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5 Changes to Anti-commercial Bribery in the New AUCL

2018-11-13 11:10 Tuesday


On November 4, 2017, the thirtieth meeting of the 12th Standing Committee of the National People's Congress voted to adopt the revised Anti-unfair Competition Law, which came into effect on January 1, 2018.

The recent law constitutes the first revision of the AUCL since it was enacted in 1993. A major revision has been made to the anti-business bribery section, which is expected to further escalate China's ongoing anti-corruption campaign. In this article, we will review five significant changes to the anti-bribery provisions in Anti-unfair Competition Law:

New AUCL

1. Definition of Commercial Bribery

1993 law: Although the provisional regulations issued by the State Administration of Industry and Commerce contain provisions on "commercial bribery", they are only limited to the category of "purchase or sale of goods".

New law: Changes the purpose of commercial bribery from "buying or selling goods" to "acquiring trading opportunity or competitive advantage", and provides a broader definition for the scope of commercial bribery.

2. Employer's vicarious liability

1993 law: The old law does not address the issue.

New law: Reaffirms the employer's vicarious liability in the provisional regulations, that is, that "when the employees of an enterprise participate in commercial bribery, their behaviors will also be regarded as those of the enterprise operators; Except, however, where the operator has evidences that the employee's behavior has nothing to do with the business opportunity or competitive advantage for the operator ".

3. Penalties and compensation measures

1993 law: Fines range from 10,000 to 200,000 RMB (about 1,500 - 30,000 U.S. dollars) and the illegal earnings are confiscated.

New law: Fines have been increased to 100,000 - 3 million RMB (about 15,000 to 450,000 U.S. dollars) and illegal earnings are confiscated. Furthermore, the business license shall be revoked in the case of serious violations. In addition, the amendment establishes different levels punishment for various illegal acts.

4. Investigatory Powers

1993 aw: Investigative authorities only have the right to ask the relevant individuals and organizations, make inquiries, and copy relevant materials.

New law: Authorities now have the power to seize property suspected of being related to illegal behavior, and monitor the bank accounts for those suspected of commercial bribery. Before the above measures are taken, the investigative authority needs to submit a written application to the superior department at the municipal level or above and obtain permission.

5. Punishment for Interference with Supervision and Investigation

1993 law: None.

New law: Penalties for any acts that interfere with or undermine supervision and investigation shall be imposed, and the penalties shall be capped at 5,000 RMB for individuals and 50,000 RMB for companies.  Those involved may be punished by public security organs.

The revised law gives a more detailed and comprehensive definition of commercial bribery, while also stepping up efforts to crack down on illegal practices. Companies with a presence in China will face more frequent dawn raids and stiffer penalties.

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