China has amended its Anti-Unfair Competition Law for the first time. The newly amended law was adopted after a third reading by the top legislature at the bimonthly session of its Standing Committee in November and took effect starting January 1.
Proper online market competition is one of the highlights of the revision. The law states that e-commerce operators should neither deceive nor mislead consumers by faking sales volumes or user comments.
"In the past, newly opened stores would try use shortcuts to gain credit ratings for themselves by faking their sales record," said Professor Cui Lili, executive director of the Institute of E-commerce at Shanghai University of Finance and Economics. "This is against the law, and by making that clearer, it raises the cost of breaking the law for stores like these. Some service providers had been making intimidating phone calls to customers to make them change their bad reviews into good ones."
This is definitely good news for customers. The new law says business operators need to follow the principles of voluntarism, equality, fairness and integrity, or companies may be fined at least 10 times more money compared to the previous regulation.
"It's worth noting that the punishment for breaking the law has changed a lot," said Ryan Tang, senior partner at Allbright Law Offices. "In the past, the upper limit of most fines was only 200,000 yuan. But now some of the maximum fines are 2 or 3 million yuan. I think we will see the effects of this new law very soon."
Tang said the newly amended competition law will work well with China's anti-monopoly law and advertising law, to help better regulate the overall business sector.