China considers draft law revision to stem unfair competition

The draft revision, the first since the law came into force in 1993, was given a first reading at a three-day bimonthly session of the National People's Congress (NPC) Standing Committee, which opened Wednesday.

As the market economy has evolved and new business models have emerged, some of the law's existing clauses do not properly address unfair competition, Zhang Mao, head of the State Administration for Industry and Commerce, told lawmakers.

The draft under consideration expands the scope of unfair competition to cover commercial bribery, false commercial propaganda, tie-in sales without buyer consent, and deceitful prize allocation, according to the draft.

It stipulated that operators can not use the names, branding or titles of established entities.

Bribery or influence to affect the outcome of a deal is banned, according to the draft.

The draft in particular stipulates that malicious activity on the Internet used to coerce buyers or disturb other businesses is also banned.

The banned activity includes misleading, cheating or forcing users to "modify, close or unload" products or services, the draft said.

It also includes products or services that are maliciously designed to not be compatible with other products or services, it noted.

The draft also stated that any activity that seriously disturbs competition order but is not currently covered by laws or regulations should be reported to the State Council, according to the draft.

The State Council will establish a coordination task force tasked with studying major policies against unfair competition.

Violators could face fines up to 3 million yuan (about $436,170) or have their business licenses revoked, it said, adding that they could also face criminal charges or have their violations recorded in a credit record system.