Bribery watch: draft Anti-unfair Competition Law cracks whip

On February 25 2016, the Legislative Office of China's State Council published a draft of the revised PRC Anti-unfair Competition Law (AUCL), which is open to public comments until March 25 2016. It addresses issues such as misleading publicity, improper promotion through rewards or prizes, infringement of trade secrets and commercial bribery. The AUCL currently in force was enacted in 1993 and contains a total of 33 provisions. The draft proposes amendments for 30 of them and adds two new ones.

Commercial bribery is an important element of the revised AUCL, as seen by the amendments to Article 7 and Article 20. The draft offers a clearer definition of commercial bribery, identifies both the offering and receiving of bribes and explicitly lists three categories of bribery conduct. It also specifies the liability for employees that commit such acts and sets different levels of penalties.

These proposed changes could have great practical implications for private companies operating in China. In light of the government's strengthened enforcement efforts, companies should closely monitor the developments to this legislation and its implementation so as to best manage—and set strategies for—the entailed risks.

Commercial bribery heavily targeted

In the current AUCL, commercial bribery is described as prohibiting business operators from resorting to bribery, by offering money or goods or by any other means, in order to purchase or sell commodities. Certain commissions and discounts are permitted if they are documented truthfully and transparently in accounting records.