Regulations of Shanghai Municipality on Anti-Unfair Competition were adopted at the 26^th Session of the Standing Committee of the 15^th Shanghai Municipal People’s Congress on October 27, 2020, and are hereby promulgated. They shall be effective as of January 1, 2021. 

Standing Committee of Shanghai Municipal People’s Congress

October 27, 2020

 

Regulations of Shanghai Municipality on Anti-Unfair Competition

(Adopted at the 21^st Session of the Standing Committee of the 10^th Shanghai Municipal People’s Congress on September 28, 1995; amended for the first time in accordance with the Decision Regarding Amendment to the Regulations of Shanghai Municipality on Anti-Unfair Competition adopted at the 38^th Session of the Standing Committee of the 10^th Shanghai People’s Congress on August 13, 1997; amended for the second time in accordance with the Decision on Amendment to Some Local Rules of This Municipality adopted at the 31^st Session of the Standing Committee of the 13^th Shanghai Municipal People’s Congress; revised at the 26^th Session of the Standing Committee of the 15^th Shanghai Municipal People’s Congress on October 27, 2020)

 

Chapter I  General Provisions

 

    Article 1

    With a view to promoting the healthy development of the socialist market economy, encouraging and protecting fair competition, repressing unfair competition acts, protecting the lawful rights and interests of business operators and consumers, and optimizing business environments, these Regulations are formulated in accordance with the provisions of the Law of the People’s Republic of China on Anti-Unfair Competition and other relevant laws and  administrative rules, and in the light of the actual circumstances of this Municipality.

    Article 2

All natural persons, legal persons and unincorporated organizations (hereinafter referred to as business operators) that are engaged in production or sale of goods or in provision of services (goods as mentioned hereinafter include services) shall abide by the principles of voluntariness, equality, fairness, and good faith, comply with laws, rules, and business ethics, and shall not conduct or help others conduct unfair competition.     

Article 3

The Municipal People’s Government shall establish a coordinating mechanism of anti-unfair competition, carry out research and make decisions on the major policies of anti-unfair competition, coordinate and deal with the major problems of maintaining the market competition order in this Municipality, and create sound environment and conditions for fair competition.

All district people’s governments shall establish coordinating mechanisms of anti-unfair competition in their respective districts, so as to coordinate and deal with such work as cross-departmental law enforcement of anti-unfair competition in their respective regions.

Article 4

The municipal market regulation administrative department shall be responsible for guiding and coordinating the work of prevention, investigation and punishment of the acts of unfair competition in this Municipality, and investigating and punishing the major or cross-regional acts of unfair competition in this Municipality. The district market regulation administrative departments shall be responsible for the prevention, investigation and punishment of the acts of unfair competition within their respective administrative areas.

The departments of finance, culture and tourism, civil affairs, sports, and commerce (hereinafter together with the market regulation administrative departments collectively referred to as the supervision and inspection departments) shall, in accordance with the provisions of laws and administrative rules, be responsible for the prevention, investigation and punishment of the acts of unfair competition within their respective functions and duties.

The departments of public security, development & reform, local financial regulation, and cyberspace affairs shall, according to their respective functions and duties, do a good job in the relevant work of anti-unfair competition.

The supervision and inspection departments such as the market regulation administrative department shall, jointly with relevant departments, establish mechanisms of information sharing and work coordinating for the cases of unfair competition, improve the notification and transfer of  case clues, provide assistance in investigation and evidence collection, and explore joint law enforcement in key fields and key areas.     

Article 5

This Municipality shall explore and establish a monitoring, analyzing and researching mechanism for the acts of unfair competition.

The market regulation administrative department shall, jointly with relevant departments, specialized colleges and universities, scientific research institutions, and trade organizations, explore and conduct monitoring, analysis and research of the acts of unfair competition in key fields, key areas and new types of business, so as to provide reference for this Municipality to formulate policies of anti-unfair competition.

Article 6

The supervision and inspection departments such as the market regulation administrative department shall strengthen the construction of the online and offline supervision systems and of the regulation and law enforcement teams, and utilize such modern information technology as artificial intelligence and big data to improve their abilities of discovering, investigating and punishing the acts of unfair competition.  

Article 7

This Municipality shall advance the regional coordination in the work of anti-unfair competition in the Yangtze River Delta (hereinafter referred to as the YRD), practice cross-regional assistance and interactive law enforcement, realize the sharing of law enforcement information, and the unification of law enforcement standards, so as to promote the coordination of major policies of anti-unfair competition and the optimization of market environments in the YRD region. The integration of law enforcement of anti-unfair competition shall be explored in the ecologically-friendly and integrated  development demonstration area in the YRD.
    This Municipality shall strengthen the exchange and cooperation with other provinces and cities in the work of anti-unfair competition, and cooperate with and assist according to law relevant administrative departments and judicial departments of other provinces and cities in such work as investigation, evidence collection, service of documents, and implementation.  

 

Chapter II  Acts of Unfair Competition

    

    Article 8

    A business operator shall not conduct the following confusing acts which mislead people into thinking that the goods is other people’s goods or has certain relationship with other people:  

1. using without authorization a trademark that is identical with or similar to the name, package or decoration of other people’s goods which has certain influence;

2. using without authorization the name of other people’s enterprise (including the abbreviation and shop name), the name of other people’s social organization (including the abbreviation), or other people’s name (including the pen name, stage name, and translated name) which has certain influence;

3. using without authorization other people’s domain name body, website name or web page which has certain influence;

4. using without authorization the trademark identical with or similar to the unique shape of goods, name of program or column, logo of enterprise, name of online shop, name or logo of We-Media, and name or icon of application software of other people, which has certain influence; or

5. other confusing acts sufficient to mislead others into thinking that the goods are others’ goods or has certain relationship with others.

The trademark which has certain influence mentioned in the preceding Paragraph refers to a conspicuous trademark known to the public within a certain scope and identifiable for the goods or its source. The acts of using mentioned in the preceding Paragraph include the acts of producing or selling other people’s trademark that has certain influence. Where a business operator previously used other people’s trademark with certain influence , it may continue to use it within the original scope of use.

A business operator shall not help, by associating other people's identities which have certain influence with keyword searches and so on, other business operators conduct the confusing acts.

    Article 9

A business operator shall not bribe the following units or individuals with property or other methods to seek a transaction opportunity or competitive advantage:

1. an employee of the opposite party;

2. a unit or an individual entrusted by the opposite party to handle relevant affairs; or

3. a unit or an individual that affects the transaction with its/his/her power or influence.

No unit or individual shall accept, promise to accept, or accept through others bribes to seek transaction opportunities or competitive advantages for a business operator.

Where a business operator, an opposite party or an intermediary pays or accepts discount or commission, they shall enter that into the account book according to relevant rules on accounting truthfully.

    Article 10

A business operator shall not make false or misleading commercial publicity with regard to the property, function, quality, sale status, users’ appraisal, and the awards of their goods, to deceive or mislead consumers or other relevant public.

The commercial publicity in the preceding Paragraph includes:

1. exhibiting, demonstrating, describing, explaining, introducing or making text annotation of goods at the business premises, exhibition, goods fair, expo, or other places, or via such information network as the Internet;

2. exhibiting, demonstrating, describing, explaining, introducing or making text annotation of goods by such means as door-to-door selling, hosting appraisal meetings, publicity meetings, and promotion meetings;

3. posting, distributing or mailing descriptions, pictures or other materials of goods; and

4. other acts of commercial publicity that do not constitute advertising.

Any of the following circumstances that is sufficient to mislead relevant public may be identified as misleading commercial publicity:

1. making one-sided publicity or comparison of goods;

2. using or incompletely citing such contents as third-party data or conclusion while neglecting its premise or necessary information;

3. taking an inconclusive view or phenomenon of science as a conclusive fact;

4. using ambiguous language to make the publicity; or

5. other commercial publicity sufficient to mislead people.

Article 11

A business operator shall not conduct the following acts to assist other operators in making false or misleading commercial publicity in respect of the sales volume, users’ appraisal, application ranking, and search results ranking:

1. organizing false transactions, made-up appraisals, forging logistics forms, or inducing the making of designated appraisals;

2. providing such services as organizing, planning, making and issuing and such conditions as fund, places and tools for other business operators to make false or misleading commercial publicity; or

3. other acts that help the making of false or misleading commercial publicity.

Whether other business operators assisted finish the false or misleading commercial publicity does not affect the identification of the illegal acts listed in the preceding Paragraph.

Article 12

    A business operator shall not conduct any of the following acts to infringe upon trade secrets:

    1. obtaining a right holder’s trade secrets by stealing, bribing, deceiving, coercing, electronically hacking or any other unfair means;

    2. disclosing, using or permitting others to use a right holder’s trade secrets obtained right by the means mentioned in the preceding Item; or

3. in violation of the confidentiality obligation or the right holder’s confidentiality requirements, disclosing, using or permitting others to use the right holder’s trade secrets it possesses; or

4. instigating, luring or helping others to violate the confidentiality obligation or a right holder’s confidentiality requirements, to obtain, disclose, use or permit others to use the right holder’s commercial secrets.

Where natural persons, legal persons and unincorporated organizations other than the business operator conduct the illegal acts listed in the preceding Paragraph, they shall be deemed as infringing upon trade secrets.

    Where a third party knows or should know an employee or a former employee of the right holder of a trade secret or other units or individuals conduct the illegal acts listed in Paragraph 1 of this Article, but still obtain, disclose, use or permit others to use the said trade secret, the said party shall be deemed as infringing upon the trade secret.

The trade secrets mentioned in this Article refer to such business information as technical information or business operation information that is unknown to the public and has commercial value, for which the right holder has taken corresponding security measures, including:

1. such information as experiment (trial) data, formulas, techniques, design plans, technical know-how, procedure codes, algorithm, and R&D records that are relevant to technology;

2. such information as the customer information, source of supply, production and marketing strategies, profit models, salary systems, and tender contents that are relevant to business operation activities; and

3. other commercial information.

Where a business operator obtains the technical information of a product through its own research and development, or by disassembling, mapping or analyzing via technical means the product obtained through an open channel, it shall not be deemed as infringing upon others’ trade secret.

Article 13

The right holder of a trade secret shall, according to the actual circumstances of the secret, take corresponding security measures, including:

1. limiting the access scope of the classified information;

2. taking such measures as locking the classified information carriers and making a confidentiality mark on them;

3. setting a password or code for the classified information;

4. signing a confidentiality agreement with relevant personnel or making a confidentiality requirement on relevant personnel;

5. taking such confidentiality management measures as restricting visitors to such devices and places as the machines, factories and workshops where the secret-related information is located or making confidentiality requirements; and

6. other corresponding confidentiality measures.

Article 14

    Any of the following cases shall not be allowed when a business operator takes such measures as providing prizes, objects or other interests for the purpose of selling goods or obtaining competitive advantages:

1. providing ambiguous prize-giving sales information as the types of prizes, the conditions for prize claim, the sum of prize money, or the prize, affecting prize claim;

2. conducting prize-giving sales by deceptive means such as falsely claiming giving prizes or purposefully giving prizes to designated persons; and

3. in lottery prize-giving sales, the sum of money for the highest prize exceeding 50,000 yuan.

The ambiguous prize-giving sales information mentioned in Item 1 of the preceding Paragraph includes:

1. the announced type of prize, conditions, scope and method of participation, time and method of prize awarding, or the sum of prize money being unclear;

2. the price, name, type or quantity of prize being unclear;

3. the time, conditions and method of prize claim, the method of prize delivery, the conditions for prize abandoning, or the hosting party or its contact information being unclear; or  

4. other prize-giving sales information being unclear.

Conducting prize-giving sales information by deceptive means includes:

1. making up prizes, prize objects, or sum of prize money;

2. failing to put on the market all or only putting part of the goods or lottery tickets with prize-winning marks or only putting the said goods or tickets on the market in certain areas during prize-giving sales activities;

3.putting on the market the goods or lottery tickets with different sum of prize money or prize marks at different time without explicitly stating that before the prize-giving sale;

4. failing to hand out the prize according to the explicit information; and

5. other methods of falsely claiming giving prizes.

The sum of money for the highest prize exceeding 50,000 yuan provided in Item 3 of Paragraph 1 of this Article includes the cases of one-time lottery prize money exceeding 50,000 yuan and accumulative prize money for two or more lottery opportunities with one lottery ticket or for one purchase of goods exceeding 50,000 yuan.

After a prize-giving sale begins, the business operator shall not arbitrarily change the types of prize, the conditions for participation, the methods of prize awarding, and the methods of prize claim, or add extra conditions or restriction, with the exception of those benefiting the consumers.

Article 15

A business operator shall not fabricate, disseminate or instigate others to fabricate, disseminate false information or misleading information to damage its competitor’s business reputation or goods reputation.

The dissemination mentioned in the preceding Paragraph includes:

1. passing the information in such forms as a statement, and a letter to clients, to specified or unspecified targets;

2. utilizing or organizing or instigating others to disseminate relevant information through mass media or information networks;

3. organizing or instigating others to appraise in the name of consumers its competitors’ goods and disseminate relevant information; and

4. other acts of dissemination.

A business operator shall not give false or misleading risk warning messages to its competitors’ good to damage the competitors’ business reputation and goods reputation.

Article 16

Any business operator who engages in production and operation via the Internet, shall obey laws, rules and commercial ethics, and shall not, by using technical means, by affecting the users’ choice or other means, conduct the following acts that impede or destroy the normal operation of the network products or services legally provided by other business operators:

1. inserting links or forcing a target jump, in the network products or services legally provided by other business operators without the latter’s approval;

2. misleading, deceiving or forcing the users to change, close, uninstall or making them unable to obtain the network products or services legally provided by other business operators;

3. maliciously conducting incompatibility to the network products or services legally provided by other business operators;

4. conducting such interference as interception and shutdown to the network products or services legally provided by other business operators;

5. downloading, installing or operating applications against the users’ will, which affects the normal operation of the equipment, function or other applications legally provided by other business operators;

6. failing to provide uninstalling function to the non-basic functional applications or setting barriers to uninstalling such applications, which affects the normal operation of the equipment, function or other applications legally provided by other business operators; or

7. other acts that impede or destroy the normal operation of the network products or services legally provided by other business operators.

 

Chapter III  Investigation of Suspected Unfair Competition Acts

    

Article 17

The supervision and inspection departments shall verify within a prescribed time limit the clue of an illegal act of unfair competition found according to their authority or through such channels as complaints, reporting, transference by other departments or assignment by the superior department, and decide whether to file the case for investigation or not.

Article 18

Where a supervision and inspection department finds an investigated case falls under the jurisdiction of other departments, it shall transfer the case to the relevant department according to law. If a cross-departmental dispute arises and can’t be settled through consultation, it shall be submitted to the municipal or relevant district coordinating mechanism of anti-unfair competition for a decision.

Article 19

The supervision and inspection departments may take the following measures to investigate a suspected unfair competition act:

1. entering the business premises of the suspected unfair competition act to conduct inspection;

2. interrogating a business operator under investigation, interests-concerned parties and other relevant units and individuals, and demanding that they make a statement of relevant information or provide other materials relevant to the act under investigation;

3. making inquiries about or duplicating agreements, account books, vouchers, documents, records, business correspondence and other materials that concern the unfair competition acts;

4. sealing up or detaining properties relevant to the unfair competition acts; and

5. checking the bank accounts of the business operators with suspected unfair competition acts.

Where the supervision and inspection departments take the measures provided in the preceding Paragraph, they shall make a written report according to law, and get the approval. If the measures provided in Item 4 of the preceding Paragraph need to be taken on spot in emergency cases, the report shall be submitted for approval within 24 hours, and the approval formalities shall be made up; if no approval is obtained, the measures shall be removed immediately.

Article 20

When the supervision and inspection departments investigate suspected unfair competition acts, the business operator under investigation, the interest-concerned parties and other relevant units and individuals shall provide the required materials or information in a truthful manner.

Where a right holder requests a supervision and inspection department to investigate and punish the suspected infringement of trade secret, he/she shall provide such preliminary materials as the specific contents of the said secret, the security measures that have been taken and the facts of infringement. The supervision and inspection department may, according to the actual circumstances, require the infringement suspect to provide the evidence that the trade information used thereby is not a trade secret or is legally obtained.

Article 21

The supervision and inspection departments and their staff members have the obligation of keeping confidential the trade secrets notified of in the investigation, and shall not disclose or illegally provide them to others.

Article 22

Where a supervision and inspection department finds a government department, relevant unit or their staff members support, cover up or engage in unfair competition acts, it may notify the department or unit and meanwhile make a copy of the notification to the superior or competent department of the said department or unit. The relevant department or unit shall handle the case according to law.

Article 23

This Municipality shall improve the connection mechanism between law enforcement and criminal justice in respect of unfair competition cases. Where a supervision and inspection department finds an unfair competition act is suspected of a crime, it shall transfer the case to relevant judicial department according to relevant provisions. Where a judicial department finds a clue of unfair competition act in handling a case, it may transfer the case to relevant supervision and inspection department.

 

Chapter IV  Environment Construction of Anti-Unfair Competition

 

Article 24

As the first person responsible for the anti-unfair competition, business operators shall implement their principal responsibilities, strengthen their internal control and compliance management of anti-unfair competition, and resist unfair competition acts on their initiative. Business operators shall be encouraged to establish and improve the management systems of anti-unfair competition such as the system of anti-commercial bribery, and the supervision and inspection departments shall conduct inspection to the business operators’ implementation of their management systems of anti-unfair competition in investigating and punishing the cases of commercial bribery.

Where a business operator’s case of unfair competition act is minor and is promptly corrected, causing no harmful consequences, he/she shall not be subject to administrative sanction according to law.

Where a business operator’s case of unfair competition act is minor or causes less harm to society, he/she shall not be subject to administrative coercion according to law.

Article 25

Trade organizations shall strengthen trade self-discipline, guide and regulate their members to legally compete, strengthen guidance for their members to establish and improve their management systems of anti-commercial bribery, coordinate in settling the disputes over competitions among their members, and maintain the competition order of the market.

Trade organizations shall, under the guidance of government departments, formulate norms of competition self-discipline and guides of competition compliance in their trades, and cooperate with and assist the supervision and inspection departments in investigating and punishing unfair competition acts.

Article 26

This Municipality shall encourage, support and protect all the organizations and individuals in the exercise of social supervision over unfair competition acts. The supervision and inspection departments shall guard the secret of organizations and individuals that report and assist in investigation and punishment of unfair competition acts.

No organization or individual shall fabricate facts to frame others, commit extortion, or abuse their right of reporting to disturb the normal work order of the supervision and inspection departments.

Article 27

The supervision and inspection departments shall establish working mechanisms to conduct advance guidance for business operators in carrying out business competition according to laws and rules, make public the discretion benchmark of unfair competition cases, and strengthen guidance for the business operators in establishing and improving their management systems of anti-unfair competition such as the system of anti-business bribery.

The municipal supervision and inspection department and the Municipal High People’s Court shall publicize typical cases of unfair competition on a regular basis, and jointly with the departments of publicity and judicial administration, conduct legal publicity of anti-unfair competition in such way as interpreting the law with cases and conducting interaction in real situations.

Article 28

As for an act that destroys the competition order and damages the consumers’ legitimate rights and interests, where a relevant organization provided by law brings a public interest litigation to a people’s court, the supervision and inspection department shall give support according to law.

Article 29

The standing committees of the municipal and district people’s congresses shall, by listening to and deliberating special work reports, carrying out law enforcement inspections and such other means, strengthen supervision over the implementation of these Regulations.

The standing committees of the municipal and district people’s congresses shall organize the deputies to the people’s congresses in such activities as special surveys and inspections, collect and reflect the people’s opinions and suggestions, and urge the relevant parties to carry out various work of anti-unfair competitions.

 

Chapter V  Legal Liability

 

Article 30

Where laws or administrative rules have provisions on the punishment for acts in violation of these Regulations, such provisions shall prevail.

Where violation of the provisions of Article 10 of these Regulations by a business operator falls under issuing a false advertisement, he/she shall be punished according to the provisions of the Advertisement Law of the People’s Republic of China.

Where a business operator’s act constitutes a monopoly, he/she shall be punished according to the provisions of the Anti-monopoly Law of the People’s Republic of China.

Article 31

Where a business operator conducts a confusing act in violation of the provisions of Article 8 of these Regulations, the supervision and inspection department shall order him/her to stop the illegal act, confiscate their such illegal goods as confusing products, labels, packages, publicity materials, moulds, printing plates, and drawings. When the total turnover of illegal business reaches or exceeds 50, 000 yuan, the said department may cumulatively impose a fine of not more than five times the turnover of the illegal business; when there is no turnover of illegal business or the turnover of illegal business is less than 50,000 yuan, the said department may cumulatively impose a fine of not more than 250,000. If the case is serious, the said department may revoke the operator’s business license.

If the name registered by a business operator constitutes a confusing act, and the supervision and inspection department or the people’s court makes an administrative penalty decision or judgement of ordering the use of a name to be stopped, the business operator shall go through the name alteration formalities within a prescribed time limit.

Where a business operator fails to go through the name alteration formalities within the prescribed time limit, the supervision and inspection department or the people’s court may, as applied for by the party concerned, issue a document of assistance in execution to the original registration department. Upon receiving the document of assistance in execution, the original registration department shall urge the business operator to promptly alter the said name. Before the name alternation, the name shall be replaced by the unified social credit code.

Article 32

When investigating a suspected unfair competition act, the supervision and inspection department shall, as required by laws and rules, publicize the investigation and punishment results in a timely manner.

Where a supervision and inspection department makes a decision of administrative penalty, it shall, within seven working days from the day of making the said decision, publicize the information of the administrative sanction case according to law via such channels as the portal website of its own department or system, and collect the sanction information as public credit information; if the case is complicated, the time may be extended for seven working days upon the approval of the person-in-charge of the department. The administrative department shall, within its statutory authority, take credit disciplinary measures to the illegal business operators.

 

Chapter VI  Supplementary Provision

 

Article 33

These Regulations shall be effective as of January 1, 2021.