The State Administration for Market Regulation (SAMR) of China is soliciting public opinion on a draft amendment to the Anti-Unfair Competition Law, which focuses mainly on the digital economy, reported China Daily.
With the revisions, the country aims to improve anti-unfair competition rules in the digital economy and to regulate and govern behavior that disrupts fair competition during the development of the new economy, new formats, and new business models in the country, the SAMR said.
The Chinese Anti-Unfair Competition Law was adopted in 1993 and has already been edited twice (in 2017 and 2019) - unlike the Antimonopoly Law, the amendments to which were first adopted only this year, says Maria Belyaeva, expert of the BRICS Competition Centre.
This revision is aimed at adapting the law to the new conditions, when new forms of business activities are developing rapidly and new types of unfair competition are emerging, carried out with the help of data, algorithms, rules of Internet platforms, etc.
Work on the preparation of the amendments began last December — in the process, the market regulator sought advice from the scientific community and business representatives.
The regulator added that the draft also lists new forms of unfair competition — in particular, those related to the acquisition and use of data and the use of algorithms. It clarifies the signs and factors that should be taken into account when identifying various unfair practices: false advertising, misleading the buyer, breaches of trade secrets.
"Separately, the enforcement of exclusive cooperation, or the so-called “either-or” choice where the platform prohibits sellers from offering their products and services on competing platforms, is noted. The phenomenon has spread widely in China with the development of the digital economy, but, according to the regulator, it has generally been brought under control - with the help of large fines imposed on Alibaba and Meituan, as well as numerous warnings and active advocacy work by the authorities,"
says Maria Belyaeva.
The expert notes that the draft introduces the term "relative dominance" — it is defined as an entity's advantage in technology, capital, number of users, credibility in the industry, etc., and the dependence of other business entities' transactional opportunities on it.
"This will expand enforcement opportunities for the regulator without the need to prove dominant position,"
If adopted, an important update will also be a stiffening of penalties - both increasing the old and introducing new penalties. For example, for unfair competition with the help of technology — in the case of aggravating circumstances and especially serious damage — a company can be fined up to 5% of annual turnover.
Now the draft amendments are presented for public consultation - they will continue until December 22.