Law of the People's Republic of China on Anti-Unfair Competition

(Adopted at the Third Meeting of the Standing Committee of the Eighth National People's Congress on September 2, 1993 and revised at the 30th Meeting of the Standing Committee of the Twelfth National People's Congress on November 4, 2017)

Catalog

Chapter 1 General Provisions

Chapter 2 Unfair Competition Behavior

Chapter 3 Investigation into Suspected Unfair Competition Practices

Chapter 4 Legal Liability

Chapter 5 Supplementary Provisions

Chapter 1 General Provisions

Article 1: In order to promote the healthy development of the socialist market economy, encourage and protect fair competition, stop unfair competition, and protect the legitimate rights and interests of operators and consumers, this Law is formulated.

Article 2: Operators shall follow the principles of voluntariness, equality, fairness, and integrity in their production and operation activities, and comply with laws and business ethics.

The unfair competition behavior referred to in this law refers to the behavior of operators who violate the provisions of this law, disrupt market competition order, and harm the legitimate rights and interests of other operators or consumers in their production and operation activities.

The term 'operator' referred to in this Law refers to natural persons, legal persons, and unincorporated organizations engaged in the production, operation, or provision of goods or services (hereinafter referred to as goods and services).

Article 3: Governments at all levels shall take measures to prevent unfair competition and create a favorable environment and conditions for fair competition.

The State Council has established a coordination mechanism for anti unfair competition work, studied and decided on major policies to combat unfair competition, and coordinated the handling of major issues related to maintaining market competition order.

Article 4: The departments of the people's governments at or above the county level responsible for the administration of industry and commerce shall investigate and punish acts of unfair competition; If laws and administrative regulations stipulate that other departments shall investigate and deal with it, their provisions shall be followed.

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

State organs and their staff shall not support or cover up acts of unfair competition.

Industry organizations should strengthen industry self-discipline, guide and regulate members to compete in accordance with the law, and maintain market competition order.

Chapter 2 Unfair Competition Behavior

Article 6: Operators shall not engage in the following confusing behaviors, which may lead people to mistakenly believe that they are other people's goods or have specific connections with others:

（1） Unauthorized use of product names, packaging, decorations, and other similar or identical signs that have a certain impact on others;

（2） Unauthorized use of enterprise names (including abbreviations, trade names, etc.), social organization names (including abbreviations, etc.), and personal names (including pen names, stage names, translated names, etc.) that have a certain influence on others;

（3） Unauthorized use of domain names, website names, web pages, etc. that have a certain impact on others;

（4） Other confusing behaviors that can lead people to mistake them for other people's products or have specific connections with others.

Article 7: Operators shall not use property or other means to bribe the following units or individuals in order to seek trading opportunities or competitive advantages:

（1） The staff of the counterparty in the transaction;

（2） The unit or individual entrusted by the counterparty to handle relevant affairs;

（3） Units or individuals who use their power or influence to influence transactions.

Operators may pay discounts to counterparties or commissions to intermediaries in an explicit manner during trading activities. Operators who pay discounts to counterparties and commissions to intermediaries shall truthfully account for them. Operators who accept discounts and commissions should also truthfully account for them.

If the staff of the operator engage in bribery, it shall be deemed as the behavior of the operator; However, unless the operator has evidence to prove that the employee's behavior is unrelated to seeking trading opportunities or competitive advantages for the operator.

Article 8: Operators shall not make false or misleading commercial advertisements about the performance, functionality, quality, sales status, user evaluations, or honors of their products, in order to deceive or mislead consumers.

Operators shall not assist other operators in conducting false or misleading commercial propaganda through organizing false transactions or other means.

Article 9: Operators shall not engage in the following acts that infringe on trade secrets:

（1） Obtaining the trade secrets of the rights holder through theft, bribery, fraud, coercion, or other improper means;

（2） Disclosing, using, or allowing others to use the trade secrets of the rights holder obtained through the aforementioned means;

（3） Disclosing, using, or allowing others to use the trade secrets they hold in violation of the agreement or the requirement of the rights holder to keep the trade secrets confidential.

If a third party knowingly or should have known that an employee, former employee, or other unit or individual of the right holder of a trade secret commits the illegal acts listed in the preceding paragraph and still obtains, discloses, uses, or allows others to use the trade secret, it shall be deemed as an infringement of the trade secret.

The trade secrets referred to in this law refer to technical and business information that is not known to the public, has commercial value, and has been protected by corresponding confidentiality measures taken by the rights holder.

Article 10: Operators engaged in prize sales shall not have the following situations:

（1） The types of prizes set up, redemption conditions, bonus amounts, prizes, and other prize sales information are unclear, which affects prize redemption;

（2） Using deceptive methods such as falsely claiming to have prizes or intentionally allowing designated individuals to win prizes for prize sales;

（3） Lottery style sales with prizes, with the highest prize amount exceeding 50000 yuan.

Article 11: Operators shall not fabricate or disseminate false or misleading information, which may damage the business reputation and product reputation of competitors.

Article 12: Operators who engage in production and business activities through the internet shall comply with the provisions of this Law.

Operators shall not use technological means to interfere with or disrupt the normal operation of network products or services lawfully provided by other operators by influencing user choices or other means

（1） Without the consent of other operators, inserting links or forcing target redirection in their legally provided network products or services;

（2） Misleading, deceiving, forcing users to modify, shut down, or uninstall network products or services legally provided by other operators;

（3） Malicious implementation of incompatibility with network products or services lawfully provided by other operators;

（4） Other behaviors that hinder or disrupt the normal operation of network products or services lawfully provided by other operators.

Chapter 3 Investigation into Suspected Unfair Competition Practices

Article 13: Supervision and inspection departments may take the following measures to investigate suspected acts of unfair competition:

（1） Entering business premises suspected of engaging in unfair competition for inspection;

（2） Inquire with the investigated operators, stakeholders, and other relevant units or individuals, requesting them to explain the relevant situation or provide other information related to the investigated behavior;

（3） Querying, copying agreements, books, documents, files, records, business correspondence, and other materials related to suspected unfair competition practices;

（4） Sealing up, impounding, and seizing property related to suspected unfair competition behavior;

（5） Retrieve the bank accounts of operators suspected of engaging in unfair competition practices.

The measures specified in the preceding paragraph shall be reported in writing to the main person in charge of the supervision and inspection department and approved. The measures stipulated in the fourth and fifth items of the preceding paragraph shall be reported in writing to the main person in charge of the supervision and inspection department of the people's government at or above the city level, and approved.

The supervisory and inspection departments investigating suspected unfair competition behavior shall comply with the provisions of the Administrative Compulsory Law of the People's Republic of China and other relevant laws and administrative regulations, and shall promptly disclose the results of the investigation to the public.

Article 14: When the supervisory and inspection departments investigate suspected unfair competition behavior, the investigated operators, stakeholders, and other relevant units or individuals shall truthfully provide relevant information or situations.

Article 15: The supervisory and inspection departments and their staff shall have the obligation to keep confidential any trade secrets known during the investigation process.

Article 16: Any unit or individual has the right to report suspected acts of unfair competition to the supervisory and inspection department. Upon receiving the report, the supervisory and inspection department shall handle it in a timely manner in accordance with the law.

The supervisory and inspection departments shall publicly disclose the telephone number, mailbox or email address for accepting reports to the society, and keep confidential the informants. For real name reporting and providing relevant facts and evidence, the supervisory and inspection department shall inform the reporter of the handling results.

Chapter 4 Legal Liability

Article 17: If an operator violates the provisions of this Law and causes harm to others, they shall bear civil liability in accordance with the law.

If the legitimate rights and interests of the operator are harmed by unfair competition, they may file a lawsuit with the people's court.

The amount of compensation for operators who suffer damages due to unfair competition shall be determined based on the actual losses suffered as a result of the infringement; If the actual loss is difficult to calculate, it shall be determined based on the benefits obtained by the infringer due to the infringement. The compensation amount should also include the reasonable expenses paid by the operator to stop the infringement.

If the operator violates the provisions of Article 6 and Article 9 of this Law and the actual losses suffered by the right holder due to infringement or the benefits obtained by the infringer due to infringement are difficult to determine, the people's court shall award compensation of up to three million yuan to the right holder based on the circumstances of the infringement.

Article 18: If an operator violates the provisions of Article 6 of this Law by engaging in acts of confusion, the supervisory and inspection department shall order the cessation of the illegal act and confiscate the illegal goods. Those who engage in illegal business activities with a total amount of over 50000 yuan may be fined up to five times the amount of illegal business activities; If there is no illegal business amount or the illegal business amount is less than 50000 yuan, a fine of up to 250000 yuan may be imposed. If the circumstances are serious, the business license shall be revoked.

If the enterprise name registered by the operator violates the provisions of Article 6 of this Law, the name change registration shall be processed in a timely manner; Before the name change, the original enterprise registration authority shall replace its name with a unified social credit code.

Article 19: If an operator violates the provisions of Article 7 of this Law by bribing others, the supervisory and inspection department shall confiscate the illegal gains and impose a fine of not less than 100000 yuan but not more than 3 million yuan. If the circumstances are serious, the business license shall be revoked.

Article 20: If an operator violates the provisions of Article 8 of this Law by making false or misleading commercial advertisements for its goods, or by organizing false transactions or other means to assist other operators in making false or misleading commercial advertisements, the supervisory and inspection department shall order the cessation of the illegal act and impose a fine of not less than 200000 yuan but not more than 1 million yuan; For serious cases, a fine of not less than one million yuan but not more than two million yuan shall be imposed, and the business license may be revoked.

If the operator violates the provisions of Article 8 of this Law by publishing false advertisements, they shall be punished in accordance with the provisions of the Advertising Law of the People's Republic of China.

Article 21: If an operator violates the provisions of Article 9 of this Law by infringing on trade secrets, the supervisory and inspection department shall order the cessation of the illegal act and impose a fine of not less than 100000 yuan but not more than 500000 yuan; For serious cases, a fine of not less than 500000 yuan but not more than 3 million yuan shall be imposed.

Article 22: If an operator violates the provisions of Article 10 of this Law by engaging in prize sales, the supervisory and inspection department shall order the cessation of the illegal act and impose a fine of not less than 50000 yuan but not more than 500000 yuan.

Article 23: If an operator violates the provisions of Article 11 of this Law and damages the business reputation or product reputation of a competitor, the supervisory and inspection department shall order the cessation of the illegal act, eliminate the impact, and impose a fine of not less than 100000 yuan but not more than 500000 yuan; For serious cases, a fine of not less than 500000 yuan but not more than 3 million yuan shall be imposed.

Article 24: If an operator violates the provisions of Article 12 of this Law by obstructing or disrupting the normal operation of network products or services lawfully provided by other operators, the supervisory and inspection department shall order the cessation of the illegal act and impose a fine of not less than 100000 yuan but not more than 500000 yuan; For serious cases, a fine of not less than 500000 yuan but not more than 3 million yuan shall be imposed.

Article 25: If an operator engages in unfair competition in violation of the provisions of this Law and voluntarily eliminates or mitigates the harmful consequences of the illegal act, the administrative penalty shall be mitigated or reduced in accordance with the law; If the illegal act is minor and promptly corrected without causing harmful consequences, no administrative penalty shall be imposed.

Article 26: If an operator engages in unfair competition in violation of the provisions of this Law and is subject to administrative penalties, the supervisory and inspection department shall record it in the credit record and publicize it in accordance with relevant laws and administrative regulations.

Article 27: If an operator violates the provisions of this Law, they shall bear civil liability, administrative liability, and criminal liability. If their property is insufficient to pay, priority shall be given to using it to bear civil liability.

Article 28: Those who obstruct the supervision and inspection departments from fulfilling their duties in accordance with this Law, refuse or obstruct investigations, shall be ordered to make corrections by the supervision and inspection departments. Individuals may be fined up to 5000 yuan, and units may be fined up to 50000 yuan. Public security organs may also impose public security management penalties in accordance with the law.

Article 29: If a party is dissatisfied with the decision made by the supervisory and inspection department, they may apply for administrative reconsideration or file an administrative lawsuit in accordance with the law.

Article 30: If staff members of supervisory and inspection departments abuse their power, neglect their duties, engage in favoritism and fraud, or disclose trade secrets learned during the investigation process, they shall be punished in accordance with the law.

Article 31: Those who violate the provisions of this Law and commit crimes shall be held criminally responsible in accordance with the law.

Chapter 5 Supplementary Provisions

Article 32: This Law shall come into effect on January 1, 2018.