On December 25, 2024, the 13th Meeting of the Standing Committee of the 14th National People’s Congress deliberated on the Draft Amendment to the Anti-Unfair Competition Law of the People’s Republic of China (the “Draft Amendment”). The draft was subsequently made public for comment, with the consultation period lasting from December 25, 2024, to January 23, 2025.
Since its promulgation in 1993, the Anti-Unfair Competition Law of the People’s Republic of China has undergone several revisions to adapt to the rapid development of the market economy and the emergence of new business models. The first comprehensive revision in 2017 introduced provisions regulating unfair competition in the internet domain and enhanced the protection of trade secrets. In 2019, further revisions expanded the definition of infringement and increased legal liabilities for violations, particularly in trade secret protection. The 2022 revision focused on platform economies, addressing issues such as data abuse and algorithmic manipulation. The 2024 Draft Amendment represents a significant overhaul, adding provisions on confusion, dual-direction bribery control, and other key areas, thereby responding to the latest challenges in the digital economy and technological development.
This article provides an explanation and analysis of the major revisions in the Draft Amendment.
1. Clarification of Departmental Responsibilities
Article 1 of the Draft Amendment explicitly states that the administrative departments for anti-unfair competition under the governments at or above the county level are responsible for investigating and handling unfair competition practices. For actions designated by laws or administrative regulations to be handled by other departments, those provisions shall prevail.
The explicit designation of the administrative departments for anti-unfair competition under governments at or above the county level as enforcement bodies raises higher expectations for local governments’ enforcement capabilities. Local governments and their regulatory bodies need to enhance specialized training and resource allocation to effectively enforce the law in increasingly complex market environments. For instance, local enforcement agencies are expected to take a leading role in handling cases of false advertising and price fraud on e-commerce platforms. However, in complex cases involving cross-departmental coordination or cross-regional unfair competition, ensuring the effective implementation of the law remains a challenge. Taking the internet industry as an example, the involved regulatory departments may include the Market Supervision Administration, the Cyberspace Administration, and the Ministry of Industry and Information Technology, among others. Strengthening interdepartmental cooperation will be key to ensuring the effective enforcement of the law.
2. New Regulations on Confusion
Article 7 of the Draft Amendment introduces new provisions prohibiting the following acts of confusion: 1) Unauthorized use of names or logos of enterprises, new media accounts, application programs, or symbols that have a certain influence. 2) Manipulating search engines to use names of well-known products or enterprises as keywords, causing confusion.
With the advancement of information technology, confusion regarding trademarks, enterprise names, and product names is no longer limited to traditional trademark infringement. The new draft specifically protects new media accounts and application names, reflecting adjustments to business rules in the “information flow” economy. For example, some enterprises manipulate search engine bidding to use keywords similar to well-known brands, misleading consumers into clicking on links they believe belong to genuine businesses, thereby gaining false traffic. Such actions may not involve direct infringement but significantly violate the principle of “non-confusion”, encroaching on competitors’ market shares.
The addition of provisions targeting those who facilitate confusion for others focuses particularly on platforms such as search engines and social media. Platforms that fail to supervise and manage effectively may bear indirect liability. For instance, a platform failing to promptly remove unauthorized confusing information could be held accountable as an accomplice. Platforms are thus expected to enhance their management of advertising placements and keyword settings to avoid facilitating unfair competition. Enterprises, in turn, should strengthen their brand registration and protection, particularly in the digital environment, and promptly report instances of confusion to regulatory authorities to safeguard their legitimate rights and interests.
3. Dual-Direction Regulation of Commercial Bribery
Article 8 of the Draft Amendment introduces a provision prohibiting business operators from offering or accepting bribes during transactions. It explicitly states that entities and individuals must not accept bribes in commercial activities, further clarifying the dual-direction regulation of commercial bribery.
This revision is significant. Traditional commercial bribery cases often focus on penalizing the bribe-giver, neglecting the accountability of the bribe-taker. In transactions involving multinational corporations or large enterprises, bribe-takers may discreetly participate via intermediaries, increasing the complexity and concealment of bribery practices. The revision’s explicit prohibition of bribe acceptance enhances oversight and curbs the spread of illegal behavior.
In recent years, China’s anti-corruption efforts have been robust. This revision aligns with anti-corruption policies, advancing legal reform. Corruption in commercial environments not only undermines fair competition but also poses a threat to long-term corporate development. By strengthening penalties for both bribe-givers and bribe-takers, the Draft Amendment helps eliminate the breeding grounds for unfair competition at its source.
4. Regulation of Unfair Competition in the Digital Domain
Article 12 of the Draft Amendment adds prohibitions on unfair competition practices involving data, algorithms, and technical means, specifically targeting the following acts: 1) False advertising through fabricated transactions or fake user reviews.2) Incompatibility with network products or services provided by other operators, disrupting normal operations.3) Illegal acquisition or use of competitors’ data.
With the rapid development of platform economies, unfair competition forms have become increasingly complex, particularly in algorithms, data, and technology. Platforms using algorithmic recommendations and user behavior data not only enhance advertising precision but may also control market shares through technical means. The Draft Amendment establishes legal boundaries for such practices, clarifying the illegality of market manipulation via algorithms. Platforms are expected to establish transparent data usage and algorithmic mechanisms, disclose algorithm rules, and ensure their recommendation systems avoid unfair competition.
Additionally, practices such as fake transactions and fabricated reviews have become pervasive on e-commerce platforms, disrupting market order and harming consumer interests. These new provisions enhance oversight of such behaviors, requiring platforms to adopt stricter monitoring and management of merchants and user activities. Regulatory authorities should collaborate with platform enterprises to jointly combat unfair practices like fake transactions and fabricated reviews.
5. Enhancements to Other Forms of Unfair Competition
In addition to the above, the Draft Amendment refines regulations on the following forms of unfair competition: 1) False Advertising: Addressing the growing prevalence of false advertising in the rapidly expanding advertising industry, particularly in online advertisements, as a critical measure to prevent false claims and misleading promises.2) Unfair Prize Promotions: Prohibiting deceptive prize promotions.3) Commercial Defamation: Banning the dissemination of false information to damage others’ reputations. Enterprises are urged to adhere to fair competition rules and avoid using unfair methods to exclude competitors.4) Abuse of Market Dominance: Reiterating the obligation of dominant market players to comply with fair competition rules. Abuses such as predatory pricing or monopolistic transactions directly harm market order and infringe on the survival rights of small and medium-sized enterprises. The revision clarifies the legal consequences of such behaviors.
[Comments]
The revisions in the Draft Amendment to the Anti-Unfair Competition Law not only address changes in the market economy but also strengthen regulation in emerging fields, particularly in the digital economy, platform economy, and online competition domains. For businesses, the legal changes necessitate deeper reflection and adjustments in compliance management, brand protection, and competitive practices. This includes enhancing internal management processes, raising awareness of legal risks, and ensuring compliance in the use of data and algorithms.
Effective implementation hinges on establishing robust regulatory mechanisms to enforce the law efficiently, particularly in complex cases requiring multi-departmental and cross-regional collaboration. Judicial bodies should accurately apply the new rules to individual cases, progressively forming a body of precedent to guide market behavior towards greater standardization and transparency. Additionally, businesses must adapt to stricter competitive environments, leveraging the legal protections provided while balancing growth with compliance.
As technology and market dynamics evolve, the Anti-Unfair Competition Law is likely to continue evolving to meet new challenges and demands. In this process, businesses, regulators, and legal practitioners must work closely together to foster the healthy development of the market economy.
Since its promulgation in 1993, the Anti-Unfair Competition Law of the People’s Republic of China has undergone several revisions to adapt to the rapid development of the market economy and the emergence of new business models. The first comprehensive revision in 2017 introduced provisions regulating unfair competition in the internet domain and enhanced the protection of trade secrets. In 2019, further revisions expanded the definition of infringement and increased legal liabilities for violations, particularly in trade secret protection. The 2022 revision focused on platform economies, addressing issues such as data abuse and algorithmic manipulation. The 2024 Draft Amendment represents a significant overhaul, adding provisions on confusion, dual-direction bribery control, and other key areas, thereby responding to the latest challenges in the digital economy and technological development.
This article provides an explanation and analysis of the major revisions in the Draft Amendment.
1. Clarification of Departmental Responsibilities
Article 1 of the Draft Amendment explicitly states that the administrative departments for anti-unfair competition under the governments at or above the county level are responsible for investigating and handling unfair competition practices. For actions designated by laws or administrative regulations to be handled by other departments, those provisions shall prevail.
The explicit designation of the administrative departments for anti-unfair competition under governments at or above the county level as enforcement bodies raises higher expectations for local governments’ enforcement capabilities. Local governments and their regulatory bodies need to enhance specialized training and resource allocation to effectively enforce the law in increasingly complex market environments. For instance, local enforcement agencies are expected to take a leading role in handling cases of false advertising and price fraud on e-commerce platforms. However, in complex cases involving cross-departmental coordination or cross-regional unfair competition, ensuring the effective implementation of the law remains a challenge. Taking the internet industry as an example, the involved regulatory departments may include the Market Supervision Administration, the Cyberspace Administration, and the Ministry of Industry and Information Technology, among others. Strengthening interdepartmental cooperation will be key to ensuring the effective enforcement of the law.
2. New Regulations on Confusion
Article 7 of the Draft Amendment introduces new provisions prohibiting the following acts of confusion: 1) Unauthorized use of names or logos of enterprises, new media accounts, application programs, or symbols that have a certain influence. 2) Manipulating search engines to use names of well-known products or enterprises as keywords, causing confusion.
With the advancement of information technology, confusion regarding trademarks, enterprise names, and product names is no longer limited to traditional trademark infringement. The new draft specifically protects new media accounts and application names, reflecting adjustments to business rules in the “information flow” economy. For example, some enterprises manipulate search engine bidding to use keywords similar to well-known brands, misleading consumers into clicking on links they believe belong to genuine businesses, thereby gaining false traffic. Such actions may not involve direct infringement but significantly violate the principle of “non-confusion”, encroaching on competitors’ market shares.
The addition of provisions targeting those who facilitate confusion for others focuses particularly on platforms such as search engines and social media. Platforms that fail to supervise and manage effectively may bear indirect liability. For instance, a platform failing to promptly remove unauthorized confusing information could be held accountable as an accomplice. Platforms are thus expected to enhance their management of advertising placements and keyword settings to avoid facilitating unfair competition. Enterprises, in turn, should strengthen their brand registration and protection, particularly in the digital environment, and promptly report instances of confusion to regulatory authorities to safeguard their legitimate rights and interests.
3. Dual-Direction Regulation of Commercial Bribery
Article 8 of the Draft Amendment introduces a provision prohibiting business operators from offering or accepting bribes during transactions. It explicitly states that entities and individuals must not accept bribes in commercial activities, further clarifying the dual-direction regulation of commercial bribery.
This revision is significant. Traditional commercial bribery cases often focus on penalizing the bribe-giver, neglecting the accountability of the bribe-taker. In transactions involving multinational corporations or large enterprises, bribe-takers may discreetly participate via intermediaries, increasing the complexity and concealment of bribery practices. The revision’s explicit prohibition of bribe acceptance enhances oversight and curbs the spread of illegal behavior.
In recent years, China’s anti-corruption efforts have been robust. This revision aligns with anti-corruption policies, advancing legal reform. Corruption in commercial environments not only undermines fair competition but also poses a threat to long-term corporate development. By strengthening penalties for both bribe-givers and bribe-takers, the Draft Amendment helps eliminate the breeding grounds for unfair competition at its source.
4. Regulation of Unfair Competition in the Digital Domain
Article 12 of the Draft Amendment adds prohibitions on unfair competition practices involving data, algorithms, and technical means, specifically targeting the following acts: 1) False advertising through fabricated transactions or fake user reviews.2) Incompatibility with network products or services provided by other operators, disrupting normal operations.3) Illegal acquisition or use of competitors’ data.
With the rapid development of platform economies, unfair competition forms have become increasingly complex, particularly in algorithms, data, and technology. Platforms using algorithmic recommendations and user behavior data not only enhance advertising precision but may also control market shares through technical means. The Draft Amendment establishes legal boundaries for such practices, clarifying the illegality of market manipulation via algorithms. Platforms are expected to establish transparent data usage and algorithmic mechanisms, disclose algorithm rules, and ensure their recommendation systems avoid unfair competition.
Additionally, practices such as fake transactions and fabricated reviews have become pervasive on e-commerce platforms, disrupting market order and harming consumer interests. These new provisions enhance oversight of such behaviors, requiring platforms to adopt stricter monitoring and management of merchants and user activities. Regulatory authorities should collaborate with platform enterprises to jointly combat unfair practices like fake transactions and fabricated reviews.
5. Enhancements to Other Forms of Unfair Competition
In addition to the above, the Draft Amendment refines regulations on the following forms of unfair competition: 1) False Advertising: Addressing the growing prevalence of false advertising in the rapidly expanding advertising industry, particularly in online advertisements, as a critical measure to prevent false claims and misleading promises.2) Unfair Prize Promotions: Prohibiting deceptive prize promotions.3) Commercial Defamation: Banning the dissemination of false information to damage others’ reputations. Enterprises are urged to adhere to fair competition rules and avoid using unfair methods to exclude competitors.4) Abuse of Market Dominance: Reiterating the obligation of dominant market players to comply with fair competition rules. Abuses such as predatory pricing or monopolistic transactions directly harm market order and infringe on the survival rights of small and medium-sized enterprises. The revision clarifies the legal consequences of such behaviors.
[Comments]
The revisions in the Draft Amendment to the Anti-Unfair Competition Law not only address changes in the market economy but also strengthen regulation in emerging fields, particularly in the digital economy, platform economy, and online competition domains. For businesses, the legal changes necessitate deeper reflection and adjustments in compliance management, brand protection, and competitive practices. This includes enhancing internal management processes, raising awareness of legal risks, and ensuring compliance in the use of data and algorithms.
Effective implementation hinges on establishing robust regulatory mechanisms to enforce the law efficiently, particularly in complex cases requiring multi-departmental and cross-regional collaboration. Judicial bodies should accurately apply the new rules to individual cases, progressively forming a body of precedent to guide market behavior towards greater standardization and transparency. Additionally, businesses must adapt to stricter competitive environments, leveraging the legal protections provided while balancing growth with compliance.
As technology and market dynamics evolve, the Anti-Unfair Competition Law is likely to continue evolving to meet new challenges and demands. In this process, businesses, regulators, and legal practitioners must work closely together to foster the healthy development of the market economy.