15 Sep 2017

PRC Law Update

Second Revised Draft for Review of Anti-Unfair Competition Law Issued For Public Comments

Recently, the Anti-Unfair Competition Law (Second Draft for Review) (“Revised Draft”) has been deliberated at the Session of the Standing Committee of the 12th National People’s Congress. The first draft for review had been issued for public comments in 2016.

Anti-unfair competition is always one of the most important issues for foreign enterprises in China. As a result, it is necessary to look into the Revised Draft even at this early stage.

The current effective statue relating to unfair competitive business is the Anti-Unfair Competition Law which was promulgated in 1993 (“1993 Version”). Over past 20 years, this legal loophole is made up, to a large extent, by the regulations issued by governmental authorities. Also, local governments have enacted related local ordinances relating to commercial bribery and illicit competition.

Compared with the 1993 Version, the Revised Draft provides further clarity regarding the definition and scope of a “market confusion act” (Article 6); commercial bribery” (Article 7);”trade secret” (Article 9); and “false or misleading propaganda” (Article 8).

Besides being more precise, the Revised Draft is keeping up with the trends of time. For example, the business operator shall be prohibited to promote any product with a lottery award with a top prize of more than 5000 RMB under the 1993 Version. According to the Revised Draft., the top prize is now 50,000 RMB.

A further example as to unfair competitive behaviour include acts performed through technical approaches on the Internet, the Revised Draft expressly states that the business operator making use of the Internet for business activities should be subject to all provisions in the Revised Draft.