PRC Law Against Unfair Competition (2017)

Title: P.R.C. Law Against Unfair Competition
Promulgating Entities: Standing Committee of the National People's Congress
Reference number: 12th Session, Presidential Order No. 77 
Promulgation Date: 2017-11-4
Expiration date: 
Source of text: http://www.npc.gov.cn/npc/xinwen/2017-11/04/content_2031584.htm

Table of Contents

Chapter I: General Provisions

Chapter II: Acts of Unfair Competition

Chapter III: Investigation of Suspected Acts of Unfair Competition

Chapter IV: Legal Responsibility

Chapter V: Supplementary Provisions

P.R.C. Law Against Unfair Competition

Chapter I: General Provisions

Article 1: This Law is formulated so as to promote 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 creditworthiness in business and production activities, and comply with laws and business ethics.

"Acts of Unfair Competition" as used in this Law refers to business operators' conduct violating provisions of this Law during production and business activities, which disrupts the order of marketplace competition, and harms the lawful rights and interests of other business operators or consumers.

"Business operators" as used in this Law, refers to natural persons, legal persons or unincorporated organizations engaged in the production or trade of goods, or the provision of 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 market competition.

Article 4: Departments performing duties of administering industry and commerce of people's governments at or above the county level are to 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 in the conduct of social supervision over acts of unfair competition.

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

Industry organizations shall strengthen industry self-discipline, leading and regulating members to compete in accordance with law, and preserving the order of marketplace competition.

Chapter II: Acts of Unfair Competition

　　Article 6: Business operators must not carry out the following confusing conduct leading people to mistakenly believe it is others' goods or that they have special relationships with others:

(1) Without authorization, using the same or similar identifiers, such as names, packaging, or dress as that of others' goods which which have a definite influence;

(2) Using the name of others' enterprises that have a definite influence (including shortened forms, brands [字号] etc.),the names of social organizations (including shortened forms etc.), or personal names (including pen names, stage names,translated names etc.) without authorization.

(3) Using the main body of others' domain names, website names, or web pages that have a definite influence without authorization;

(4) Other confusing conduct that could lead people to mistakenly believe it is others' goods or that they have special relationships with others;

Article 7: Business operators must not employ financial or other methods to bribe the following units or individuals in an attempt to obtain business opportunities or competitive advantages;

(1) Employees of the other party in a transaction;

(2) units or individuals entrusted by the other party in a transaction to handle related matters;

(3) Units or individuals exploiting their authority or influence to impact trade.

In transactional activities, business operators may provide discounts to trade counterparts in an explicit manner, or pay commissions to intermediaries. Where business operators pay 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 the employees of business operators carry out bribery, it shall be viewed as the conduct of the business operator; except for where there is evidence showing that the employee in question's conduct had no relation to obtaining transaction opportunities or competitive advantages for the business operator.

Article 8: Business operators must not falsely or misleadingly commercially promote their goods' nature, functions, quality, sale condition, user ratings, or awards received, so as to trick or mislead consumers.

Business operators must not use methods such as organizing false transactions to help other business operators conduct false or misleading commercial promotions.

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

(1) Obtaining rights holders' commercial secrets by theft, bribery, fraud, 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.

Where third parties clearly knew or should have known that the commercial secrets rights-holders' employees, former employees, or other units and individuals carried out the illegal conduct listed in the preceding paragraph, but still acquire, disclose, use or allow others to use commercial secrets, it is viewed as a violation of 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 secrecy measures taken by the rights holder.

Article 10: Business operators conducting prize promotions must not have any of the following circumstances:

(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 50,000 RMB in drawing-style prize promotion.

Article 11: Business operators must not concoct or disseminate fake facts, harming competitors' commercial reputations or the reputation of their goods.

Article 12: Business operators using the networks to engage in production or trade activities shall comply with all provisions of this Law.

Business operators must not use technological methods, using influencing of user choices or other methods, to carry out the following conduct that impedes other business operators' from lawfully providing network products or services as normal:

(1) inserting links or forced transfers in other business operators' lawfully provided network products and services, without their consent;

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

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

(4) Other conduct that impedes or undermines other business operators' lawful provision of network products or service normally.

Chapter III: Investigation of Suspected Acts of Unfair Competition

Article 13: Supervision and inspection departments' investigation of suspected acts of unfair competition may employ the following methods;

(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 that they explain relevant circumstances or provide or other materials relating to the conduct under investigation;

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

(5) make inquiries into the bank accounts of the business operators suspected of acts of unlawful competition,

The employment of the measures in the preceding paragraph shall be reported in writing to the principle responsible person or the supervision and inspection department, and be upon their approval. The employment of the measures in items 4 and 5 of the preceding paragraph shall be reported in writing to the principle responsible person or the supervision and inspection department at the districted city level or above, and be upon their approval.

When supervision and inspection departments are investigating suspected 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, and shall promptly make their conclusions public.

Article 14: In supervision and inspection departments' investigation of suspected acts of unfair competition, business operators under investigation, interested parties, and other relevant units or individuals shall truthfully provide relevant materials or circumstances.

Article 15: The supervision and inspection departments, and their staff members, have the duty to keep confidential the commercial secrets learned of during the investigation.

Article 16: All units or individuals have the right to report suspected acts of unfair competition to the supervision and inspection departments, and the supervision and inspection departments shall promptly handle the reports it receives in accordance with law.

Oversight and inspection departments shall publicly release the phone numbers, mailboxes, or email addresses for accepting and handling reports, and preserve the confidentiality of those making reports. Where reports are made in ones real name and provide relevant facts and evidence, the oversight and inspection departments shall inform the reporter of the outcome of the handling.

Chapter IV: Legal Responsibility

　　Article 17: Where business operators violate this Law and cause damages to others, they shall bear civil responsibility 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.

The amount of compensation for business operators who have been harmed by acts of unfair competition is determined on the basis of the actual losses they suffered as a result of the violation of their rights; and where the actual losses are hard to calculate, compensation is determined on the basis of the benefit received by the infringers as a result of the infringement. The amount of compensation shall also include reasonable expenses paid by business operators in stopping the infringing conduct.

Where business operators violate articles 6 or 9 of this Law, and the losses suffered by the rights holder and the benefit gained by infringer are both difficult to determine, the people's courts are to make judgement for compensation of up to 3,000,000 RMB on the basis of the circumstances of the infringement.

Article 18: Where business operators violate Article 6 of this law by carrying out confusing conduct, 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 the registered names of business operators' enterprises violate the provisions of Article 6 of this Law, formalities to change registered name shall be promptly completed; and prior to the name being changed, the organ of original registration is to use the uniform social credit number in place of the name.

Article 19: Where business operators bribe others, the supervision and inspection departments are to confiscate illegal income and give a fine of between 100,000 and 3,000,000 RMB. Where the circumstances are serious, business licenses are to be revoked.

Article 20: Where business operators violate article 8 of this law with commercial promotions that are false or misleading, or by helping other business operators conduct false misleading commercial promotions by conducting fake transactions, 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.

Where business operators violate the provisions of Article 8 of this Law and it is false advertising, punishment is in accordance with the provisions of the "Advertising Law of the People's Republic of China."

Article 21: Where business operators bribe other or accept bribes in violation of the provisions of Article 9 of this Law by infringing on commercial secrets, 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 22: Where business operators conduct prize promotions 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 shall impose a fine between 50,000 and 500,000 RMB.

Article 23: Where business operators harm competitors' commercial reputation, or that of their goods, in violation of the provisions of Article 11 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 24: Where business operators violate Article 12 of this Law by impeding or undermining other business operators' lawful provision of internet products and services as normal, the supervision and inspection departments 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 25: Where business operators who have engaged in unfair competition in violation of the provisions of this Law, have circumstances such as taking the initiative to eliminate or mitigate the harmful consequences of the illegal acts, they shall be given a lighter or mitigated administrative punishment in accordance with law; if the illegal act is slight and promptly rectified, and no harmful consequences are caused, no administrative punishment shall be given.

Article 26: 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 27: Business operators violating the provisions of this Law shall bear responsibility, administrative responsibility, and criminal responsibility, if their assets are insufficient to pay these,priority is given to bearing civil liability.

Article 28: Where the supervision and inspection departments' lawful performance of their duties is impeded by refusal or obstructing the investigation, the supervision and inspection departments are to order corrections, and may give individuals a fine of up to 5,000 RMB, and give units a fine of up to 50,000 RMB, and the public security organs may concurrently give public security administrative sanctions.

Article 29: 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 30: Where employees of the supervision and inspection departments abuse their authority, derelict their duties, twist the law for personal gain, or disclose commercial secrets learned of during the investigation, they are to be given sanctions in accordance with law.

Article 31: Where a violation of the provisions of this Law constitutes a crime, criminal responsibility is to be pursued in accordance with law.

Chapter V: Supplementary Provisions

Article 32: This law shall enter into force on January 1, 2018.