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New Efforts On Unfair Competition Enforcement

10 July 2018

The establishment of the State Administration for Market Regulation ("SAMR"), combines the role of six former regulators, the Antimonopoly Bureau of the Ministry of Commerce ("MOFCOM"), the Price Supervision and Antimonopoly Bureau of the National Development and Reform Commission ("NDRC"), the Antimonopoly and Anti-unfair Competition Bureau of the State Administration of Industry and Commerce, the Antimonopoly Commission Office of the State Council, the State Quality Supervision Inspection and Quarantine Bureau, and the State Food and Drug Supervision Administration.

Following their establishment, SAMR announced an in-depth enforcement sweep, focusing particularly on the online and pharma industries. This targeted campaign began on May 17th and will continue through until October 2018. The targets of the campaign will be market confusion acts, trade secret infringement, and internet-related misconduct.

The relevant legislation of note in this crackdown are as follows;

Articles 6, 9, 18, and 21 of the Amended Anti Unfair Competition.

According to Article 6, market confusion acts refer to actions taken by a company to cause consumers to mistake its product for the product of another company, or to believe that there is a certain relationship between the company’s product and that of another company. The legislature has added two new types of market confusion acts in Article 6 of the Amended AUCL:

a)      unauthorized use of names social organizations which have certain influence, and

b)      unauthorized use of domain names, website names, or webpages of others which have certain influence.

Conversely, two types  of market confusion acts that appeared in the Old AUCL have been removed:

a)      counterfeiting the registered trademarks of others, and

b)      falsely using symbols of quality on products, falsifying the origin of products, or making false and misleading representations as to product quality.

This appears to be a moot point as both these actions remain prohibited under the PRC Trademark Law and the PRC Product Quality Law.

Article 9 of the Amended AUCL concerns trade secret infringement. There has been a significant development in Article 9

a)      the Amended AUCL no longer requires that trade secrets have “practical value,” and

b)      a third party will now be held liable if the third party knew, or should have known, that trade secrets it accepted and used from a current or former employee of another company were obtained illegally.

Article 18 stipulates the potential legal consequences that could follow from a violation of Article 6,

a)      an order to cease the infringing acts,

b)      a confiscation order in respect to the infringing commodities,

c)       and/or administrative fines.

Article 18 also increases the maximum amount of administrative fines that can be imposed. Fines have increased from 3 time up to five times the amount (if illegal turnover is greater than 50,000 renminbi), or up to 250,000 renminbi (if illegal turnover is less than 50,000 renminbi, or if no illegal turnover is generated).

Article 21 provides the penalties for violating Article 9, including an order to cease the infringing acts and an administrative fine of up to 3 million renminbi (previously 200,000 renminbi).

The SAMR webpage can be visited at