Due to rapid development, the existing PRC Anti-Unfair Competition Law was not fully capable of responding to various acts of unfair competition. In addition, the interrelation of the articles with other laws and regulations created the urgent need to revise the Anti-Unfair Competition Law. In order to conform to the trend of market development, the new revision to the Anti-Unfair Competition Law was adopted at the 30th Session of the Standing Committee of the 12th National People's Congress on November 4, 2017. The revision focuses on detailed methods and investigation procedures relating to acts of unfair competition as well as the corresponding punitive measures, which will come into effect on January 1, 2018.

The revision establishes several updates with regards to the following employment issues:

Trade secrets

  • A new definition in Article 9 has clarified that a trade secret is technical or operational information which has "commercial value". In contrast with the "economic benefits and practical value" definition in the 1993 revision, the new revision has removed the requirement of practicality to offer wider protection for the information owned by businesses. Thus, certain trade secrets which seemingly have no practical use, but which have potential economic value, may also be protected under this article.
  • Furthermore, the illegal acts that a third party knows or should know of when determining that party's infringement have been made clear, including acts of an employee or former employee of the right owner of trade secrets or any other entity or individual. In this event, although certain businesses may not have obtained trade secrets directly from the employee, they could be punished according to this article if the employee or former employee discloses the trade secret unlawfully.
  • More importantly, the cost of the penalty has increased significantly. Article 21 indicates that the penalty for violation of Article 9 will range from RMB 0.1 to 3 million. The maximum penalty has therefore increased considerably compared to the 1993 limit of RMB 0.2 million.

Commercial Bribery

  • The original clause of taking bribes and offering bribes has been deleted from Article 7 of the new revision to distinguish from the articles found in Criminal Law. More importantly, the new revision has added "to seek a transaction opportunity or competitive advantage" as the purpose of commercial bribery. This emphasises the competition requirement for this kind of bribe; bribes without such purpose or effect cannot be identified as commercial bribes even if they are made in the course of commercial activities.
  • In addition, the potential subjects of commercial bribery have been specified, namely:
  1. any employee of the counterparty in a transaction;
  2. any entity or individual entrusted by the counterparty in a transaction to handle relevant affairs; or
  3. any other entity or individual that takes advantage of their power or influence to manipulate a transaction.
  • A new clause states that any employee's act of commercial bribery shall be deemed to be an act of the business operator, unless there is evidence to the contrary. As a result, businesses should be concerned about the risk of being held liable for their employees' acts and pay more attention to the drafting of employment contracts in order to avoid any related risks.