PRC Anti-unfair Competition Law (Amended)

Article 1:        This Law has been formulated in order to promote the healthy development of the socialist market economy, encourage and protect fair competition, halt acts of unfair competition and protect the lawful rights and interests of business operators and consumers.

Article 2:        In their production and operating activities, business operators shall comply with the principles of free will, equality, fairness and good faith, and abide by the law and commercial ethics.

For the purposes of this Law, the term “act of unfair competition” means an act committed by a business operator in the course of its production and/or operating activities that violates this Law, disturbs the market competition order and prejudices the lawful rights and interests of other business operators or consumers.

For the purposes of this Law, the term “business operator” means a natural person, legal person or an organization without legal personality that engages in the production of, or deals in goods, or provides services (hereafter the term “goods” includes services).

Article 3:        People's governments at every level shall take measures to halt acts of unfair competition and create a good environment and good conditions for fair competition.

The State Council will establish an anti-unfair competition work coordination mechanism, study and decide on major anti-unfair competition policies and coordinate the handling of major issues concerning the maintenance of market competition order.

Article 4:        The departments of people's governments at the county level and above that perform industry and commerce administration duties shall investigate and handle acts of unfair competition. Where laws or administrative regulations provide that investigation and handling is to be conducted by another department, such provisions shall apply.

Article 5:        The state encourages, supports and protects public scrutiny of acts of unfair competition by all organizations and individuals.

State authorities and their personnel may not support or provide cover for acts of unfair competition.

Industry organizations shall strengthen industry self-regulation, guide and regulate fair competition in accordance with the law by members, and safeguard the market competition order.

Part Two: Acts of Unfair Competition

Article 6:        A business operator may not engage in any of the following acts meant to sow confusion, causing others to mistakenly believe that its goods are those of a third party or that a specific connection exists between it and such third party:

(1)        using a mark that is identical or similar to the influential product name, packaging, trade dress, etc. of a third party without authorization;

(2)        using the influential enterprise name (including abbreviation and trade name), social organization name (including abbreviation) or personal name (including pseudonym, stage name and translated name) of a third party without authorization;

(3)        using the entity portion of an influential domain name, the website name, web page, etc. of a third party without authorization; or

(4)        committing another act meant to sow confusion that is able to cause others to mistakenly believe that its goods are those of a third party or that a specific connection exists between it and such third party.

Article 7:        A business operator may not bribe any of the following entities or individuals with property or by other means in order to gain trading opportunities or secure a competitive advantage:

(1)        the working personnel of the trading counterparty;

(2)        an entity or individual engaged by the trading counterparty to handle relevant matters; or

(3)        an entity or individual that by virtue of using its/his/her position authority or influence has an effect on a transaction.

In trading activities, a business operator may pay a discount to the trading counterparty or pay an intermediary a commission in a manner that is above-board. When a business operator pays a discount to a trading counterparty or a commission to an intermediary, it shall truthfully enter the same in its accounts. The business operator that receives such discount or commission shall also truthfully enter the same in its accounts.

If a member of the working personnel of a business operator engages in bribery, the same shall be deemed to be an act of the business operator, unless the business operator has evidence to show that the act by such member of its working personnel had nothing to do with gaining a trading opportunity or securing a competitive advantage for the business operator.

Article 8:        A business operator may not conduct fraudulent or misleading commercial publicity on its goods' performance, functions, quality, sales situation, user comments, awards bestowed, etc. to deceive or mislead consumers.

A business operator may not assist other business operators in conducting fraudulent or misleading commercial publicity by arranging fraudulent transactions or other such means.

Article 9:        A business operator may not commit any of the following infringements of trade secrets:

(1)        obtaining the trade secret of the rights holder through theft, bribery, deceit, coercion or other illegitimate means;

(2)        disclosing, using or permitting a third party to use the trade secret of the rights holder obtained by the means set forth above; or

(3)        disclosing, using or permitting a third party to use the trade secret in its/his/her possession in breach of contractual provisions or the requirements of the rights holder in respect of the protection of the trade secret.

If a third party is aware or ought to be aware that an employee or ex-employee of the holder of the rights in the trade secret, or other entity or individual committed any of the illegal acts set forth in the preceding paragraph but nonetheless obtains, discloses, uses or permits another to use such trade secret, it shall be deemed to have infringed the trade secret.

For the purposes of this Law, the term “trade secret” means technical information and business information that is not known to the public, that has commercial value and for which the rights holder has taken the corresponding measures to maintain its confidentiality.

Article 10:      When carrying out giveaway sales, a business operator may not:

(1)        make the particulars of the giveaway sale, such as the type of prize, the conditions for redeeming the prize, the amount of the prize or the prize, ambiguous, affecting redemption of the prize;

(2)        carry out a giveaway sale by using trickery such as falsely claiming that there is a prize or intentionally awarding the prize to a predetermined winner; or

(3)        carry out a giveaway sale involving a draw where the amount of the top prize exceeds Rmb50,000.

Article 11:      A business operator may not fabricate or communicate false or misleading information to damage the commercial goodwill or the reputation of the goods of a competitor.

Article 12:      A business operator that engages in business activities online shall comply with the provisions hereof.

A business operator may not use technical means to commit the following acts of interfering with or disrupting the normal operation of the online products or services lawfully offered by the other business operator by influencing user choice or other such means:

(1)        inserting a link or forced redirection in the online products or services lawfully offered by the other business operator without its consent;

(2)        misleading, deceiving or coercing users to revise, close or uninstall an online product or service lawfully offered by the other business operator;

(3)        maliciously making an online product or service lawfully offered by the other business operator incompatible; or

(4)        committing another act of interfering with or disrupting the normal operation of the online products or services lawfully offered by the other business operator.

Part Three: Investigation of Alleged Acts of Unfair Competition

Article 13:      When conducting an investigation of an alleged act of unfair competition, the monitoring inspection department may take the following measures:

(1)        entering the place of business where the alleged act of unfair competition was committed to conduct an inspection;

(2)        questioning the business operator being investigated, materially interested parties and other relevant entities and individuals, and requiring them to explain relevant matters or provide other materials relating to the act being investigated;

(3)        reviewing and taking copies of agreements, account books, receipts, documents, records, business correspondence and other materials relating to the alleged act of unfair competition;

(4)        placing under seal and seizing property relating to the alleged act of unfair competition; and

(5)        searching the bank accounts of the business operator suspected of committing the act of unfair competition.

When the measures set forth in the preceding paragraph are to be taken, a written report shall be made to the main person in charge of the monitoring inspection department and his/her approval secured therefor. When the measures set forth in Item (4) or (5) of the preceding paragraph are to be taken, a written report shall be made to the main person in charge of the monitoring inspection department of the people's government at the level of city divided into districts or above and his/her approval secured therefor.

When conducting an investigation of an alleged act of unfair competition, the monitoring inspection department shall comply with the PRC Administrative Enforcement Law and other related laws and administrative regulations, and shall publish the results of the investigation and handling thereof in a timely manner.

Article 14:      When a monitoring inspection department conducts an investigation of an alleged act of unfair competition, the business operator being investigated, materially interested parties and other relevant entities and individuals shall provide truthful relevant documentation and information.

Article 15:      The monitoring inspection department and its working personnel shall bear an obligation of confidentiality in respect of the trade secrets to which they were privy in the course of an investigation.

Article 16:      Any entity or individual has the right to report an alleged act of unfair competition to the monitoring inspection department, and the monitoring inspection department shall, after receipt of such report, deal therewith in accordance with the law in a timely manner.

The monitoring inspection department shall publicize its telephone number, postal box or e-mail address for accepting reports, and maintain the confidentiality of persons who come forward with reports. Where a person lodges a report using his/her real name and provides related facts and evidence, the monitoring inspection department shall inform the person who came forward therewith of how the matter was handled.

Part Four: Legal Liability

Article 17:      A business operator that violates this Law, causing another to incur damage, shall bear civil liability in accordance with the law.

A business operator whose lawful rights and interests are prejudiced by an act of unfair competition may institute a legal action in a people's court.

The measure of damages to be awarded to a business operator who has been harmed by an act of unfair competition shall be determined based on the actual loss incurred by it as a result of the infringement. If calculation of the actual loss is not possible, it shall be determined based on the benefits derived by the infringer from the infringement. The measure of damages shall also include the reasonable expenditures paid by the business operator in halting the infringement.

If a business operator violates Article 6 or 9 hereof and the actual loss incurred by the rights holder due to the infringement and the benefits derived by the infringer from the infringement cannot be determined, the people's court shall award damages to the rights holder of up to Rmb3 million, depending on the circumstances of the infringement.

Article 18:      If a business operator violates Article 6 hereof by committing an act meant to sow confusion, the monitoring inspection department shall order it to cease the illegal act and confiscate the illegal goods. If the illegal business turnover is at least Rmb50,000, it may also impose a fine of up to five times the illegal business turnover. If there is no illegal business turnover or the amount thereof is less than Rmb50,000, it may additionally impose a fine of up to Rmb250,000. If the circumstances are serious, the business operator's business license shall be revoked.

If the enterprise name registered by a business operator violates Article 6 hereof, the business operator shall carry out a registration amendment of the name in a timely manner; and until the name is amended, the original company registrar shall use the business operator's unified social integrity code instead of its name.

Article 19:      If a business operator violates Article 7 hereof by bribing another party, the monitoring inspection department shall confiscate the illegal income and impose a fine of not less than Rmb100,000 and not more than Rmb3 million. If the circumstances are serious, the business operator's business license shall be revoked.

Article 20:      If a business operator violates Article 8 hereof by using fraudulent or misleading commercial publicity for its goods or assisting another business operator conduct fraudulent or misleading commercial publicity by arranging fraudulent transactions or other such means, the monitoring inspection department shall order it to cease the illegal act, and impose a fine of not less than Rmb200,000 and not more than Rmb1 million. If the circumstances are serious, it shall impose a fine of not less than Rmb1 million and not more than Rmb2 million and may revoke the business operator's business license.

If a business operator violates Article 8 hereof and the same constitutes dissemination of a false advertisement, penalties shall be imposed in accordance with the PRC Advertising Law.

Article 21:      If a business operator violates Article 9 hereof by infringing trade secrets, the monitoring inspection department shall order it to cease the illegal act and impose a fine of not less than Rmb100,000 and not more than Rmb500,000. If the circumstances are serious, it shall impose a fine of not less than Rmb500,000 and not more than Rmb3 million.

Article 22:      If a business operator conducts giveaway sales in violation of Article 10 hereof, the monitoring inspection department shall order it to cease the illegal act and impose a fine of not less than Rmb50,000 and not more than Rmb500,000.

Article 23:      If a business operator violates Article 11 hereof by damaging the commercial goodwill or the reputation of the goods of a competitor, the monitoring inspection department shall order it to cease the illegal act, eliminate the effect and impose a fine of not less than Rmb100,000 and not more than Rmb500,00. If the circumstances are serious, it shall impose a fine of not less than Rmb500,000 and not more than Rmb3 million.

Article 24:      If a business operator violates Article 12 hereof by interfering with or disrupting the normal operation of the online products or services lawfully offered by another business operator, the monitoring inspection department shall order it to cease the illegal act and impose a fine of not less than Rmb100,000 and not more than Rmb500,000. If the circumstances are serious, it shall impose a fine of not less than Rmb500,000 and not more than Rmb3 million.

Article 25:      If a business operator violates this Law by engaging in unfair competition but there are statutory mitigating circumstances such as taking the initiative in eliminating or reducing the harmful consequences of its illegal act, light or lighter administrative penalties shall be imposed in accordance with the law. If the illegal act is minor, promptly rectified and did not cause any harmful consequences, no administrative penalties will be imposed.

Article 26:      If a business operator violates this Law by engaging in unfair competition and is imposed administrative penalties therefor, the monitoring inspection department shall record the same in its integrity record and announce the same in accordance with relevant laws and administrative regulations.

Article 27:      If a business operator violates this Law and is required to bear civil liability, administrative liability and criminal liability, but its property is insufficient to cover the same, such property shall be used on a priority basis to bear the civil liability.

Article 28:      If the performance by the monitoring inspection department of its duties in accordance with the law is hampered by a refusal or obstruction of an investigation, the monitoring inspection department shall order rectification of the matter and may impose a fine of up to Rmb5,000, on an individual, or up to Rmb50,000 on an entity, and the public security authority may impose public security penalties in accordance with the law.

Article 29:      If a party is dissatisfied with the decision rendered by the monitoring inspection department, it may apply for administrative reconsideration or institute an administrative action in accordance with the law.

Article 30:      If a member of the working personnel of a monitoring inspection department abuses his/her authority, is derelict in his/her duties, practices partiality by committing an irregularity or discloses trade secrets to which he/she was privy in the course of an investigation, he/she shall be disciplined in accordance with the law.

Article 31:      If this Law is violated and the same constitutes a criminal offense, criminal liability shall be pursued in accordance with the law.

Part Five: Supplementary Provisions

Article 32:      This Law shall be effective as of January 1 2018.