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China Regulations – Interim Provisions on Prohibition of Unfair Online Competition

The State Administration for Market Regulation (SAMR) has recently announced the release of the "Interim Provisions on Prohibition of Unfair Online Competition" (hereinafter referred to as "the Provisions"), which will come into effect on September 1, 2024. This new regulation aims to establish clear guidelines for competitive behaviour in the online market, ensuring that market mechanisms operate efficiently and orderly under the rule of law. The Provisions are designed to guide digital technology to better empower and continuously enhance China's competitiveness.

Key Features of the Provisions

  • Encouragement of Innovation

One of the core tenets of the Provisions is to foster innovation within the digital economy. The regulation aims to protect the innovative achievements of enterprises, thereby promoting the maximum potential of innovation within the Internet industry. By safeguarding innovation, the Provisions ensure that businesses can thrive in a competitive environment that rewards creativity and technological advancement.

 

  • Regulation of Competition

In response to the new characteristics, trends, and requirements of China's digital economy, the Provisions refine the standards and regulatory requirements for various forms of unfair online competition. They delineate new manifestations of traditional unfair competition behaviours in the online environment, such as imitation, confusion, and false advertising, and highlight new types of unfair competition, including reverse fake reviews and illegal data acquisition. Additionally, the regulation includes a catch-all clause to provide a basis for regulating emerging problems and behaviours.

  • Strengthening Consumer Rights Protection

The Provisions address major concerns in online consumption, such as fake reviews, incentivized positive reviews, and practices that influence user choice, which infringe on consumer rights. By providing regulatory support for these issues, the Provisions aim to protect consumers in new online consumption scenarios and emerging business models, ensuring their rights are upheld.

  • Reinforcement of Platform Responsibilities

Given that platform enterprises possess vast amounts of data and connect numerous entities, they are both the focal point of unfair competition regulation and a critical node in collaborative regulation. The Provisions emphasize the responsibility of platform entities, urging them to enhance the management of competitive behaviours within their platforms. They also regulate the misuse of data algorithms to gain competitive advantages, ensuring fair play.

  • Optimization of Law Enforcement Procedures

The Provisions recognize the wide reach, cross-platform, and cross-regional nature of unfair online competition behaviours and make special provisions for supervision and inspection procedures accordingly. They establish an expert observer system to provide intellectual and technical support for resolving complex issues in cases of unfair online competition.

 

  • Clarification of Legal Responsibilities

The Provisions leverage the comprehensive framework of laws and regulations in the market regulation field, effectively linking the Anti-Unfair Competition Law, E-Commerce Law, Anti-Monopoly Law, and Administrative Penalty Law. They clarify the legal responsibilities for confiscation of illegal gains, enhancing the effectiveness of regulation.

 

Implementation and Enforcement

Set to take effect on September 1, 2024, the Provisions will be supported by enhanced training and guidance for local market regulation departments. The SAMR aims to ensure that unfair online competition behaviours are effectively regulated and addressed, protecting the legitimate rights and interests of operators and consumers alike. This will foster orderly competition and innovative development among various business entities, thereby contributing to the high-quality development of the digital economy through efficient anti-unfair competition law enforcement.

 

The introduction of the "Interim Provisions on Prohibition of Unfair Online Competition" by the SAMR marks a significant step forward in regulating the digital market in China. By setting clear guidelines and responsibilities, encouraging innovation, and protecting consumer rights, these Provisions aim to create a fair and competitive online marketplace. As these regulations come into effect, businesses and consumers can expect a more transparent and equitable digital economy.


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