March 28, 2024

The Unfair Competition Act overhauls unfair competition or is punished

Recently, the State Administration for Industry and Commerce completed the revised draft of the Anti-Unfair Competition Law (hereinafter referred to as the revised draft) and has submitted it to the State Council Legislative Affairs Office. According to experts who participated in the revision work, this amendment is an overhaul. Within the original framework, the content of the law will undergo major changes.

The current "Anti-Unfair Competition Law" was enacted in 1993. However, with the passage of time, the way of unfair competition has undergone tremendous changes, and the phenomenon of "trimming the ball" has become more and more frequent, and the "Unfair Competition Law" has often failed to catch on. The revised "Unfair Competition Law" will increase the deterrent effect of the law in many aspects such as increasing administrative penalties and clarifying the main body of law enforcement.

Extending the scope of an expert who participated in the preparation of the revised draft revealed that the revision of the Anti-Unfair Competition Law can be said to be an overhaul. One of the major changes was the expansion of the scope of unfair competition. The revised draft enriches the connotation of unfair competition practices. Previously, it was only illegal to use names, packaging, and decorations that were unique to well-known products, or to use names, packaging, and decorations that were similar to well-known ones, causing confusion with other people's well-known products.

The revised draft expands the illegal activities to unauthorized use of domain names, company names, company abbreviation, size, name, etc. This means expanding the scope of protection of commercial marks, as long as there are any commercial marks of certain popularity, whether counterfeiting with similar or heterogeneous commercial marks, if it is enough to cause buyers to misidentify, it is a market confusion and constitutes an improper competition. The 11 types of behavior listed in the current "Anti-Unfair Competition Law" are defined as unfair competition behavior. However, due to the fact that unfair competition behavior will continue to refurbish with changes in the market environment, the formulation and revision of laws and regulations will need to pass strict procedures and experience a long period of time. This will lead to the emergence of new and unfair competition practices that will continue to emerge. Incorporate the adjustment scope of the current law.

Professor Ji Jichun of the Law School of Renmin University of China stated that in order to overcome the lagging nature of legislation, most countries’ Anti-unfair Competition Laws stipulate specific clauses that can summarize the general characteristics of all acts of unfair competition. Such clauses are called “ Normal condition". For this reason, in addition to enumerating some specific acts of unfair competition, the revised draft defines unfair competition as an act in which the operator violates the provisions of the preceding paragraph and damages the legitimate rights and interests of other business operators or consumers and disrupts social and economic order. And the right to identify the "general terms" was granted to the State Administration for Industry and Commerce.

It is clear that the main body of law enforcement is clear that the main body of law enforcement is also a major change in the revision of this law. According to the current "Anti-Unfair Competition Law," other departments outside the administration of industry and commerce, such as quality inspection, price, health, construction, and culture, may also exercise supervision over unfair competition. At the same time, this provision in the Anti-Unfair Competition Act left gaps for other laws and regulations that were subsequently introduced. For example, laws and regulations such as the "Insurance Law" and the "Tendering and Bidding Law" that were enacted and implemented afterwards stipulate different regulatory authorities, resulting in conflicts between the "Unfair Competition Law" and other relevant laws and regulations on law enforcement entities. On this issue, the revised draft stipulates that the administrative department for industry and commerce of the State Council and the administrative departments for industry and commerce at various levels are the supervisory and inspection departments for acts of unfair competition, and conduct supervision and inspection of acts of unfair competition in accordance with this Law.

In addition to clarifying the law enforcement departments, the revised draft also authorizes the administrative department of industry and commerce of the State Council to determine the rights of other acts of unfair competition. Wu Jingming, a professor at the China University of Political Science and Law, believes that the revised manuscript not only harmonizes the main body of law enforcement, but also makes the scale of law enforcement uniform, which is conducive to strengthening the enforcement of unfair competition.

In the practice of increasing penalties, weak enforcement methods and weak administrative measures have always been the weakness of the Anti-Unfair Competition Law. The current "Anti-Unfair Competition Law" stipulates that the operators who commit unfair competition shall be fined "more than 10,000 yuan but less than 200,000 yuan" or "illegal income more than twice as high as 3 times less." Wu Jingming believes that the maximum fine of 200,000 yuan has been far from the current law enforcement needs, and it is difficult to form an effective deterrent against unscrupulous unfair competition. At the same time, the identification of “illegal gains” in law enforcement is a difficult problem. In the revised draft, fines are imposed on the operators who commit unfair competition. A fine of up to two million yuan or less than the illegal income or more than five times the illegal income is imposed. Wu Jingming believes that in the past, when it was difficult to identify illegal income, companies faced a fine of up to 200,000 yuan, but now the maximum fine limit has increased by 10 times. When the illegal income is determined, it will also face a penalty of up to 5 times. This has greatly increased the cost of operators' unfair competition practices. Although the current Anti-Unfair Competition Law stipulates the right to supervise and inspect anti-unfair competition law enforcement agencies, due to the lack of mandatory measures such as detention, seizure, and forced transfer, law enforcement agencies have insufficient law enforcement efforts to investigate cases of unfair competition. .

The revised draft stipulates that when supervising and examining acts of unfair competition, the supervision and inspection department has the right to seize and detain relevant property and evidence of suspected unfair competition, and to seal up places suspected of acts of unfair competition; at the same time, it may inquire into the business operators being inspected. The bank account tells the bank to suspend the payment of its deposit. If the law enforcement department fails to truthfully provide related materials or fail to cooperate with the investigation, and refuses to obstruct the investigation, if the circumstances are serious, the individual shall be fined between 20,000 yuan and 100,000 yuan and the unit shall be paid 200,000 yuan. More than 1 million yuan in fines.

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