Law Against Unfair Competition of the People's Republic
of China
(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 means
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 containing 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 competition
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 status according 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 of the 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 the relevant 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 legitimate 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
