Provisions on Prohibited Acts of Unfair Online Competition (Draft for the Solicitation of Comments)

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Chapter I: General Provisions

Article 1: These Provisions are formulated on the basis of the PRC Law Against Unfair Competition (hereinafter 'Unfair Competition Law'), The E-commerce Law of the PRC, the Administrative Punishments Law of the PRC (hereinafter Administrative Punishments Law), and other laws, so as to stop and prevent acts of unfair competition online, to encourage and support innovation, to preserve the order of fair market competition, to protects the lawful rights and interests of business operators and consumers, and to promote the regulated, continuous, and healthy development of the digital economy.

Article 2: Business operators engaging in production and business activities through the internet and other information networks shall comply with the principles of voluntariness, equality, fairness, and creditworthiness, obey the laws, regulations, and these provisions, and obey commercial ethics.

Business operators must not carry out or assist in carrying out acts of unfair competition online that disrupt the order of market competition and impact fair market transactions, and must not directly or indirectly harm the lawful rights and interests of other business operators or consumers.

Article 3: The State Administration for Market Regulation is responsible for organizing and leading efforts to counter unfair online competition, and for investigating and handling major cases of unfair online competition.

The departments of people's governments at the county level or above that perform market regulation duties (hereinafter "market regulation departments”) are to conduct investigations and handle acts of unfair online competition online.

Article 4: Each member unit of the coordination mechanism against unfair competition for people's governments at the county level or above shall strengthen coordination and cooperation, jointly researching resolutions to major issues in unfair online competition in that region, and collaborating to carry out comprehensive governance of acts of unfair online competition.

Article 5: All organizations and individuals are to be encouraged and supported in conducting societal oversight of acts of unfair online competition. All units or individuals have the right to report suspected acts of unfair online competition to the market regulation departments, and the market regulation departments shall promptly handle the reports it receives in accordance with law.

Industry associations and other social organizations are to be encouraged to carry out analysis and research on acts of unfair online competition, to lead and regulate member units in competing in accordance with laws and regulations.

Article 6: Platform operators shall provide guidance and regulation for the competition of business operators on the platform, and where violations of these Provisions by business operators on the platform are discovered, they shall employ necessary measures to address it in accordance with law, store information related to the handling for at least 3 years, and accept oversight inspections in accordance with law.

Where business operators on the platform continue to carry out illegal conduct and cause harmful consequences after necessary disposition measures are employed, the platform operators shall promptly report leads on the violation to a market regulation department with jurisdiction.

Chapter II: Ordinary Regulation of Online Competition

Article 7: Business operators must not use networks to carry out the following acts of confusion in production and sales activities, leading people to mistakenly believe it is others' goods or that they have special relationships with others:

(1) Using indicators without authorization that are identical or similar to the main body of others' influential domain names, website names, or web pages;

(2) Using indicators without authorization that are identical or similar to the main body of others' influential applications, websites, personal media, game interfaces, and other website design, names, images, or formats.

(3) Using others' influential enterprise names (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 as key search terms.

(4) Other uses of networks to carry out acts of confusion that could lead people to mistakenly believe it is others' goods or that they have special relationships with others;

Business operators providing online services must not help other business operators carry out the acts of confusion provided for in the preceding paragraph.

Article 8: Business operators must not employ the following methods to make false or misleading commercial promotions about themselves or their products' nature, functions, quality, receipt of awards, credentials and qualifications, tricking or misleading consumers of the public:

(1) Using webpages, personal media, or other online tactics to carry out displays, performances, instructions, explanations, recommendations, or text notes;

(2) Carrying out commercial marketing activities through methods such as livestream marketing, topic marketing, platform recommendations, and online documents;

(3) Other methods of online publicity.

Business operators must not help other business operators carry out the false or misleading acts of commercial promotion in the preceding paragraph.

Article 9: Business operators must not employ the following methods to make false or misleading commercial promotions about themselves or their products' market status, transaction information, business data, or user ratings, tricking or misleading consumers of the public:

(1) faking transactions or organizing fake transactions;

(2) faking rankings or organizing fake rankings;

(3) faking transaction values, the volume of completed transactions, order volumes, or other data and information related to the business;

(4) Faking user ratings or the number of saves, likes, votes, follows, subscriptions, shares, and other traffic data;

(5) Employing misleading displays and other methods to conceal negative ratings or put positive ratings up front and negative ratings at the end, or to not clearly distinguish ratings for different products or services, and so forth;

(6) Faking data on interactions such as the number of hits, follows, reads, listens, views, or plays;

(7) Conducting false marketing through methods such as falsely claiming something is in-stock, faking orders, and faking a rush on buying;

(8) Using cash kickbacks, red envelopes, cards, and other means to induce users to make directed ratings, likes, shares, directed votes, or other interactions;

(9) Carrying out other false or misleading acts of commercial promotion.

Business operators must not help other business operators carry out the false or misleading acts of commercial promotion in the preceding paragraph.

Article 10: Business operators must not employ financial or other methods to bribe online platform personnel and units or individuals with influence over online transactions in an attempt to obtain business opportunities or competitive advantages;

Article 11: Business operators must not use networks to concoct or disseminate false or misleading information, harming competitors' commercial reputations or the reputation of their goods

"False information" as used in the preceding paragraph refers to information that's content is not true or does not comport with the actual situations.

"Misleading information" as used in the preceding paragraph refers to information that while true only describes part of the facts and could easily lead to false associations.

"Harming competitors' commercial reputations or the reputation of their goods" as used in the preceding paragraph refers to causing a clear reduction or decrease in other business operators' online traffic, advertising revenue, financing ability, and so forth, as well as harm to their potential competitiveness such as transaction opportunities, expected income, bargaining power, or brand value.

Article 12: Business operators must not carry out the following conduct harming competitors' commercial reputations or the reputation of their goods:

(1) Organizing or directing others to make malicious reviews of competitors' products as consumers;

(2) Using, organizing, or directing others to maliciously spread false or misleading information through the networks;

(3) Using networks to make false or misleading notices about risks in competitors' products, customer notifications, warning letters, legal letters, or reports.

(4) Other acts that concoct or disseminate false or misleading information, harming competitors' commercial reputations or the reputation of their goods.

Organizations and individuals such as the providers and users of personal media and comments services or online shills must not assist other business operators to carry out the conduct in the preceding paragraph.

Chapter III: Prohibitions on Acts of Unfair Competition Such As The Use of Technical Methods to Obstruct and Disrupt

Article 13: Business operators must not use data, algorithms, and other technical means to influence user choices or use other methods to carry out conduct such as traffic hijacking, interference, or malicious incompatibility that obstructs or undermines the normal operation of network products or services that are legally provided by other business operators.

Article 14: Absent the consent of other business operators, business operators must not carry out the following acts of traffic hijacking such as inserting links or forced target jumps in network products or services that are lawfully provided by other business operators:

(1) inserting jump links or embedding links to one's own products or services in other business operators' lawfully provided network products and services, without their consent;

(2) Using keyword association functions to set up links to one's own products or services, tricking or misleading users into clicking;

(3) Other conduct that carries out traffic hijacking through technical means.

Article 15: Business operators must not use technological means to carry out the following conduct interfering with other business operators' lawful provision of network products or services:

(1) Misleading, tricking, or compelling users to modify, close, uninstall, or abandon the use of network products or services lawfully provided by other business operators;

(2) Downloading, installing, or operating applications against the users' will, harming consumers' lawful rights and interests, or impacting equipment, functions, or the normal operations of applications lawfully provided by other business operators.

(3) Not providing uninstall functions for applications other than basic functions or obstructing the uninstallation of the application, harming consumers' lawful rights and interests, or impacting equipment, functions, or the normal operations of applications lawfully provided by other business operators.

(4) Blocking, intercepting, modifying, closing, of uninstalling network products and services that are lawfully provided by other business operators, or obstructing their download, installation, operation, upgrades, dissemination, and so forth;

(5) Adjusting the natural position of other business operators' network products and services in search results, and maliciously locking them.

(6) Other conduct that impedes or interferes with network products and services that are lawfully provided by other business operators.

Article 16: Business operators must not use technological methods to maliciously causing incompatibility with other business operators' lawful provision of network products or services:

The determination of whether business operators maliciously caused incompatibility with network products or services lawfully provided by other business operators shall be upon a comprehensive consideration of the following factors:

(1) The subjective plan of the conduct;

(2) The scope of targets for the conduct;

(3) The impact of the conduct on the order of market competition;

(4)The impact of the conduct on the normal operation network products or services that lawfully provided by other business operators;

(5) The impact of the conduct on consumers' lawful rights and interests and on social welfare;

(6) Whether the conduct complied with the principle of creditworthiness, commercial ethics, industry custom, practice norms, conventions on self-discipline, and so forth;

(7) Whether there was a legitimate reason for the conduct.

Chapter IV: Prohibitions on the use of Technical Means to Carry Out Other Acts of Unfair Online Competition

Article 17: Business operators must not directly have, organize, or go through third parties to have a high frequency of transactions with competitors in a short period or give them positive reviews to trigger the platform's mechanisms for countering fake transactions and reduce that competitor's opportunities for transactions.

Article 18: Business operators must not intercept or block the information content or webpages of specific information service provider businesses, except for frequent pop-ups that interfere with users as well as floaters or windows that do not provide a means of closing them.

Article 19: Business operators must not use technical means to reduce transaction opportunities between other business operators through methods such as user choices, traffic restrictions, blocking, or removing products, carrying out 'either/or' choices, obstructing or undermining the normal operation of network products and services that are lawfully provided by other business operators and disrupting the order of fair market competition.

Business operators must not use technical means to influence the business choices of other business operators through methods such as restrictions on transaction partners, restriction on sales areas or times, restrictions on participation in promotions, carrying out 'either/or' choices, obstructing or undermining the normal operation of network products and services that are lawfully provided by dependent counterparts in transactions and disrupting the order of fair market competition.

Article 20: Business operators must not use technical means to illegally capture or use other business operators' data to create an actual replacement for the main content or partial content of the network products or services lawfully provided by other business operators or to unreasonably add to the operations costs of other business operators, reduce the security of other business operators' user data, or obstruct or undermine the normal operation of network products and services that are lawfully provided by other business operators.

Article 21: Business operators must not use technical means such as data and algorithms to unreasonably provide different transaction information to similarly situated transaction counterparts through methods such as the collection and analysis of transaction counterparts' transaction information, browsing content and frequency, and the brand and price of the terminal equipment they used at the time of the transaction; so as to infringe on the transaction counterparts' rights to know, to choose, to fair trade, and so forth, and disrupting the order of fair market transactions.

Transaction information includes transaction histories, willingness to pay, spending habits, individual preferences, ability to pay, degree of reliance, credit status, and so forth.

Article 22: Business operators must not use technological means to carry other conduct that impedes the normal operation of products or services that are lawfully provided by other business operators.

In assessing whether conduct impedes or undermines the normal operation of products or services that are lawfully provided by other business operators, the following factors may be considered:

(1) Whether it made network products or services that were lawfully provided by other business operators unable to used normally;

(2) Whether it made network products or services that were lawfully provided by other business operators unable to be downloaded, installed, or uninstalled normally;

(3) Whether it unreasonably increased the cost of network products or services that were lawfully provided by other business operators;

(4) Whether it caused an unreasonable reduction in access by users of network products or services that were lawfully provided by other business operators;

(5) Whether it leads to unreasonable decline of consumer experience or unreasonable losses of other interests;

(6) The number of instances and the duration it was continued;

(7) The geographic area and time frame impacted by the conduct;

(8) Other factors.

Chapter V: Oversight and Inspection

Article 23: In normal circumstances, the jurisdiction of cases of unfair online competition shall be in accordance with the Provisions on Procedures for Market Regulation Administrative Punishments.

Where the market regulation department for the site of the residence of those who constructed or manage websites, the actual business place of business operators, or the place where illegal consequences occurred first discovers leads on the violation or receives a relevant report, they may also take jurisdiction.

Article 24: In the course of market regulation departments investigation and handling of unfair online competition cases, the business operator that is being investigated, stakeholders, and other relevant units and individuals shall truthfully provide materials or circumstances and must not fabricate or destroy data and related materials involved in the case, must not obstruct the market regulation departments' lawful performance of their duties, and must not refuse or obstruct the investigation.

Article 25: Where business operators violate these provisions by carrying out acts of unfair competition and the circumstances are serious or a major impact is caused, they shall make a public pledge to make corrections to the public through their website after receiving an administrative punishment from the market regulation departments, pledging to employ measures to eliminate the consequences of the actions.

Article 26: As needed for cases handling, the market regulation departments may entrust third party professional bodies to collect and fix electronic evidence related to the case, and to audit financial data.

Article 27: For new types of cases or difficult cases, the market regulation departments may appoint expert observers to participate in and assist investigations.

Expert observers may submit comments based on their expert knowledge, professional skills, practical experience, and so forth, regarding whether there are reasonable explanations for competitive conduct such as promoting innovation, increasing efficiency, or protecting the lawful rights and interests of consumers.

Article 28: Expert observers shall concurrently satisfy the following requirements:

(1) possess good ethical character, and be just, honest, and trustworthy;

(2) Have a bachelors degree or higher in law, economics, finance, or computing;

(3) Have at least 5 years work experience in the internet or unfair competition regulations sectors;

Article 29: Where expert observers have any of the following circumstances, they shall be recused:

(1) They have previously served in the business being investigated;

(2) The have previously served full or part-time in a competitor in the same industry as the business being investigated;

(3) There is evidence showing that there is a risk of leaking the commercial secrets or other intellectual property of the business being investigated in the expert observer's participating or assisting in the investigation;

(4) Other interests that might cause the investigation outcome to be unjust.

Article 30: The market regulation departments and their staffs, third-party professional bodies, expert observers, and others participating in investigations bear an obligation to keep information they learn of during the investigation confidential.

Chapter VI: Legal Responsibility

Article 31: Business operators that violate article 7 of these Provisions are to be punished by market regulation departments in accordance with the provisions of article 18 of the Unfair Competition Law.

Article 32: Business operators that violate article 8 or 9 of these Provisions are to be punished by market regulation departments in accordance with the provisions of article 20 of the Unfair Competition Law.

Article 33: Business operators that violate article 10 of these Provisions are to be punished by market regulation departments in accordance with the provisions of article 19 of the Unfair Competition Law.

Article 34: Business operators that violate article 11 or 12 of these Provisions are to be punished by market regulation departments in accordance with the provisions of article 23 of the Unfair Competition Law.

Article 35: Business operators that violate article 13, 14, 15, 16, 17, 18, 19, 20, 21, or 22 of these Provisions are to be punished by market regulation departments in accordance with the provisions of article 24 of the Unfair Competition Law.

Article 36: Business operators that violate article 24 of these Provisions are to be punished by market regulation departments in accordance with the provisions of article 28 of the Unfair Competition Law.

Article 37: Where business operators violate article 6 or 25 of these Provisions, and laws and regulations have applicable provisions, follow those provisions. Where laws and regulations have no such provisions, market regulation departments are to, depending on the severity of the circumstances, issue a warning, or impose an administrative penalty that is a fine below three times the amount of illegal proceeds but not exceeding 30,000 RMB; where there is no illegal proceed, impose a fine of below 10,000 RMB.

Article 38: Where business operators abuse dominant market positions to carry online competitive acts that eliminate or restrict competition, handle in accordance with the "P.R.C. Anti-Monopoly Law."

Article 39: Where business operators that violate these Provisions have obtain illegal proceeds, they, in accordance with the provisions of article 28 of the Administrative Punishments Law, shall be confiscated except for those that shall be recovered according to law.

Chapter VII: Supplementary Provisions

Article 40: These Provisions shall come into effect on XX, XX, 2021.

 

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