CHINA Trends and Developments Contributed by: Ting Liu, Fang Pan and Xiangru Chen, King & Wood Mallesons
to its jurisdiction. This significant expansion of the regulatory perimeter necessitates that employers implement robust internal controls and monitoring mechanisms capable of investigating and addressing employee misconduct, whether occurring domesti - cally or overseas. New types of unfair competition in the era of data economy Paragraph 3 of Article 13 of the New PRC Anti-Unfair Competition Law is known as the data protection clause, which states that a business operator shall not obtain and use data lawfully held by other business operators through fraud, coercion, electronic intrusion or other improper means. This addition is designed to protect the legitimate rights and interests of business operators in the digital age and to maintain a healthy digital market competition environment. On the same day the New PRC Anti-Unfair Competi - tion Law was promulgated, the PRC State Administra - tion for Market Regulation released a typical case of illegal data crawling. The operator developed and sold software tools to automatically relocate and replicate product listings from one e-commerce platform to a competing one without authorisation. The enforce - ment authority found that this conduct constituted a substantive substitution of the source platform’s ser - vices, disrupted the fair market order, and infringed upon the lawful rights of other business operators. Accordingly, a fine of CNY530,000 was imposed. Besides, the New PRC Anti-Unfair Competition Law establishes a specific protection against deceptive online practices. For example, paragraph 4 of Article 13 prohibits business operators from abusing platform rules, whether directly or by instructing others, to carry out false evaluations, sham transactions or malicious returns against competitors. This provision directly targets actions designed to unfairly harm competi - tors by manipulating core platform mechanisms such as review systems, transaction processes and return policies. The newly introduced regulatory interviews and corrective measures Beyond imposing stricter penalties, the New PRC Anti-Unfair Competition Law introduces a tiered
enforcement toolkit designed to encourage proactive compliance and corrective measures. • Article 18 stipulates that the competent govern - mental authorities may conduct interviews with the legal representatives or principal responsible persons, requesting explanation of the alleged suspected illegal conduct and/or commitments to necessary improvements. This innovation allows governmental authorities to address potential issues with greater flexibility and lower cost before escalating to a formal investigation. Meanwhile, co- operating effectively in such interviews is crucial for business operators to provide clear explanations and implement concrete remedial actions to avoid formal investigations and penalties. • Article 31 introduces a time-limited rectification mechanism specifically for unfair competition involving the abuse of dominant position. This mandates that governmental authorities must first order the offender to rectify the violation within a specified timeframe. An administrative penalty is imposed only if the offender fails to comply with the orders by the deadline. These two new mechanisms significantly elevate the requirements for enterprises’ internal investigation and compliance systems, underscoring the critical importance of self-investigations and immediate self- correction. With the advent of the regulatory interviews and corrective measures, the focus of internal investi - gations expands from merely uncovering misconduct to also evaluating the effectiveness of remediation efforts and preparing documentation to demonstrate timely and effective rectification to authorities. Therefore, in the light of anti-unfair competition, it is recommended that employers should strengthen employee education and improve internal investiga - tion mechanisms. These regulatory updates demand internal investigations to cover a wider scope – includ - ing employee misconduct both domestically and over - seas – and mandate proactive alignment with regula - tory requirements to mitigate legal risks.
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