Interpretation Of Key Revisions To The Anti-Unfair Competition Law

On June 27, 2025, the 16th Session of the Standing Committee of the 14th National People's Congress voted to adopt the revised draft of the Anti-Unfair Competition Law, which is taking effect as of October 15, 2025. This revision represents the second major revision of the law since 2017, introducing 8 new articles and revising 16 existing ones. The revised law not only clarifies and expands regulations concerning conventional unfair competition practices - including confusing conduct, commercial defamation, and false advertising - but also imposes stricter legal constraints on new forms of unfair competition arising in the digital economy. The following is an overview of the key revisions.

i. Refined the Definition and Application Rules of Conventional Unfair Competition Practices

In light of the increasingly diverse and complex forms that conventional unfair competition practices have taken within emerging business models, the revised law proactively expands and clarifies the criteria for identifying unfair behaviors and specifying their applicable rules. Key updates include:

1. Confusing conduct:The revised Anti-Unfair Competition Law explicitly classified the following as unfair confusing conduct:
   1. unauthorized use of another person's new media account name, application name, or icon, which has certain fame;
   2. unauthorized use of another person's registered trademark or unregistered well-known trademark as a trade name;
   3. setting another person's goods name, corporate name (including its abbreviation or trade name), registered trademark, or unregistered well-known trademark as a search keyword, thereby misleading the public into believing that their goods are the goods of another person or that they have a specific connection with another person; and
   4. aiding others in committing confusing conduct.

2. Commercial Bribery:The revised law added provisions prohibiting entities and individuals from accepting bribes, clarifying that both the party offering and the party accepting bribes bear equal responsibility.

3. False advertising:The revised law expanded the scope of those who may be misled by false advertising from "consumers" to "consumers and other business operators." The revision also stipulated that false advertising through false reviews is prohibited.

4. Unfair prize sales:The revised law stipulated that business operators must not arbitrarily change the term of a prize sales activity after its commencement;

5. Commercial defamation:the revised law expanded the target of commercial defamation from "competitors" to "other business operators." The revision also prohibited business operators from instructing another person to engage in commercial defamation.

ii. Strengthened Regulation of Unfair Competition in the Digital Realm

The revised Anti-Unfair Competition Law enhanced the protection of data rights, which introduced new provisions targeting malicious transactions and clarified the regulatory responsibilities of platform operators. Key measures include:

1. Explicit prohibition of illegal data collection practices;
2. New bans on fraudulent transactions, false reviews, and malicious returns facilitated by abuse of platform rules;
3. Emphasis on platform operators' obligations to maintain standardized regulations, including establishing mechanisms for reporting, handling complaints, and resolving disputes, thereby guiding and regulating businesses on the platform to compete fairly and in accordance with the law.

iii. Introduced Regulations Targeting Two New Forms of Unfair Competition Practices Affecting SMEs

The revised Anti-Unfair Competition Law introduced rules addressing two emerging forms of unfair competition that particularly harm small and medium-sized enterprises (SMEs): 1) "race-to-the-bottom" low-price competition and 2) the abuse of dominant positions by large enterprises. Key provisions include:

1. Prohibition of "race-to-the-bottom" unhealthy competition: Platform operators are prohibited from forcing or covertly forcing businesses on the platforms to sell goods at prices below cost.
2. Ban on abuse of dominant position by large enterprises: Unreasonable transaction terms and delayed payments to SMEs are prohibited. The application of this rule no longer requires the offender to possess a "dominant market position" in the sense of China's Anti-monopoly Law, significantly expanding the law's coverage of unfair trade practices.

iv. Enhanced Provisions on Regulatory Measures, Enforcement Mechanisms, and Penalties

The revised Anti-Unfair Competition Law further clarified the regulatory framework and the criteria for determining legal liability in cases of unfair competition. Major updates include:

1. The revision introduced provisions on the extraterritorial application of the Anti-Unfair Competition Law, establishing a clear legal basis for regulating and penalizing overseas activities that disrupt domestic market order in China.
2. The revision introduced flexible enforcement instruments - including "rectification within a prescribed period" and "corrective interviews" - to provide businesses operators that violates the law an opportunity to rectify violations. This reflects a balanced legislative approach that combines severe deterrence with lenient opportunities.
3. Penalties have been rationally adjusted: the revision increased the maximum fines for offenses including trade secret infringement, commercial defamation, and online unfair competition; removed the minimum fine threshold for false advertising; and introduced an exemption clause for sellers engaged in confusing conduct who can demonstrate lack of awareness and provide evidence of legitimate product sources.

Overall, the revised Anti-Unfair Competition Law represents a proactive adaptation to the rapidly evolving digital economic environment. It tackles critical issues including the diversification of unfair competition practices in new business formats, "race-to-the-bottom" unhealthy competition, violations against data rights, and the protection of small and medium-sized enterprises. Through the establishment of a more comprehensive regulatory system, the revised law also delivers enhanced legal guidance for business operators, industry organizations, regulatory agencies, and judicial institutions in the execution of their relevant duties.

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