Interpretation of the Newly revised Anti-Unfair Competition Law and Key Points of Concern in Enterprise Practice
Recently, the revision of the Anti-Unfair Competition Law of the People's Republic of China (hereinafter referred to as the "Anti-Law") has drawn widespread attention from all sectors of society. This revision not only optimizes and supplements the existing legal provisions, but also reflects a significant evolution in China's regulatory thinking in the field of market economy regulation, especially in addressing new types of competitive behaviors under new business forms. The revision of the law aims to provide a legal basis for regulating new types of competitive behaviors, increase the cost of violations, clarify the responsible subjects, and adjust the law enforcement standards. If enterprises fail to deeply understand and promptly respond to these changes, they will face unprecedented compliance risks.
Below, we will conduct an in-depth interpretation of the core provisions of this revision and, in light of practical scenarios, put forward specific compliance concerns.
I. Application of "General Provisions" and Exploration of the Boundaries of Administrative Law Enforcement
Article 2 of the Anti-Narcotics Law, as a "general provision", generally stipulates that business operators should follow the principles of voluntariness, equality, fairness and good faith, and abide by the law and business ethics. In past administrative law enforcement practices, Article 2, as a principle-based declaration, has long remained in a "dormant" state due to the lack of specific legal responsibilities and penalty measures. Article 38 of the Administrative Penalty Law stipulates that "an administrative penalty is invalid if it has no basis or the implementing entity does not have the qualification of an administrative subject" [1]. Therefore, administrative organs cannot directly apply the principle-based provisions of Article 2 to investigate and deal with unfair competition behaviors.
Although this revision does not directly modify Article 2, recent law enforcement practices, especially the two typical cases announced by the State Administration for Market Regulation (" SAMAC ") on June 27, 2025 [2], have sent a strong signal that law enforcement agencies are attempting to "activate" this clause.
Case Sharing
(1) The Market Supervision and Administration Bureau of Zhenjiang City, Jiangsu Province, investigated and dealt with the case of Zhenjiang Weifeng Computer Software Co., Ltd. using network technology to carry out unfair competition
Case introduction: Zhenjiang Weifeng Computer Software Co., LTD. (" the party concerned ") independently developed and sold software such as "w Inventory Assistant" and "w Distribution Assistant", which can provide services such as "one-click moving" and "one-click consignment" of product information data. These software have been launched and operated in the service markets of different e-commerce platforms and charge software usage fees. Without the consent of the data source e-commerce platform and the operators within the platform, the party concerned used the software to crawl the product information data of the shopping platform and uploaded it to other competing shopping platforms with one click. This constitutes a substantive substitution of the data source platform and the operators within the platform, hindering and disrupting the normal operation of the network products or services legally provided by other operators. It has disrupted the order of the Internet market and infringed upon the legitimate rights and interests of other platform operators.
The party's actions violated Article 2 and Paragraph 2, Subparagraph (4) of Article 12 of the Anti-Unfair Competition Law of the People's Republic of China. According to Article 24 of this law, the party was ordered to cease the illegal act and, considering the circumstances of the case, was fined 530,000 yuan.
(2) The Market Supervision and Administration Bureau of Gongshu District, Hangzhou City, Zhejiang Province, investigated and dealt with the case where Hangzhou Gubang Network Technology Co., Ltd. obstructed or damaged the normal operation of network products or services lawfully provided by other operators
Case introduction: Hangzhou Gubang Network Technology Co., LTD. (" the party concerned ") is a brand maintenance agency. Its main business includes controlling prices in stores selling related brand products on e-commerce platforms and maintaining the brand's price system. In order to achieve the goal of price control, the party concerned frequently purchased goods in bulk and returned them to stores that did not adjust prices as required through technical means, resulting in economic losses such as freight losses and overstocked goods for the relevant stores. At the same time, according to the rules of e-commerce platforms, frequent bulk purchases and returns of goods will have negative impacts on the relevant stores, such as reduced search weight, fewer transaction opportunities, and a lower business reputation, forcing the relevant stores to modify product prices or remove product links as required by the parties involved.
The actions of the party concerned violated Article 16, Paragraph (3) of the Interim Provisions on Anti-Unfair Competition on the Internet and Article 2 and Paragraph (4) of Article 12 of the Anti-Unfair Competition Law of the People's Republic of China. According to Article 37 of the Interim Provisions on Anti-Unfair Competition on the Internet and Article 24 of the Anti-Unfair Competition Law of the People's Republic of China, Order the party concerned to immediately cease the illegal act and impose a fine of 200,000 yuan based on the circumstances of the case. The law enforcers' innovative steps closely follow the new situation and changes in the market, and they have innovatively adopted a combined application model of "Article 2 + other specific provisions". The logic lies in the fact that when a new type of competitive behavior that is not explicitly listed in the legal provisions but violates business ethics emerges, the law enforcement agency can first determine the "unfairness" of such behavior based on Article 2, and then classify it within the category of the closest specific clause with clear penalty provisions (such as false advertising, commercial defamation, etc.) for punishment. This "detour" approach to law enforcement ingeniously resolves the legal issue of the basis for punishment, significantly enhancing the applicability and deterrent effect of the law.
Practical Impact and Risk Warning
The application of the "general provisions" increases the uncertainty of administrative law enforcement: With the continuous emergence of benchmark cases and the in-depth exploration of legal principles, in the future, it is not ruled out that law enforcement agencies will promote the separate application of the second article in specific circumstances and use it as an independent basis for administrative penalties. Many "grey area" innovations or business models of enterprises, even if not explicitly prohibited by existing legal provisions, may still fall under the administrative supervision scope of Article 2 due to their "unfair" or "dishonest" nature. This makes it more difficult to predict compliance risks.
Practical compliance suggestions
1. Establish a "legitimacy" file for business decisions: For innovative business models that may cause controversy, enterprises should proactively and comprehensively record their business logic, technical principles (algorithm Outlines), as well as their positive impacts on market competition and consumer welfare, in order to prove the legitimacy of their actions in possible future administrative investigations.
2. Change your mindset and actively use "general terms" as an "offensive weapon" : When encountering competitors' attacks by new and unfair means, enterprises can change their mindset. Even if the other party's behavior does not fully fall under any specific terms, they can proactively report to the law enforcement authorities based on the principle provisions of the second article and attempt to seek protection from the law enforcement authorities. For acts that have been confirmed by judicial authorities as violating the "general provisions", administrative authorities may also be required to impose administrative penalties on them in accordance with the law.
Ii. Practical Difficulties with the Keywords "Commercial confusion" and "Adverse Effects"
The revised Article 7 has made significant adjustments in the determination of "commercial confusion" behavior, especially in the context of Internet search keywords. The core change lies in the confusion of key words, and the restrictive condition of "having a certain influence" is no longer there. Under the framework of the old law, if a right holder wanted to claim that the act of others setting their brand as a search keyword constituted unfair competition, they had to first expend a great deal of effort to prove that their product names, business names, etc. had "a certain degree of influence". This was an extremely high threshold of proof for start-ups, small and medium-sized enterprises or new products entering the market.
This revision directly removes this threshold, meaning that to a certain extent, almost all commercial identifiers of operators may be protected. This change aims to protect the initial goodwill of all market entities more fairly and prevent others from making improper profits through "free-riding".
However, new problems arise: How to define and handle search keywords involving the label of "adverse effects"? According to authoritative interpretations such as "Understanding and Application of the Interpretation on Several Issues Concerning the Application of the Anti-Unfair Competition Law", "based on the method of systematic interpretation, for marks that violate the substantive requirements of trademark registration and may harm public interests and thus cannot be used or registered, None of them can be included in the protection scope of the Anti-Unfair Competition Law by becoming a mark with certain influence through use. [3] This gives rise to a complex issue of analogical application of law:
Scenario assumption: If a brand's name is highly associated with words like "inferior", "scam" or "borderline" on the Internet due to product quality issues or negative news, it is likely to create a "negative impact". Can competitors use the brand name when setting search keywords and promote their products as "better alternatives"?
Legal predicament: On the one hand, this seems to be taking advantage of others' commercial identifications; On the other hand, the logo itself already has a negative "adverse impact". Would protecting such logos make the Anti-Monopoly Law violate its legislative purpose of safeguarding the healthy development of the socialist market economy?
Practical Impact and Risk Warning
The burden of proof for plaintiffs has been significantly reduced: The threshold for brand owners to protect their rights has been greatly lowered, and it will be easier to file lawsuits or complaints against competitors for setting keywords.
"Adverse effects" have become a new focus of litigation defense: The defendant may defend on the grounds that the plaintiff's brand has "adverse effects", which will become a new and complex point of contention in future judicial practice.
Practical compliance suggestions
1. Conduct a comprehensive review and update of the keyword library: The business department should immediately collaborate with the legal department to conduct a comprehensive review of the existing keyword advertising placement lists on search engines and e-commerce platforms.
2. Pay attention to the trends of judicial precedents: Closely follow the latest cases of courts and law enforcement agencies regarding the protection boundaries of "adverse impact" labels, understand the standards of judicial decisions, and dynamically adjust the advertising placement strategies of enterprises accordingly.
Iii. Personal Liability and Penalties for Commercial Bribery
Standard: Penetrating supervision and accountability to individuals
The core changes in Article 8 of the revised Anti-Bribery Law regarding commercial bribery are as follows: First, it clearly includes the bribe-accepting party within the scope of prohibition; second, it significantly increases the penalty amount and clarifies individual responsibilities. In the past, legal provisions mainly prohibited business operators from offering bribes to "counterparty units or individuals in transactions", but the new law explicitly prohibits "units and individuals from accepting bribes". This has officially established a "two-way" and "penetrating" crackdown on commercial bribery at the legislative level, making the coverage of legal responsibilities broader.
What is more intimidating is the change in the liability clause:
The penalty amount has soared: The upper limit of fines for bribing units has been raised from 3 million yuan to 5 million yuan.
The new law clearly stipulates that for the illegal acts of an entity, a fine of up to 1 million yuan can be imposed on its "principal person in charge, directly responsible person in charge and other directly responsible personnel".
The law does not provide clear definition standards for terms such as "principal person in charge" and "direct person responsible". In practice, this may include: company executives who approve the bribery budget, department managers who issue instructions, salespeople who specifically carry out the bribery behavior, and even financial personnel who handle the related funds. The law grants law enforcement agencies considerable discretionary power.
Practical Impact and Risk Warning
The risk of internal accountability intensifies: Once a company is found to have engaged in commercial bribery, law enforcement agencies may require the company to identify internal responsible persons, which will trigger complex issues of responsibility division.
Personal risks for senior executives: Once senior executives are abandoned by the company, they may immediately shift from a community of shared interests to a party of conflict with the company. How to balance the interests between the company and its "abandoned subsidiaries" has become an important consideration for the company.
Practical compliance suggestions
1. Upgrade internal anti-corruption and anti-bribery systems: Enterprises should revise their internal "Code of Conduct" or "Compliance Manual", explicitly prohibiting any form of commercial bribery and clearly defining the approval process and amount limits for gifts, hospitality, academic conferences, etc.
2. Strengthen compliance training for all staff and at different levels: For high-risk positions, conduct specialized and scenario-based anti-commercial bribery training to ensure they clearly understand the legal red lines and the legal consequences they will face. Keep training records, which may be useful when applying for reduced penalties in the future.
Ⅳ. Refined revision of false advertising and "all-round" supervision of marketing behaviors
In-depth Interpretation
The revision of Article 9 of the Anti-Publicity Law regarding false advertising reflects the deepening of supervision towards both the "comprehensive" and "refined" dimensions.
The scope has been expanded: Not only is false promotion of one's own products prohibited, but also behaviors such as "fictitious transactions" and "false reviews" (like "order manipulation" and "positive review manipulation" in the e-commerce field) and "helping others conduct false promotion" (such as "online water army" companies) are clearly included in the regulatory scope.
The threshold for penalties has been lowered: The most significant change is the removal of the previous penalty threshold of "a fine of between 200,000 yuan and 1 million yuan", and its replacement with "a fine of less than 1 million yuan" [4].
Practical Impact and Risk Warning
Marketing content is facing the strictest scrutiny in history: any external promotional materials of enterprises, from official website introductions, product manuals to social media tweets and scripts, will become potential enforcement targets.
New media marketing has become a high-risk area: Due to its fast dissemination speed, wide influence range and flexible content form, marketing activities on new media platforms such as social media, short videos and live streaming will become the top priority of regulation.
Practical compliance suggestions
1. Establish a "cross-review system" for marketing content: Set up a content release process consisting of "initial review by the business department, final review by the legal/compliance department, and internal cross-review". Where conditions permit, a cross-review mechanism involving multiple age groups, multiple regional cultural backgrounds, and both men and women should be established.
2. Develop compliance guidelines for new media: For channels such as live streaming, short videos, and social media, formulate detailed content compliance guidelines, including prohibited absolute terms and sensitive words, scientific basis necessary for functional promotion, and requirements for marking the sources of cited data and cases, etc. 3. Standardize the management of "Internet celebrity" cooperation: When cooperating with external Internet celebrities, the contract must clearly stipulate the compliance obligations and responsibility terms of their promotional content, and require them to provide the content for enterprise review before release.
V. Enforcement Challenges in "Selling Below Cost" : The Clarification of Platform Responsibilities and the Fog of "Cost"
The newly added Article 14 directly targets a major chronic problem in the current digital economy: Large platforms, taking advantage of their dominant position, force or covertly force operators within the platform to sell at prices lower than the cost. This usually occurs during large-scale promotional events. To attract traffic and increase transaction volume, the platform will require merchants to participate in activities such as "50% off the entire store". If merchants do not participate, they may face adverse consequences such as search ranking reduction and traffic restrictions. The positive significance of this clause lies in that it provides, for the first time, at the legal level, the operators within the platform a weapon to counter the platform's unreasonable low-price demands. However, its enforcement and application face two core challenges:
1. How is "cost" determined? The law does not provide a specific accounting standard for "cost". Is it the production cost of the commodity? Should various taxes and fees be excluded from the purchase cost? Or is it the comprehensive cost that includes all the expenses of the enterprise such as operation, marketing, logistics, and human resources? The cost structure varies greatly among enterprises of different industries and scales. This leaves law enforcement agencies lacking a unified and clear yardstick when determining whether it is "below cost".
2. How can "coercion or disguised coercion" be proved? Platforms often do not force merchants through written contracts, but rather achieve this through more covert technical means such as algorithms, traffic distribution rules, and activity thresholds. It is extremely difficult for merchants to produce evidence to prove that they were "forced".
Practical Impact and Risk Warning
The compliance costs for platform enterprises have significantly increased: When designing large-scale promotional activities, platforms must be more cautious and can no longer simply require merchants to lower prices or use "coupons" in a one-size-fits-all manner.
The legal risks are highly uncertain: Due to the ambiguous criteria for determining "cost" and "coercion", any large-scale promotional activities of platform enterprises may face the risk of being investigated.
Practical compliance suggestions
1. Compliance transformation of promotional activity design: The platform should transform mandatory major promotion activities into a model where merchants "voluntarily sign up and can choose to participate". Clearly define the voluntariness of merchants' participation in the activity rules and retain the background records of merchants' independent decisions on whether to participate.
2. Establish a "cost" appeal and evaluation mechanism: The platform can explore the establishment of an internal mechanism that allows merchants to file appeals when they believe that the platform's promotional requirements are lower than their costs, and the platform will then conduct evaluations and adjustments. This can not only resolve conflicts but also serve as evidence of compliance.
Vi. Other revision highlights worthy of high attention
Prize Sales (Article 11) : It is explicitly prohibited for business operators to change the conditions for claiming prizes without justifiable reasons after the start of promotional activities. This article is in line with Article 13 of the Interim Provisions on Regulating Promotional Activities, which states that "before conducting a prize sale, the operator The types of awards, participation conditions, participation methods, draw times, draw methods, prize amounts or prize prices, prize names, prize types, prize quantities or winning probabilities, redemption times, redemption conditions, redemption methods, prize delivery methods, conditions for forfeiting prizes, the contact information of the organizer, etc. should be clearly announced. No changes or additional conditions should be imposed. It shall not affect the redemption of prizes, except for those that are beneficial to consumers. There is inconsistency. There is a difference between "justifiable reasons" and "benefits to consumers". How to apply it remains to be clarified by the cases of law enforcement agencies.
Commercial defamation (Article 12) : The scope of regulation has been expanded from "damaging competitors" to "damaging the business reputation and product reputation of other operators". This means that enterprises not only cannot defame their direct competitors, but also cannot defame their partners and service providers in the supply chain, or even other companies from other industries. The scope of the plaintiffs has been greatly broadened.
Dominant position (Article 15) : For the first time, the concept of "relative dominant position" was explicitly introduced in the Anti-Monopoly Law, prohibiting operators with a dominant position from engaging in unfair trading practices. This complements the "dominant market position" in the Anti-Monopoly Law, with a lower regulatory threshold. It is expected that in the future, supervision over large platforms and industry leaders will be stricter.
Extraterritorial effect (Article 40) : It is clearly stipulated that if an act outside China has an impact on the market competition order within the territory of China, this Law shall also apply. This demonstrates the extraterritorial jurisdiction and institutional confidence of Chinese law. For multinational companies with significant business in China, their global business activities all need to take into account the compliance requirements of China's Anti-Law.
Vii. Conclusion
The revision of the Anti-Unfair Competition Law this time represents a systematic and all-round regulatory upgrade. Facing stricter regulatory standards, lower law enforcement thresholds and heavier legal responsibilities, all enterprises operating in China should abandon the mentality of taking chances and regard compliance as the lifeline for survival and development. We suggest that enterprises take immediate action.
1. Conduct a comprehensive internal compliance "check-up" : In accordance with the new law, systematically review all aspects of the company's marketing strategy, channel management, supplier relations, internal control, etc.
2. Establish or upgrade a dynamic compliance system: Compliance is not a one-off project but an ongoing process. Enterprises need to establish a regular mechanism that can dynamically track legislation, law enforcement and judicial practices, and can transform the latest requirements into internal behavioral norms.
3. Integrate compliance culture into the very core of the enterprise: Through top-level advocacy and all-staff training, make the concept of "fair competition and honest operation" deeply rooted in people's hearts and become the voluntary action of every employee.
The changes in the law bring both challenges and opportunities. A fairer, more transparent and predictable market environment will ultimately benefit those honest enterprises that truly rely on innovation and quality services to win the competition.
Disclaimer: The above analysis is merely an interpretation and exchange based on publicly available information and does not constitute any form of legal advice. For specific legal issues, it is recommended to consult a professional lawyer.
Footnote
[1]. Wang Ruihe (Ed.), Interpretation of the Anti-Unfair Competition Law of the People's Republic of China, Law Press, 1st Edition, 2018, pp. 6-7. However, since this Law does not set corresponding penalties for violations of the "general provisions", in accordance with the provision of Article 3 of the "Administrative Penalty Law" that "administrative penalties without legal basis or not in compliance with legal procedures are invalid", administrative organs cannot apply the "general provisions" to detect unfair competition behaviors.
[2]. See the article "The State Administration for Market Regulation Publishes Five Typical Cases of Unfair Competition on the Internet".
[3]. Lin Guanghai, Li Jian, Tong Shu, People's Justice, No. 31, 2022. See the article "Understanding and Application of the Interpretation on Several Issues Concerning the Application of the Anti-Unfair Competition Law".
[4]. The boundary between "advertising" and "commercial promotion" remains a difficult point in practice and will not be elaborated on here.
