Unfair Competition Laws and Regulations |
(Adopted at the
Third Session of the Standing Committee of the Eighth National
People's Congress on September 2, 1993. Promulgated by Order No. 10 of the
President of the People's Republic of China on September 2, 1993. and Effective
as of December 1, 1993)
Chapter
I General Provisions
Article
1 This Law is formulated with a view to
safeguarding the healthy development of the socialist market economy,
encouraging and protect fair competition, preventing acts of unfair
competition, and defending the lawful rights and interests of operators and
consumers.
Article
2 An operator shall, in transactions in the
market, follow the principle of voluntariness, equality, fairness, honesty and
credibility, and observe generally recognized business ethics.
"Unfair competition" in this Law refers to acts of operator which
contravene the provisions of this Law, damage the lawful rights and interests
of other operator, and disturb the socio-economic order.
"Operator" in this Law refers to a legal person or other economic
organization or individual engaging in the trading of goods or profit-making
services. ("Goods" mentioned hereinafter include services. )
Article
3 The People's Governments at various levels
shall adopt measures to prevent acts of unfair competition and create a
favorable environment and conditions for fair competition.
The administrative authorities for industry and commerce in the People' s
Governments above the county level shall supervise and inspect acts of unfair
competition. In respect of those acts which, according to the provisions of
various laws and administrative regulations, are subject to supervision and
inspection by other departments, these provisions shall be abided by.
Article
4 The state encourages, supports and protects all
organizations and individuals in carrying out social supervision over acts of
unfair competition.
Staff members of State organs shall not support or cover up acts of unfair
competition.
Chapter
II Acts of Unfair Competition
Article 5 An operator may not adopt the following unfair means to carry
to transactions in the market and cause damage to competitors:
(1) passing off the registered trademark of another person;
(2) using, without authorization, the name, packaging or decoration peculiar to
well-known goods or using a name, packaging or decoration similar to that of
well-known goods, so that his goods are confused with the well-known goods of
another person, causing buyers to mistake them for the well-known goods of the
other person;
(3) using, without authorization, the business name or personal name of the
other person on his own goods, leading people to mistake them for the goods of
the other person;
(4) forging or falsely using, on his goods, symbols of quality such as symbols
of certification and symbols of famous and high-quality goods, falsifying the
origin of his goods, and making false representations which are misleading as
to the quality of the goods.
Article
6 A public utility enterprise or any other
operator having monopolistic status according to law may not restrict others to
buying the goods of operators designated by it so as to exclude other operators
from competing fairly.
Article
7 Governments and their subordinate departments
may not abuse their administrative powers to restrict others to buying the
goods of operators designated by them and to restrict the lawful business
activities of other operators.
Governments and their subordinate departments shall not abuse their
administrative powers to restrict the entry of goods from other parts of the
country into the local market or the flow of local goods to markets in other
parts of the country.
Article
8 An operator may not practice bribery by using
money, gifts or other means to sell or buy goods. Where an operator secretly
pays a kickback to the other party, be it an entity or individual, without
accounting for it in the books, he shall be punished for offering a bribe;
where the other party, be it an entity or individual, secretly accepts a
kickback without accounting for it in the books, it or he shall be punished for
taking a bribe.
In the selling or buying of goods, an operator may express clearly his
intention to offer a discount to the other party and pay a commission to the
middleman. Where an operator gives a discount to the other party and pays a
commission to the middleman, he must enter the items in the books factually. An
operator accepting a discount or commission must enter it in the books
factually.
Article
9 An operator may not use advertisements or other
meas to give false, misleading publicity as to the quality, composition,
performance, use, manufacturer, useful life, origin, etc. , of the goods.
An advertisement operator shall not act as an agent for, or design, produce or
release advertisements contatning false representations of which he is
obviously aware or should be aware.
Article
10 An operator may not adopt the following means
to infringe business secrets:
(1) obtaining business secrets from the owners of rights by stealing, promising
of gain, resorting to coercion or other improper means;
(2) disclosing, using, or allowing others to use business secrets of the owners
of rights obtained by the means mentioned in the preceding item;
(3) disclosing, using or allowing others to use business secrets that he has
obtained by breaking an engagement or disregarding the requirement of the
owners of the rights to maintain the business secrets in confidence.
Where a third party obtains, uses or discloses the business secrets of others
when he obviously has or should have full awareness of the illegal acts
mentioned in the preceding paragraph, he shall be deemed to have infringed the
business secrets of others.
"Business secret" in this Article means technical information and
operational information which is not known to the public, which is capable of
bringing economic benefits to the owner of rights, which has practical
applicability and which the owner of rights has taken measures to keep secret.
Article
11 An operator may not sell goods at a price below
cost for the purpose of excluding his competitors.
None of the following acts constitute acts of unfair competition:
(1) selling fresh or live goods;
(2) disposing of goods the useful life of which is about to expire or other
overstocked goods;
(3) reducing prices seasonably;
(4) selling goods at reduced prices for paying off debts, changing the line of
production or closing the business.
Article
12 An operator may not, in sales of goods, make a
tie-in sale against the wish of the buyer or attach other unreasonable
conditions.
Article
13 An operator may not make the following kinds of
sales with prizes attached:
(1) making sales with prizes attached by the fraudulent method of falsely
claiming the existence of prizes or intentionally causing internally chosen
people to win the prizes;
(2) promoting the sale of inferior but high-priced goods by offering prizes;
(3) making sales with prizes attached in the form of a lottery where the amount
for the highest prize exceeds 5 , 000 yuan (RMB).
Article
14 An operator may not utter or disseminate
falsehoods to damage the goodwill of a competitor or the reputation of his
goods.
Article
15 Tenderers may not submit tenders in collusion
with one another to force the tender price up or down.
A tenderer shall not collaborate with the party inviting tenders to exclude
competitors from fair competition.
Chapter
III Supervision and Inspection
Article
16 The supervising and inspecting authorities above
the county level may exercise supervision over and carry out inspection of acts
of unfair competition.
Article
17 In exercising supervision over and carrying Out
inspection of acts of unfair competition, the supervising and inspecting
authorities are entitled to exercise the following functions and powers:
(1) questioning operators under scrutiny, interested parties and witnesses, and
requiring them to provide evidential material or other information related to
acts of unfair competition in accordance with prescribed procedure;
(2) consulting and copying written agreements, account books, receipts, bills,
vouchers, invoices, documents, records, business correspondence and other material
related to acts of unfair competition;
(3) inspecting property related to acts of unfair competition as stipulated in
Article 5 of this Law and, where necessary, ordering the operator under
investigation to explain the source and quantity of the goods, temporarily stop
selling them pending inspection, and not to
remove, conceal or destroy them.
Article
18 When exercising supervision over and carrying
Out inspection of acts of unfair competition, members of the supervising and
inspecting authorities shall produce warrants of inspection.
Article
19 When the supervising and inspecting authorities
are exercising supervision over and carrying out inspection of acts of unfair
competition, the operators under investigation, interested parties and
witnesses shall truthfully provide them with relevant data or information.
Chapter
IV Legal Responsibility
Article
20 Where an operator, in contravention of the
provisions of this Law, causes damage to the injured operator, he shall bear
the responsibility for compensating the damages. Where the losses suffered by
the injured operator are difficult to calculate, the amount of damages shall be
the profits gained by the infringer during the period of infringement through
the infringing act. The infringer shall also bear all reasonable costs paid by
the injured operator in investigating the acts of unfair competiton committed
by the operator suspected of infringing his lawful rights and interests.
Where the lawful rights and interests of the injured operator are damaged by
the acts of unfair competition, he may institute proceedings before a People' s
Court.
Article
21 Where an operator passes off the registered
trademark of another person, uses the business name or personal name of another
person without authorization, forges or falsely uses symbols of quality such as
symbols of certification and symbols of famous and high-quality goods,
falsifies the origin of the goods and makes false representations which are
misleading as to the quality of the goods, he shall be punished in accordance
with the provisions of the Trademark Law and the Product Quality Law of the
People' s Republic of China.
Where an operator uses, without authorization, the name, packaging or
decoration peculiar to well-known goods or uses the name, packaging or
decoration similar to that of well-known goods so that his goods are confused
with the well-known goods of another person, causing buyers to mistake them for
the well-known goods, the relevant supervising and inspecting authority shall
order him to cease the offense, confiscate the illegal income, and may impose,
according to circumstances, a fine of more than twice and less than three times
the amount of illegal income; where the circumstances are serious, the said
authority may revoke his business license; where an operator sells goods which
are counterfeit or of inferior quality, constituting a crime, his criminal
responsibilities shall be investigated according to law.
Article
22 Where an operator practices bribery, by using
money, gifts or other means to sell or buy goods, constituting a crime, his
criminal responsibilities shall be investigated according to law; where the act
does not constitute a crime, the relevant supervising and inspecting authority
may, according to circumstances, impose a fine of more than 10, 000 yuan (RMB)
and less than 200, 000 yuan (RMB). His illegal income, if any, shall be
confiscated.
Article 23 Where a public utility enterprise or any other operator
having monopolistic statusaccording to law restricts others to buying the goods
of operators designated by it so as to exclude other operators from competing
fairly, the supervising and inspecting authorities at the level of provinces or
municipalities which are divided into districts shall order it to desist from
the illegal acts and may punish it by imposing, according to circumstances,
fines of more than 50, 000 yuan (RMB) and less than 200, 000 yuan (RMB). Where
the designated operators take advantage of the arrangement to foist inferior
but high-priced goods on buyers or make exorbitant charges, the supervising and
inspecting authorities shall confiscate the illegal income and may, according
to circumstances, impose fines of more than twice and less than three times the
illegal income.
Article
24 Where an operator uses advertisement or other
means to give false, misleading publicity to his goods, the relevant
supervising and inspecting authority shall order him to desist from the illegal
act, dispel the bad influence, and may, according to circumstances, impose a
fine of more than 10, 000 yuan (RMB) and less than 200,000 yuan (RMB).
Where an advertisement operator acts as an agent for, or designs, produces or
releases advertisements containing false representations of which he is
obviously aware or should be aware, the relevant supervising and inspecting
authority shall order him to desist from the illegal act, confiscate his
illegal income, and impose a fine on him according to law.
Article
25 Where any party infringes the business secret
of another person in contravention ofthe provisions of Article 10 of this Law,
the relevant supervising and inspecting authority shall order him to desist
from the illegal act and may, according to circumstances, impose on him a fine
of more than 10,000 yuan (RMB) and less than 200,000 yuan (RMB).
Article
26 Where an operator makes sales with prizes
attached in contravention of the provisions of Article 13 of this Law, the
relevant supervising and inspecting authority shall order him to desist from
the illegal act and may, according to circumstances, impose on him a fine of
more than 10,000 yuan (RMB) and less than 100,000 yuan (RMB).
Article
27 Where tenderers submit tenders in collusion
with one another to force the tender price up or down, or where a tenderer
collaborates with the party inviting tenders to exclude competitors from
competing fairly, his successful bid is null and void. The supervising and
inspecting authority may, according to circumstances, impose on them a fine of
more than 10,000 yuan (RMB) and less than 200,000 yuan (RMB).
Article
28 Where an operator commits an act in
contravention of an order to temporarily stop selling, and not to remove,
conceal or destroy, property related to acts of unfair competition, the
relevant supervising and inspecting authority may, according to circumstances,
impose on him a fine of more than twice and less than three times the price of
the property which has been sold, removed, concealed or destroyed.
Article
29 Where a party is not satisfied with the
decision on punishment made by therelevant supervising and inspecting
authority, he may, within 15 days from the date of receipt of the decision on
punishment, apply to the competent authority at the next highest level for
reconsideration; where the party is not satisfied with the decision made after
reconsideration, he may, within 15 days from the date of receipt of the written
decision made after reconsideration, institute proceedings before a People's
court. The party may also directly institute proceedings before a People's
Court.
Article
30 Where a government and its subordinate
departments, in contravention to the provisions of Article 7 of this Law,
restrict others to buying the goods of operators designated by them, restrict
the legitmate business activities of other operators, or restrict the normal
flow of goods between regions, the higher authorities shall order them to
rectify the situation; where the circumstances are serious, the competent
authorities at the same level or the next highest level shall impose
disciplinary sanctions on the persons directly responsible. Where the
designated operators, taking advantage of this arrangement, foist inferior but
high-priced goods on buyers or make exorbitant charges, the supervising and
inspecting authorities shall confiscate the illegal income and may, according
to circumstances, impose a fine of more than twice and less than three times
the illegal income.
Article
31 Where a staff member of the State organ
responsible for supervision over and inspection of acts of unfair competition
abuses his powers and neglects his duty, constituting a crime, his criminal
responsibilities shall be investigated according to law; where the act does not
constitute a crime, he shall be subject to disciplinary sanction.
Article
32 Where a staff member of the State organ
responsible for supervision over and inspection of acts of unfair competition
practices illegally out of personal consideration, intentionally covers up for
an operator and causes him to avoid prosecution, obviously knowing that he has
contravened the provisions of this Law, constituting a crime, the said staff
member's criminal responsibilities shall be investigated according to law.
Chapter
V Supplementary Provision
Article
33 This Law shall enter into force as of December
1, 1993.