P.R.C. Law Against Unfair Competition (Draft Revision)

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Source:http://www.npc.gov.cn/npc/xinwen/2017-02/26/content_2008334.htm

Contents

Chapter I: General Provisions

Chapter II: Acts of Unfair Competition

Chapter III: Supervision and Inspection

Chapter IV: Legal Responsibility

Chapter V: Supplementary Provisions

 

Chapter I: General Provisions

Article 1: This Law is formulated so as to safeguard the healthy development of the socialist market economy, to encourage and protect fair competition, to stop acts of unfair competition, and to protect the lawful rights and interests of business operators and consumers.

Article 2: Business operators shall follow the principles of voluntariness, equality, fairness, honesty and credibility in market transactions, and observe the generally recognized business ethics.

"Acts of Unfair Competition" as used in this Law refers to a business operator's conduct violating the provisions of the preceding paragraph to use unfair methods in market transactions, harming the lawful rights and interests of other business operators, disturbing market order.

"Business operators" as used in this Law refers to natural persons, legal persons, or other organizations engaged in the trade of goods, or for-profit services ("goods" hereinafter includes services).

Article 3: People's governments at all levels shall adopt measures to stop acts of unfair competition, so as to create a favorable environment and conditions for fair competition.

The State Council is to establish coordinating mechanisms for efforts against unfair competition, research and decide on major policies against unfair competition, and coordinate and handle major issues of preserving the order of competition.

Article 4: Departments performing duties of administering industry and commerce of people's governments at or above the county level (hereinafter "administrative departments for industry and commerce") investigate and handle acts of unfair competition; where laws or administrative regulations provide that other departments are to investigate and handle [such acts], follow those provisions.

Article 5: The State encourages, supports and protects all organizations and individuals conducting social supervision over acts of unfair competition.

State organs and their staffs must not support or cover up acts of unfair competition.

Chapter II: Acts of Unfair Competition

Article 6: Business operators must not use the following unfair tactics to engage in market transactions:

(1) Using the characteristic names, packaging, or decoration of well-known goods without authorization; or using names, packaging, or decoration similar to those of well-known goods, causing confusion with others' well-known goods and leading people to mistake them with those well-known goods;

(2) Using the names of others' enterprises, or their abbreviations, without authorization; using full names, pen names, or stage names of others, without authorization; or using the names of social organizations, or the abbreviations thereof, without authorization; and leading others to mistakenly believe they are the goods of others;

(3) Using the main body of others' domain names, website names, or web pages; and the names or symbols of others' channels, programs, or columns, and so forth, leading others to mistakenly believe they are the goods of others;

(4) Using others' registered trademarks or unregistered well-known trademarks as the brand [字号] in an enterprise's name, misleading the public.

Article 7: Business operators must not use assets or other means to bribe trade counterparts or third parties who might influence the transaction. Trade counterparts or third parties who may influence the transaction must not accept or give bribes.

In transaction activities, business operators may provide discounts to trade counterparts in an explicit manner, or pay commissions to intermediaries. Where business operators provide discounts to trade counterparts or pay commissions to intermediaries, it shall be truthfully recorded in the books. Business operators receiving discounts or commissions shall also include these in the books.

Where business operators' employees use bribery to seek trading opportunities or competitive advantages for the business operator, such acts shall be deemed to be the acts of the business operators, except where the business operator has evidence showing that it was individual conduct.

A "third party that might influence the transaction" as used in the first paragraph of this article, refers to units and individuals that might exploit their authority to create an impact on the transaction.

Article 8: Business operators must not use advertisement or other means to engage in false or misleading commercial publicity; and must not engage in false transactions.

Article 9: Business operators must not carry out the following acts infringing on commercial secrets:

(1) Obtaining rights holders' commercial secrets by theft, bribery, intimidation or other improper tactics;

(2) Disclosing, using, or allowing others to use a rights holders' commercial secrets acquired by tactics provided for in the previous item;

(3) Disclosing, using, or allowing others to use commercial secrets in their possession, in violation of agreements or the rights holders' demands for preserving commercial secrets.

"Commercial secrets" as used in this Law refers to technological information and business information that is not publicly known, has commercial value, and is subject to corresponding confidentiality measures taken by the rights holder.

Article 10: The following acts are viewed as acts infringing on commercial secrets:

(1) Employees or former employees of commercial secrets rights holders carrying out the acts provided for in paragraph 1 of Article 9 of this Law;

(2) Where a third party clearly knows or should know that the source of commercial secrets is an illegal channel provided for in paragraph 1 of Article 9 of this Law, but still obtains, discloses, uses or allows others to use them.

Employees of state organs, and professionals such as lawyers and certified public accountants shall keep confidential the trade secrets they learn of in the course of performing their duties.

Article 11: Business operators selling good must not bundle the sale of goods against buyers' wishes, and must not attach other unreasonable conditions.

Article 12: The following situations must not occur in business operators' prize promotions:

(1) The type of award, the contest requirements, the payout amount or prizes, and other information on prize promotions is not clear, influencing consumers' redemption of prizes.

(2) Carrying out prize promotions by using the fraudulent methods of lying that there is a prize or intentionally having predetermined personnel win prizes;

(3) Having a top-prize valued at more than 20,000 RMB in drawing-style prize promotions.

Article 13: Business operators must not concoct or disseminate fake facts, harming competitors' commercial reputations or the reputation of their goods.

Article 14: Business operators must not use technological tactics to carry out the following acts in the internet field, to influence user choices or interfere with other business operators' normal business operations:

(1) Without consent, inserting links in network products or services that are lawfully provided by other business operators, causing forced target jumping;

(2) Misleading, deceiving, or compelling users to modify, close, or uninstall network products or services lawfully provided by others;

(3) Interfering with or disrupting the normal operation of network products or services lawfully provided by others;

(4) Maliciously causing incompatibility with network products or services lawfully provided by other business operators.

Article 15: The administrative department of industry and commerce under the State Council, either alone or together with other relevant departments of the State Council, will research and submit opinions on whether to designate it as acts of unfair competition and report it to the State Council for a decision, where business operators' market transaction conduct violates the provisions of article 2 of this law, for which there are no clear provisions in articles 6-14 of Chapter II of this law, or in related laws and administrative regulations but which seriously disrupt the order of competition and truly need to be investigated.

Chapter III: Supervision and Inspection

Article 16: When supervision and inspection departments investigate acts of unfair competition, they have the right to exercise the following powers of office:

(1) Enter business premises suspected of acts of unfair competition to conduct inspections;

(2) Question business operators under investigation, interested parties, as well as other relevant units or individuals, and request supporting materials or other materials relating to the suspected acts of unfair competition;

(3) Make inquiries about, or reproduce, agreements, account books, invoices, documents, records, business correspondence or other materials relating to the suspected acts of unfair competition;

(4) Order business operators under investigation to suspend suspected acts of unfair competition and to explain the source and quantity of relevant assets;

(5) Seal or seize assets related to suspected acts of unfair competition;

(6) Make inquiries into the bank accounts of business operators suspected of acts of unfair competition as well as accounting vouchers, books, statements and so forth relating to deposits.

Article 17: When supervision and inspection departments and their employees are supervising and inspecting acts of unfair competition, they shall follow the provisions of the "Administrative Compulsion Law of the People's Republic of China" and of other relevant laws and administrative regulations.

Article 18: When supervision and inspection departments are supervising or inspecting acts of unfair competition, business operators under inspection, interested parties, and other relevant units or individuals shall truthfully provide relevant materials or circumstances.

When supervision and inspection departments are conducting spot checks for acts of unfair competition, they shall randomly select inspection targets, randomly designate law enforcement and inspection personnel, and promptly disclose to the public the situations of the inspections and the results of the handling.

Article 19: Any unit or individual has the right to report acts of unfair competition to supervision and inspection departments. Supervision and inspection departments shall publicly release the phone numbers, mailboxes, or email address for accepting and handling reports, and shall arrange personnel to accept and handle reports. The supervision and inspection departments shall inform informants who use their real name of the dispositions, and preserve their confidentiality.

Chapter IV: Legal Responsibility

Article 20: Where business operators violate this Law and cause damages to others, they shall bear civil responsibility for compensation in accordance with law.

Where business operators' lawful rights and interests are harmed by acts of unfair competition, they may file lawsuits in the people's courts.

Article 21: Where business operators violate the provisions of items 1-3 of Article 6 of this law, the supervision and inspection departments shall order them to cease the unlawful acts, and confiscate the unlawful goods. Where the illegal business revenue is above 50,000 RMB, a concurrent fine of less than five times the amount of illegal business revenue may be imposed; where there is no illegal business revenue or the illegal business revenue is less than 50,000 RMB, a concurrent fine of less than 250,000 RMB may be imposed. Where the circumstances are serious, business licenses are to be revoked.

Where business operators violate the provisions of item 4 of Article 6 of this Law, the supervision and inspection departments shall order them to apply to change their registered name within one month; where an application for change of registration is not submitted before that period is completed, the supervision and inspection department shall impose penalties in accordance with the provisions of the previous paragraph, and the organ that originally registered the enterprise shall delete its name from the public notice system for enterprise credit information, and replace its name with its unified social credit number, and list that business operator in the irregular business directory. Where the circumstances are serious, business licenses are to be revoked.

 

Article 22: Where a business operator bribes others or accepts bribes in violation of the provisions of Article 7 of this Law, the supervision and inspection department shall order it to cease unlawful acts and impose a fine between 100,000 and 3,000,000 RMB. Where the circumstances are serious, business licenses are to be revoked.

Article 23: Where business operators violate the provisions of Article 8 of this Law, punishment is in accordance with the provisions of the "Advertising Law of the People's Republic of China." Where the "Advertising Law of the People's Republic of China" has no provisions, the supervision and inspection departments shall order them to cease the unlawful acts, and impose a fine of between 200,000 and 1,000,000 RMB; where the circumstances are serious, a fine of between 1,000,000 and 2,000,000 RMB is imposed, and business licenses may be revoked.

Article 24: Where business operators bribe other or accept bribes in violation of the provisions of Article 9 of this Law, or third parties infringe on trade secrets in violation of the provisions of Article 10 of this Law, the supervision and inspection department shall order them to cease the unlawful acts and shall impose a fine between 100,000 and 500,000 RMB; where the circumstances are serious, impose a fine between 500,000 and 3,000,000 RMB.

Where employees or former employees of rights holders in trade secrets, infringe on trade secrets in violation of the provisions of Article 10 of this Law, the supervision and inspection departments shall order them to cease the unlawful acts, and impose a fine of up to 100,000 RMB.

Where employees of State organs infringe on trade secrets in violation of the provisions of Article 10 of this Law, the organs responsible for appointment and removal or the supervision organs shall give punishments in accordance with law.

Where professionals such as lawyers and certified public accountants infringe on trade secrets in violation of the provisions of Article 10 of this Law, the supervision and inspection departments shall order them to cease the unlawful acts, and impose a fine of up to 100,000 RMB. Where the circumstances are serious, their practice licenses will be revoked by the relevant departments.

Article 25: Where business operators conduct prize promotions in violation of the provisions of Article 12 of this Law, the supervision and inspection department shall order them to cease the unlawful acts and shall impose a fine between 100,000 and 500,000 RMB; where the circumstances are serious, impose a fine between 500,000 and 3,000,000 RMB.

Article 26: Where business operators harms others' commercial reputation, or that of their goods, in violation of the provisions of Article 13 of this Law, the supervision and inspection department shall order them to cease the unlawful acts and shall impose a fine between 100,000 and 500,000 RMB; where the circumstances are serious, impose a fine between 500,000 and 3,000,000 RMB.

Article 27: Where business operators interfere with others' regular business operations business in violation of the provisions of Article 14 of this Law, the supervision and inspection department shall order them to cease the unlawful acts and shall impose a fine between 100,000 and 500,000 RMB; where the circumstances are serious, impose a fine between 500,000 and 3,000,000 RMB.

Article 28: Where business operators engage in unfair competition in violation of the provisions of Article 15 of this Law, the supervision and inspection departments shall order them to cease the unlawful acts and shall impose a fine of between 100,000 and 500,000 RMB; where the circumstances are serious, impose a fine between 500,000 and 3,000,000 RMB.

Article 29: Where business operators receive administrative punishments for engaging in unfair competition in violation of the provisions of this Law, the supervision and inspection departments shall record this in their credit record, and publicly disclose it in accordance with the provisions of relevant laws and administrative regulations.

Article 30: Business operators violating this Law shall be liable for civil compensation and payment of penalties and fines, and when their assets are insufficient for concurrent payment, the civil compensation shall be executed first.

Article 31: Where the obstruction of the supervision and inspection departments' performance of its duties in accordance with this Law constitutes a violation of public security administration, punishment is to be given by the public security organs in accordance with the "Public Security Administration Punishment Law of the People's Republic of China."

Article 32: Parties dissatisfied with a supervision and inspection department's decision may apply for an administrative reconsideration or bring an administrative lawsuit in accordance with law.

Article 33: Where supervision and inspection departments and their employees play twist the law for personal gain, abuse their authority, or derelict their duties, the responsible leadership personnel and the directly responsible personnel are given sanctions in accordance with law.

Article 34: Where violations of this Law constitute a crime, criminal liability is pursued in accordance with law.

Chapter V: Supplementary Provisions

Article 35: This Law shall take effect on xx-xx-xxxx.

 

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