China issued Measures for the Supervision and Administration of Online Transactions

New Measures for the Supervision and Administration of Online Transactions were presented by the State Administration for Market Regulation of China (the SAMR) on March 15 during the World’s Consumer Rights Day gala, broadcasted by the CCTV. The Measures are dedicated to provide more details on the implementation of China’s E-commerce Law, with the purpose to enforce regulation of internet transactions in order to guarantee legal interests of all parties, to accelerate healthy and sustainable development of digital economy.

The Measures declare that while regulating online transactions the authorities will respect the principles of cautious tolerance and encouraging innovations. All transaction parties are required to respect the Anti-Unfair Competition Law of China and not to disturb market competition or to harm interests of other undertakings or consumers.

The main responsibilities of parties include to provide true and complete information on business entities, goods and services, transaction terms and conditions etc. E.g. it is prohibited to mislead consumers by publishing false reviews, false announcements of short supplies or false click-through rates. The parties should not conduct tied selling unless explicitly authorized by a consumer. The Measures state which sellers must register as market entity and which are exempted. The document also enforces the protection of personal data – they must be collected upon voluntarily consent of user, with respect to the principles of lawfulness, fairness, and necessity, with clearly stated purpose, method, and scope of use.

A separate chapter indicates the obligations of online platform operators. Platform operators are defined as providers of online space for transaction, communication of parties and publication of relevant information. According to the Measures, social e-commerce and live streaming platforms also fall under that scope. Operators’ responsibilities include to control the publication and to verify parties’ information, to ensure timely access to user agreements, to respect data storage terms etc. At the backdrop of widespread ‘either-or’ practice, the Measures do not allow operators to impose unreasonable restrictions, such as to prohibit to use a competitive platform or platforms at risk of lowing search rankings, putting goods ‘off shelves’, limiting business activity, shielding online shops or raising fees; to prohibit to choose delivery service and other service providers at own disposal etc.

Platform operators are also obliged to provide any necessary information to relevant government bodies upon its request. While conducting probes or investigations, authorities may request the relevant data, including the details of parties’, goods and services, as well as history of payment, delivery, returns and after sale service. A platform must cooperate and use technical means to identify any violations. In the course of investigation, authorities are entitled to access any contracts, receipts, accountant books, digital data and other materials, related to the transaction in question. The result of digital monitoring conducted by a platform are a sufficient proof to impose administrative penalty.

The new Measures come into force on May 1 and repeal the former Measures for the Administration of Online Transactions promulgated in 2014. Failure to comply with the Measure may entail criminal liability.