China: Draft amendments to the AUCL redefine commercial bribery

Eugene Chen

Under the Xi Jinping administration, China has made sweeping changes to tackle bribery and corruption.

The results include major enforcement actions against both high- and low-ranking corrupt officials; an enforcement action against GlaxoSmithKline, leading to China’s first and only major criminal corruption case against a corporate entity; and rising administrative actions across the country to enforce pricing, competition, and anticorruption laws.

While those activities continue, this year has seen extensive legislation and rule-making, as China tries to build a legal regime and rule of law to further support the enforcement actions taking place. One such piece of legislation is the draft amendments to the Anti-Unfair Competition Law (AUCL), initially released for public comment in February of this year, and recently approved for submission to the Standing Committee of the National People’s Congress for consideration. The draft proposes significant changes in antitrust, unfair competition, false advertising, and intellectual property theft, among other areas. The most significant changes, however, come in the provisions addressing commercial bribery. In fact, these changes reconfigure the entire regime.

Commercial bribery redefined

The current AUCL bans bribes made in the purchase or sale of products. It includes a specific safe harbor for discounts or rebates recorded in the accounting records of the parties involved. The revised amendments, in contrast, treat as bribery any economic benefits provided to counterparties or third parties in order to secure business opportunities or competitive advantages. So, anything of value given that creates any benefit has the potential to be considered a bribe.

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