The Compliance Checklist

1. What are the most significant cases from the past year that reflect China's continuing crackdown on corruption and bribery? 

Since the GlaxoSmithKline case in 2014, no particularly influential commercial bribery cases have occurred in China.

However, certain instances in which multinational corporations have been penalized by U.S. regulators for suspected commercial bribery in China are worth noting:

•    In July 2015, Mead Johnson was fined $12 million by the U.S. Securities and Exchange Commission (SEC) for suspected commercial bribery in China. According to the SEC, Mead Johnson violated the U.S. Foreign Corrupt Practices Act (FCPA) by making improper payments in China during the past few years, specifically paying fees to individuals at numerous Chinese hospitals in exchange for their recommending Mead Johnson nutritional products. Reports indicate that these acts by Mead Johnson have not been investigated or dealt with by Chinese regulators.
•    In November 2016, JPMorgan Chase and its Hong Kong subsidiary were fined $264 million by relevant U.S. regulators for violating the FCPA by hiring and engaging the children of Chinese government officials to solicit business.

The revision of the PRC Anti-unfair Competition Law (AUCL)'s potential impact on corporate compliance is a legal development worth noting. The AUCL has not undergone any revisions since its implementation in 1993. But the economic environment in China has shifted dramatically since then, and the degree of market competition and the competitive landscape itself have also experienced wide-ranging and profound changes, leaving the AUCL clearly incapable of responding to the needs of economic development. On February 25, 2016, the PRC Anti-unfair Competition Law (Draft Amendments for Deliberation) (Draft AUCL) was published. The Draft AUCL makes major revisions to provisions on commercial bribery. In summary, the Draft AUCL (1) provides a relatively complete and direct definition of “commercial bribery”; (2) brings in “a third party that could affect the transaction”; (3) enumerates three typical acts of commercial bribery; (4) clarifies the relationship between acts of commercial bribery by employees and the liability of the business operator; and (5) increases the legal liability for commercial bribery.