China Issues Guiding Opinions for the Regulation of Online Auctions
Published 29 May 2024
Sarah Xuan
On 22 May 2024, to regulate the online auction market further and promote high-quality development of the auction industry, the State Administration for Market Regulation, Ministry of Commerce, and State Administration of Cultural Heritage have jointly issued the Guiding Opinions on Promoting the Standardized and Healthy Development of Online Auctions (hereinafter referred to as “Guiding Opinions”). The main points of the Guiding Opinions are as follows:
1. Strengthening Market Access Management for Online Auctions
The Guiding Opinions mandate that participants adhere to the auction regulatory system and comply with existing laws and regulations, ensuring strict market access for online auctions. Entities conducting commercial online auction activities must obtain corporate legal status under the Company Law and an auction business license from the competent commercial department as required by the Auction Law, except where other provisions apply. For online auctions involving cultural relics, the relevant entities must obtain a cultural relic auction license under the Cultural Relics Protection Law, and the cultural relics department must approve the cultural relics before the auction. Relevant departments should ensure that online auction operators prominently display business licenses, auction permits, and cultural relic auction permits on their websites or main pages where online auction activities are conducted.
2. Enhancing the Supply of Online Auction Regulations
The Guiding Opinions encourage revising and improving departmental regulations related to auctions. Relevant departments should intensify efforts to formulate and revise standards for online auctions, further improving national standards. Industry associations, enterprises, and research institutions are encouraged to develop industry and group standards for segmented areas of online auctions, such as cultural relics. Additionally, standardized transaction contract templates covering online auctions should be created and promoted to regulate auction signing and performance behaviors and protect all contract parties’ legitimate rights and interests.
3. Encouraging Innovation in Online Auction Industry Models
The Guiding Opinions support business entities participating in model innovation within the online auction market. Departments should guide business entities to participate in building fundamental infrastructure for online auctions, such as data storage and network security. Business entities are encouraged to develop comprehensive online auction systems that include auction announcements, item display, auctioneer hosting, online bidding, transaction confirmation, electronic signing, auction proceeds settlement, and data archiving. The Guiding Opinions encourage participants in auctions to develop products that utilize live auctions and simultaneous on-site and online auctions to fully leverage the role of auctioneers, provide accurate and comprehensive item presentations, and ensure bidders’ right to know.
4. Promoting Technical Innovation in Online Auction Platforms
The Guiding Opinions encourage online auction platform operators to leverage their technical and data advantages to contribute to constructing a service system for online auctions, promoting the digitization of the auction industry. Departments should guide platform operators to build and optimize auction service systems in compliance with auction laws and business standards, providing legal, safe, and high-quality platform services. Moreover, the relevant departments should promote cooperation among platform operators, auction enterprises, and upstream and downstream entities involved in auction activities to cultivate a robust online auction market ecosystem.
5. Improving Service Quality of Online Auction Enterprises
The Guiding Opinions encourage auction enterprises to enhance service quality. Departments should guide auction enterprises to leverage their market and professional advantages, use new technologies like the internet and big data to innovate service models, expand service scenarios, and diversify service content. Auction enterprises are encouraged to apply new technologies for due diligence, appraisal, rating, item inquiry, market promotion, and targeted marketing services. Auction enterprises are encouraged to Expand legal new auction categories and promote specialized and large-scale market development. In addition, the relevant departments should promote the network of cultural relics auction and consignment custody, online display, education and research, and other business integration and development.
6. Strengthening Supervision and Law Enforcement of Online Auction Activities
The Guiding Opinions require relevant law enforcement departments to intensify competition enforcement efforts to promote fair competition and orderly development in the online auction market. Law enforcement departments should investigate and address monopolistic agreements, abuse of market dominance, illegal mergers, and unfair competition in online auctions and prevent administrative actions that exclude or restrict competition. In addition, the relevant departments should strengthen social supervision and enhance the disclosure and publicity of information on auction licensing and heritage auction licensing. Moreover, law enforcement departments should focus on regulating illegal activities such as operating without proper licenses, false advertising, malicious collusion, fictitious transactions, counterfeiting, and auctioning prohibited cultural relics.
7. Enhancing Regulatory Collaboration for Online Auctions
The Guiding Opinions call for strengthening departmental collaboration to establish mechanisms for information sharing, reporting, and joint law enforcement among auction industry authorities, market regulation departments, and cultural heritage departments. In addition, the relevant departments should strengthen departmental coordination, up-and-down cooperation, central and local linkage, and enhance collaborative research and judgment on major issues in the field of online auctions. At the same time, regulatory policy coordination should be strengthened to form stable development expectations and boost development confidence.
8. Promoting Self-Regulation of Online Auction Platforms
The Guiding Opinions encourage online auction platform operators to fully implement the responsibilities outlined in the E-Commerce Law and Network Transaction Supervision and Administration Measures. Platform operators should verify and register the identities and auction licenses of operators on their platforms and address violations accordingly. For auction categories like cultural relics that require special permits, platform operators should enhance their professional review capabilities and internal control systems to monitor and address illegal transactions. Platform operators should provide technical support for information disclosure obligations and ensure their auction activities are marked as “self-operated” to maintain transparency and fairness.
9. Encouraging Industry Self-Regulation
The Guiding Opinions promote industry self-regulation and the establishment of a credit system. Industry associations are encouraged to develop service standards and self-regulatory agreements, guide online auction enterprises and platform operators to operate legally and honestly and assume their responsibilities in the online auction market. Associations should also establish and improve enterprise credit archives, collect and record credit information, and conduct credit evaluations. In addition, industry associations should organize self-discipline and compliance training to strengthen the concept of standardized operation and form a long-term mechanism.
10. Encouraging Pilot Projects and Exploration in Online Auctions
The Guiding Opinions encourage regulatory departments to explore adaptive regulatory models for the standardized and healthy development of the online auction market, building a regulatory environment suited to developing online auction formats. Besides, the regulatory departments should continuously improve the regulatory system for online auctions and optimize service mechanisms. In addition, the regulatory departments should explore optimizing the review procedures for online cultural relics auction subjects, strengthen the dynamic monitoring of online cultural relics auctions using new technologies, and promote the pilot credit supervision of online cultural relics auctions. At the same time, seriously summarize and timely refine the effective practices and successful experiences in the pilot work, based on the characteristics, give full play to the advantages, and promote the formation of a demonstrative effect, replicable and scalable system results, and strive to promote the high-quality development of the network auction industry.
Conclusion/Comment
The Guiding Opinions outline comprehensive measures to enhance the online auction industry’s regulatory framework, technological innovation, and service quality. By strengthening market access management, encouraging regulatory supply, and promoting industry models and technical innovations, it aims to foster a more transparent, secure, and efficient auction environment. The emphasis on improving service quality, enhancing law enforcement, and promoting collaboration among regulatory bodies ensures that the online auction market operates fairly and competitively. Promoting self-regulation and pilot projects also encourages continuous improvement and adaptation to emerging trends and challenges. The Guiding Opinions standardize online auction practices, protect the rights and interests of all parties involved, and support the high-quality development of the auction industry in China.
1. Strengthening Market Access Management for Online Auctions
The Guiding Opinions mandate that participants adhere to the auction regulatory system and comply with existing laws and regulations, ensuring strict market access for online auctions. Entities conducting commercial online auction activities must obtain corporate legal status under the Company Law and an auction business license from the competent commercial department as required by the Auction Law, except where other provisions apply. For online auctions involving cultural relics, the relevant entities must obtain a cultural relic auction license under the Cultural Relics Protection Law, and the cultural relics department must approve the cultural relics before the auction. Relevant departments should ensure that online auction operators prominently display business licenses, auction permits, and cultural relic auction permits on their websites or main pages where online auction activities are conducted.
2. Enhancing the Supply of Online Auction Regulations
The Guiding Opinions encourage revising and improving departmental regulations related to auctions. Relevant departments should intensify efforts to formulate and revise standards for online auctions, further improving national standards. Industry associations, enterprises, and research institutions are encouraged to develop industry and group standards for segmented areas of online auctions, such as cultural relics. Additionally, standardized transaction contract templates covering online auctions should be created and promoted to regulate auction signing and performance behaviors and protect all contract parties’ legitimate rights and interests.
3. Encouraging Innovation in Online Auction Industry Models
The Guiding Opinions support business entities participating in model innovation within the online auction market. Departments should guide business entities to participate in building fundamental infrastructure for online auctions, such as data storage and network security. Business entities are encouraged to develop comprehensive online auction systems that include auction announcements, item display, auctioneer hosting, online bidding, transaction confirmation, electronic signing, auction proceeds settlement, and data archiving. The Guiding Opinions encourage participants in auctions to develop products that utilize live auctions and simultaneous on-site and online auctions to fully leverage the role of auctioneers, provide accurate and comprehensive item presentations, and ensure bidders’ right to know.
4. Promoting Technical Innovation in Online Auction Platforms
The Guiding Opinions encourage online auction platform operators to leverage their technical and data advantages to contribute to constructing a service system for online auctions, promoting the digitization of the auction industry. Departments should guide platform operators to build and optimize auction service systems in compliance with auction laws and business standards, providing legal, safe, and high-quality platform services. Moreover, the relevant departments should promote cooperation among platform operators, auction enterprises, and upstream and downstream entities involved in auction activities to cultivate a robust online auction market ecosystem.
5. Improving Service Quality of Online Auction Enterprises
The Guiding Opinions encourage auction enterprises to enhance service quality. Departments should guide auction enterprises to leverage their market and professional advantages, use new technologies like the internet and big data to innovate service models, expand service scenarios, and diversify service content. Auction enterprises are encouraged to apply new technologies for due diligence, appraisal, rating, item inquiry, market promotion, and targeted marketing services. Auction enterprises are encouraged to Expand legal new auction categories and promote specialized and large-scale market development. In addition, the relevant departments should promote the network of cultural relics auction and consignment custody, online display, education and research, and other business integration and development.
6. Strengthening Supervision and Law Enforcement of Online Auction Activities
The Guiding Opinions require relevant law enforcement departments to intensify competition enforcement efforts to promote fair competition and orderly development in the online auction market. Law enforcement departments should investigate and address monopolistic agreements, abuse of market dominance, illegal mergers, and unfair competition in online auctions and prevent administrative actions that exclude or restrict competition. In addition, the relevant departments should strengthen social supervision and enhance the disclosure and publicity of information on auction licensing and heritage auction licensing. Moreover, law enforcement departments should focus on regulating illegal activities such as operating without proper licenses, false advertising, malicious collusion, fictitious transactions, counterfeiting, and auctioning prohibited cultural relics.
7. Enhancing Regulatory Collaboration for Online Auctions
The Guiding Opinions call for strengthening departmental collaboration to establish mechanisms for information sharing, reporting, and joint law enforcement among auction industry authorities, market regulation departments, and cultural heritage departments. In addition, the relevant departments should strengthen departmental coordination, up-and-down cooperation, central and local linkage, and enhance collaborative research and judgment on major issues in the field of online auctions. At the same time, regulatory policy coordination should be strengthened to form stable development expectations and boost development confidence.
8. Promoting Self-Regulation of Online Auction Platforms
The Guiding Opinions encourage online auction platform operators to fully implement the responsibilities outlined in the E-Commerce Law and Network Transaction Supervision and Administration Measures. Platform operators should verify and register the identities and auction licenses of operators on their platforms and address violations accordingly. For auction categories like cultural relics that require special permits, platform operators should enhance their professional review capabilities and internal control systems to monitor and address illegal transactions. Platform operators should provide technical support for information disclosure obligations and ensure their auction activities are marked as “self-operated” to maintain transparency and fairness.
9. Encouraging Industry Self-Regulation
The Guiding Opinions promote industry self-regulation and the establishment of a credit system. Industry associations are encouraged to develop service standards and self-regulatory agreements, guide online auction enterprises and platform operators to operate legally and honestly and assume their responsibilities in the online auction market. Associations should also establish and improve enterprise credit archives, collect and record credit information, and conduct credit evaluations. In addition, industry associations should organize self-discipline and compliance training to strengthen the concept of standardized operation and form a long-term mechanism.
10. Encouraging Pilot Projects and Exploration in Online Auctions
The Guiding Opinions encourage regulatory departments to explore adaptive regulatory models for the standardized and healthy development of the online auction market, building a regulatory environment suited to developing online auction formats. Besides, the regulatory departments should continuously improve the regulatory system for online auctions and optimize service mechanisms. In addition, the regulatory departments should explore optimizing the review procedures for online cultural relics auction subjects, strengthen the dynamic monitoring of online cultural relics auctions using new technologies, and promote the pilot credit supervision of online cultural relics auctions. At the same time, seriously summarize and timely refine the effective practices and successful experiences in the pilot work, based on the characteristics, give full play to the advantages, and promote the formation of a demonstrative effect, replicable and scalable system results, and strive to promote the high-quality development of the network auction industry.
Conclusion/Comment
The Guiding Opinions outline comprehensive measures to enhance the online auction industry’s regulatory framework, technological innovation, and service quality. By strengthening market access management, encouraging regulatory supply, and promoting industry models and technical innovations, it aims to foster a more transparent, secure, and efficient auction environment. The emphasis on improving service quality, enhancing law enforcement, and promoting collaboration among regulatory bodies ensures that the online auction market operates fairly and competitively. Promoting self-regulation and pilot projects also encourages continuous improvement and adaptation to emerging trends and challenges. The Guiding Opinions standardize online auction practices, protect the rights and interests of all parties involved, and support the high-quality development of the auction industry in China.