The “Interim Provisions Against Unfair Competition in Cyberspace” shall come into force as of Sep. 1, 2024

Article 12 of the “Anti-unfair Competition Law” stipulates three types of internet unfair competition behaviors, which are traffic hijacking, malicious interference and malicious incompatibility. In addition, it also has a catch-all provision. Article 21 and 22 of the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Anti-unfair Competition Law” furtherly prescribes the determination of traffic hijacking and malicious interference. However, with the development of online commercial behaviors, the above provisions could not solve the new problems.

In view of this, the SAMR released the “Interim Provisions Against Unfair Competition in Cyberspace” on May 11, 2024 (hereinafter referred to as the “Interim Provisions”), which shall come into force as of Sep. 1, 2024. The “Interim Provisions” consists of 5 chapters and 43 articles, which divided into general provisions, online unfair competition behavior, supervision and inspection, legal responsibilities, and supplementary provisions.

For enterprises, the provisions on online unfair competition behaviors and relevant recognition standards as stipulated in the “Interim Provisions” are worth attention.

  1. The “Interim Provisions” has described new manifestations of 3 traditional internet unfair competition behaviors.
Types Provisions
Confusing acts

Article 7

 • To add the following items into the scope of protection:

① The main domain name, website name or webpage etc., which has influence to a certain extent.

② The page design, name, icon or shape etc. of other people’s application software, in cyberspace store, client terminals, applets, public account, game interface, etc., that have influence to a certain extent.

③ The other people’s name, symbol or abbreviation or other marks in cyberspace that have influence to a certain extent.

• TO add confusing acts, which include:

①Manufacturing and selling goods that are sufficient to mislead party into believing that such goods are other party’s goods or have certain relations with other party’s goods.

②Setting, without authorization, other party’s influential business marks as search keywords, which are sufficient to cause relevant parties to mistake its goods for the goods of other parties or certain relations between its goods and the goods of other parties.

•To add the behaviors regarding assistance, that is, committing confusing acts jointly with other operators by providing network operation premises and other conveniences.
Sham campaign

Article 8 & 9

 

 

 •The sham campaign channels related to marketing in cyberspace mainly include:

①Displaying, demonstrating, describing, explaining, promoting or marking words through websites, client terminals, applets and public accounts, among others.

②Implementing commercial marketing activities by means of live-streaming, platform recommendation and web copywriting, among others.

③ Implementing commercial marketing activities by means of hot search, hot comments, hot forwarding and lists.

• The sham campaign behaviors related to fake data in cyberspace mainly include:

①Committing false transactions or false rankings.

②Fabricating transaction volume, turnover, reservation volume and other business-related data and information.

③Conducting marketing by falsely declaring spot goods, making false orders, or making false panic purchase, etc..

④Fabricating user comments, or concealing bad comments by means of misleading display, placing favorable comments in front or bad comments behind, or inconspicuously distinguishing the comments on different commodities, etc..

⑤Inducing users to give designated favorable comments, likes, targeted voting and other interactive activities by means of returning cash, red packets, or card coupons, etc..

⑥ Fabricating traffic data such as the volume of collections, hits, attention, likes, reading, subscriptions and forwarding.

⑦Fabricating interactive data such as the volume of votes, the volume of listeners, the number of views, the quantity of broadcasting, the box office and television ratings.

⑧ Fabricating education and training effects such as admission rates, passing rates and employment rates.

⑨Conducting marketing by means of fabricating word-of-mouth, concocting topics, creating false heat of public opinions, and fabricating the income of in cyber-related employees, etc..
Defamation

Article 11

 

 • To extend the defamation behaviors to those which may impair the business reputation or commodity reputation of the competitors.

• To list 3 typical defamation behaviors:

①Organizing or instigating other people to maliciously evaluate the commodities of their competitors.

②Making use of, organizing or instigating others people to disseminate false or misleading information.

③Disseminating risk reminders, notices to clients, warning letters or tip-off letters containing false or misleading information by making use of cyberspace.

• To add the prohibition regarding jointly defamation behaviors, that is, the operator of any client terminal, applet or public account or any organization or individual that provides follow-up and comment services shall not intentionally carry out any of the acts specified in the preceding paragraph jointly with any other business operator.

 
  1. The “Interim Provisions” prescribes 5 new types of internet unfair competition behaviors.
Types Provisions
 Reverse scalping The reverse scalping refers to a business operator maliciously scalps other business operators’ transactions, which may trigger the anti-scalping punishment rules of e-commerce platforms, by which the other business operators’ commercial opportunities may be reduced. Article 16 prescribes the following prohibition circumstances:

①Intentionally conducting large-scale and high-frequency transactions with other business operators or giving favorable comments to other business operators in a short period of time, causing other business operators to be disposed of such as degrading the search right, lowering the credit rating, removing the goods from shelves, disconnecting the links and ceasing the services.

②Maliciously refusing to pay for the goods ordered in bulk within a short period of time.

③Returning goods or refusing to accept goods after malicious bulk orders, etc..
Maliciously blocking Maliciously blocking refers to business operators using technological means to influence the online sales of other business operators.

Article 17 prescribes that a business operator shall not intercept or block the information content and webpages legally provided by specific business operators, impede, or disrupt the normal operation of cyber goods or services legally provided by other business operators, and disrupt the fair competition order of the market.

※The identification rules regarding the specific business operators are not clear.
Either-or choice

 

 The practice of giant e-commerce platforms forcing business operators to make an either-or choice has caused a strong reaction of the market. Article 18 prescribes two main prohibition behaviors regarding the either-or choice.

①To use of technical means to interfere with normal transactions between other business operators, by means as influencing user selection, flow restriction, shielding, lowering the search right, and removing the commodities from shelves.

②To use of technical means to influence the business choices of other business operators, by restricting transaction objects, sales regions or time, and participating in promotional activities, among others.

※ It is worth noting that this provision applies to all operators, regardless of whether they have a dominant market position.
Illegally obtain or use data Article 19 prescribes that a business operator shall not make use of technical means to illegally obtain or use the data legally held by other business operators, impede or disrupt the normal operation of cyber goods or services legally provided by other business operators, and disrupt the fair competition order of the market.
Discrimination Article 20 prescribes that a business operator shall not make use of technical means to illegally obtain or use the data legally held by other business operators, impede or disrupt the normal operation of cyber goods or services legally provided by other business operators, and disrupt the fair competition order of the market.

However, there are 3 circumstances would not be deemed as illegal, there are as follows:

①The trading habits and industry practices.

② Promotion activities carried out for new users within a reasonable period.

③Random transactions based on fair, reasonable and non-discriminatory rules.

※ It is worth noting that this provision applies to all operators, regardless of whether they have a dominant market position.

Finally, it is worth noting that according to Article 27 of the “Interim Provisions”, where the reports on cyber-related unfair competition acts are relatively concentrated or such cases have caused serious consequences or other adverse effects, the local administrations for market regulation at or above the level of city divided into districts of the actual operation place or the place of occurrence of the illegal results may have jurisdiction. Compared to previous regulations, only local administrations for market regulation at the registered place of the platforms could handle those reports, Article 27 provides the rights to other local administrations, so it is an important task for platforms to establish a timely and effective mechanism for responding to and handling complaint .