Anti-Unfair Competition Law in China

What the Anti-Unfair Competition Law covers

The Anti-Unfair Competition Law (AUCL) protects fair competition by prohibiting specific unfair practices, regardless of the market power of the business involved. That distinguishes it from the Anti-Monopoly Law, which mostly targets agreements and dominant firms. The AUCL was first enacted in 1993, revised in 2017 and amended in 2019. The latest revision was adopted by the NPC Standing Committee on 27 June 2025 and took effect on 15 October 2025; the full text is published on the CNIPA website.

The AUCL is enforced administratively by market regulation authorities at county level and above, and privately through civil claims by affected businesses. Article 3 also anchors the fair competition review system for government measures in the AUCL.

The AUCL often overlaps with other laws. False advertising that falls under the Advertising Law is penalised under that law; trademark infringement is handled primarily under the Trademark Law, with the AUCL filling gaps for unregistered trade dress and names; and conduct by dominant firms may also be assessed under the Anti-Monopoly Law. In civil litigation, Chinese courts have also used the AUCL's general clause in Article 2 to address new forms of online conduct that do not fit a specific prohibition, and that approach is likely to continue alongside the new data and platform provisions.

How the law has evolved

Each revision has responded to new business models. The 2017 revision addressed online practices such as forced redirection and malicious incompatibility; the 2019 amendments strengthened trade secret protection; and the 2025 revision focuses on data, platforms, fake reviews, the treatment of smaller suppliers and higher penalties.

Prohibited practices under the Anti-Unfair Competition Law

Confusion and copycat products

Article 7 protects names, packaging, decoration and other marks with a certain influence, including enterprise names, abbreviations and trade names, domain names, website names and app identifiers. It is a frequent tool for foreign brands whose products, packaging or store designs are copied but who lack registered rights for every element. The key questions are whether the claimant's mark has "a certain influence" in China, which requires evidence of use and recognition among relevant consumers, and whether the defendant's use is likely to cause confusion. Article 7 now also covers those who knowingly help others to commit confusion.

Trade secrets

Trade secret claims under the Anti-Unfair Competition Law are often brought against former employees and the companies that hire them. Article 39 eases the claimant's burden: once the claimant shows it took confidentiality measures and provides preliminary evidence of infringement, the burden shifts to the defendant to show that the information is not a trade secret or was not misappropriated. Damages can be based on actual loss or the infringer's profits, with statutory damages of up to RMB 5 million where neither can be determined. See trade secrets.

Misleading promotion and commercial defamation

Article 9 prohibits false or misleading commercial promotion about performance, function, quality, sales, user reviews or awards, and now expressly covers helping others to do so through fake transactions or fake reviews. Article 12 prohibits fabricating or spreading false or misleading information that damages competitors' commercial reputation. Comparative marketing claims should therefore be accurate, verifiable and fair, and review management programmes should avoid incentivised or fabricated reviews.

Data, platforms and the digital economy

The 2025 revision responds to disputes over data scraping, traffic hijacking and platform pricing practices that Chinese courts had previously handled under the general clause. Article 13 now expressly prohibits obtaining or using data lawfully held by other businesses through fraud, coercion, circumvention of technical management measures or other improper means. Article 14 prohibits platform operators from forcing, directly or indirectly, merchants on the platform to sell below cost under platform pricing rules, a provision linked to the government's campaign against destructive price wars.

Platform operators must also set out fair competition rules in their service agreements and transaction rules, provide complaint and dispute mechanisms for merchants, and act on and report unfair competition they discover on their platforms. Businesses may not abuse platform rules to inflict fake transactions, fake reviews or malicious returns on competitors, according to Xinhua's report on the revision.

Platform operators' duties in practice

For platform operators, the revision means reviewing service agreements and transaction rules to state fair competition rules clearly, setting up a channel through which merchants can complain about unfair competition by others on the platform, and creating an internal process to investigate, act on and report such conduct to the regulator. Pricing tools, promotional campaigns and subsidy programmes should be checked to ensure that merchants are not forced, directly or indirectly, to sell below cost. Platform operators should also keep records of how they handle complaints, because these will be relevant if a regulator examines their compliance.

Commercial bribery and individual liability

The revision closes a long-standing gap by making acceptance of commercial bribes an infringement, not only giving them. Under Article 24, the bribing or bribe-accepting entity can be fined RMB 100,000 to RMB 1 million, rising to RMB 1 million to RMB 5 million in serious cases, with possible revocation of the business licence. The legal representative, principal responsible persons and directly responsible persons who bear personal responsibility can be fined up to RMB 1 million. This aligns the AUCL more closely with anti-corruption enforcement and raises the stakes for sales incentives, rebates and hospitality; see anti-bribery and corruption.

What counts as a commercial bribe

Bribery under the anti-unfair competition rules covers money, property and other benefits given to employees of a counterparty, entities or individuals entrusted by the counterparty, or those who use their power or influence to affect a transaction, in order to obtain a transaction opportunity or competitive advantage. Gifts, travel, sponsorships, consulting fees and "marketing support" can all qualify if their purpose is improper. Bribery by an employee is generally attributed to the employer unless the employer can show that the conduct was unrelated to seeking a transaction opportunity or advantage for the business. That makes training, approval procedures and documented controls important evidence.

Payment terms and smaller suppliers

Article 15 is new. It prohibits large enterprises from abusing advantages in funds, technology, trading channels or industry influence to impose clearly unreasonable payment terms, methods, conditions or default liability on small and medium-sized enterprises, or to delay payments to them. Enforcement is by provincial-level or higher market regulators, who first order correction and may fine if the conduct continues. Separate State Council regulations on ensuring payments to small and medium-sized enterprises also apply. Multinationals with large Chinese supplier bases should review standard payment terms and payment practices.

Penalties and extraterritorial reach

Penalties have been raised across the board. Examples include fines of up to five times the illegal business volume for confusion; fines of up to RMB 5 million for serious trade secret or data infringements; and fines for the platform below-cost pricing provision of up to RMB 2 million in serious cases. Courts can award statutory damages of up to RMB 5 million for confusion and trade secret infringement where losses cannot be determined, and Article 39 eases the burden of proof for trade secret holders. Under Article 40, the law applies to conduct outside China that disrupts competition in the domestic market or harms the rights of domestic businesses or consumers.

Enforcement in practice

Market regulation authorities can investigate suspected unfair competition, enter premises, question parties, review and copy documents, and seal or seize property connected with the conduct. Many cases arise from complaints by competitors. In parallel, affected businesses can sue for injunctions and damages in the people's courts. Because administrative enforcement is often quicker and cheaper, rights holders frequently file a complaint with the local market regulator first, and use the findings in later civil proceedings.

Anti-unfair competition issues for international businesses

International brands, technology companies and Chinese businesses expanding abroad encounter anti-unfair competition rules in different ways.

For Chinese businesses going abroad, the position is reversed: marketing practices, review programmes and data collection that are tolerated at home may breach consumer protection, unfair competition or data rules in export markets, and should be reviewed before launch.

Cross-border comparison

Hong Kong has no single unfair competition statute; similar issues are handled through the common law of passing off, the Trade Descriptions Ordinance and trade secret claims based on confidence. In the European Union, unfair commercial practices towards consumers and trade secret protection are governed by separate directives implemented nationally, and the Digital Markets Act regulates the largest platforms. Businesses operating across these markets should not assume that a strategy that works in one will work in another.

What businesses should review now

• Trade dress, product names and app identifiers, especially where competitors' marks or packaging are similar.
• Marketing claims, influencer campaigns and review management practices, including any incentivised reviews.
• Sales incentives, rebates and hospitality, given recipient and individual liability for bribery.
• Data collection practices, including scraping and API use, against Article 13.
• Platform terms, pricing rules and complaint mechanisms, for platform operators.
• Payment terms with small and medium-sized suppliers, for large enterprises.
• Confidentiality measures for trade secrets, including access controls, employee agreements and exit procedures, since these are the starting point for any claim.
• Prize promotions and lucky draws, to ensure rules are clear and prizes are within the legal limits.
• Contracts with marketing agencies, data vendors and distributors, to allocate responsibility for compliance with the revised law.

Preparing evidence

Whether a business is enforcing its rights or defending a complaint, evidence decides most anti-unfair competition cases. Rights holders should keep records showing the reputation of their brands in China, such as sales data, advertising spend and media coverage, and should notarise purchases and online pages that show copying or misleading claims. Defendants should be able to show the independent development of their products, the basis for marketing claims, and the lawful source of any data they use.

Common mistakes

• Assuming that only dominant companies need to worry about anti-unfair competition rules.
• Relying on registered trademarks alone and neglecting evidence of reputation for unregistered packaging and names.
• Paying marketing agencies without checking how reviews and traffic are generated.
• Treating rebates and commissions as purely commercial matters without checking how they are recorded.
• Collecting third-party data without assessing whether technical measures are being circumvented.
• Ignoring the extraterritorial clause when targeting Chinese consumers from servers or entities outside China.

How TRW & Co helps

We help international brands, platforms and technology businesses understand how the revised anti-unfair competition rules affect their operations in China and align their practices with rules on unfair competition, advertising and bribery in other jurisdictions. We review marketing programmes, incentive schemes and platform terms from an international perspective, and coordinate responses to infringements such as passing off, data scraping and trade secret theft. Where PRC legal advice, complaints to market regulators or litigation in Chinese courts are needed, we work with licensed PRC law firms and manage the overall strategy. See also advertising and marketing compliance. Please contact us to discuss your situation.