2025/07/02

China has enacted a significant revision to its Anti-Unfair Competition Law (AUCL), effective October 15, 2025

 


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.

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