China has enacted a significant revision to its Anti-Unfair
Competition Law (AUCL), effective October 15, 2025. This update aims to address the complexities
of China's digital economy and foster fair market competition. Notably, the
revised AUCL includes an extraterritoriality clause, meaning foreign companies
engaging in activities outside of China can be subject to the law if their
conduct disrupts the Chinese market or harms Chinese businesses or consumers.
This underlines the importance of the AUCL compliance for all entities interacting
with the Chinese market.
The revised
AUCL significantly enhances brand protection by expanding the definition
of "confusion" to encompass the unauthorized use of trademarks and
trade names as hidden search keywords. Furthermore,
it introduces robust prohibitions against commercial defamation, including fabricating
false information that harms competitor's reputations and holding liable those who
instigate such actions. These amendments aim to address contemporary challenges
in online marketing and advertising practices.
The AUCL introduces significant provisions aimed at
regulating data practices and platform behavior within the digital
economy. Firstly, it explicitly
prohibits unauthorized data acquisition and use, such as scraping, aligning
with broader efforts to clarify commercial data rights. Secondly, the law
targets platform rule abuse by prohibiting operators from manipulating their rules
to orchestrate unfair practices like fake reviews or malicious returns. Lastly,
the AUCL addresses algorithm-based manipulation that disrupts competitors'
online products or services. These
provisions signal China's commitment to fostering a fairer and more transparent
digital economy.
The revised eCommerce regulations aim to foster a fairer
and more competitive digital marketplace.
Key changes include prohibiting platforms from forcing merchants into
below-cost selling, protecting SMEs from exploitative payment terms by larger
enterprises, and requiring platforms to establish robust internal rules and
mechanisms for addressing unfair competition. These measures seek to curb
destructive pricing practices and level the playing field for businesses of all
sizes.
The AUCL has been strengthened with increased penalties
for violations such as commercial bribery, trade secret infringement, and
digital unfair competition. Fines can now reach up to RMB 5 million, and key
individuals may face personal liability. The law clarifies that violators can
be subject to civil, administrative, and criminal penalties, prioritizing
victim compensation.
Notably, the AUCL now extends its jurisdiction to unfair
competition acts committed outside China if they negatively impact the Chinese
market or its participants.
The AUCL revision significantly modernizes its competition framework. This revision has broad implications for brand protection, data rights, eCommerce, and platform governance. While the AUCL establishes a general legal framework, specific rules and guidance from government agencies will ultimately dictate its practical application. Businesses operating in or with China should proactively review their practices, update compliance protocols, and prepare for stricter enforcement across both digital and traditional markets. Continuous vigilance and responsiveness to regulatory changes are crucial for ensuring full compliance.