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SAMR's New Draft on Whistle-blowers

10.12.2019
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The State Administration for Market Regulation (SAMR) posted a Draft - "Major illegal acts in the field of market supervision Interim Measures for Reporting Rewards (Revised Draft for Comment)" on its website for public comment.


The Draft is based upon the rules and regulations passed previously by the SAMR itself and the variety of governing bodies, that preceded SAMR before the reform in 2018. It proposes to establish a new system that will provide financial incentives to whistle-blowers, to report violations of laws within SAMR's jurisdiction, including antitrust offences. In the new Draft, the SAMR has put forward detailed procedures for whistle-blowers to report illegal activity.


The goal of SAMR is to expand coverage of prior rules, increase efficiency in investigations and reduce administrative costs, through providing incentives to employees, and setting out detailed and 'easy-to-follow' procedure. The Draft Reward Measures are meant to apply only to reports of "significant illegal conduct," which is defined as conduct which amounts to a crime or which could be sanctioned by ordering the suspension of operations, revocation of permits or business licence, or "fines of relatively large amounts." 


If the measures proposed in the Draft are passed, we can expect to see an increase in pressure and scrutiny put on companies to comply and self-regulate in China, due to the higher risks of the illegal schemes being uncovered from within the organization. This can be seen as a step towards better regulation within the companies, which will hopefully become a 'good habit' in the market.