regulatory authorities such as honorary titles; and (5) other administrative measures stipulated by the law, administrative regulations, and policy documents of the Party Central Committee and the State Council.
Fourth, the newly amended Measures modify the timing for enterprises to be removed from the list.
Under Article 16 of the Measures, if a party who has been on the list for a year believes it has fulfilled the obligations specified in the administrative penalty decision, taken the initiative to eliminate the harmful consequences and negative effects, and has not been subject to heavier administrative penalties from a market regulatory authority, it may apply in accordance with the Measures to the market regulatory authority for early removal from the list once the term of the corresponding administrative measures taken pursuant to law or administrative regulations has expired. Article 21 of the Measures provides that a party who has been on the list for three years will be removed from the list by the market regulatory authority that added the party to the list, stop the public disclosure of relevant information, and lift the relevant administrative measures. For restrictions on production and business activities that have lasted for over three years, such measures shall be in place pursuant to the actual restriction period.