On 1 January 2018, China’s long-anticipated amendment to the Anti-Unfair Competition Law (AUCL) came into effect. The revised law represents the first amendment made to the AUCL since it was enacted in 1993. Many have applauded the revised AUCL for revising the definition of commercial bribery. However, an analysis of the new text, combined with statements by enforcement officials, suggests that the definition of what acts constitute commercial bribery remains uncertain. Further, the new AUCL imposes more severe penalties for commercial bribery and expands the investigative powers of enforcement authorities. With central and local authorities seeking to use their traditional and new investigative powers to set enforcement examples, companies doing business in China should consider taking steps to assess and further enhance anti-corruption compliance in China.

The revised definition of ‘commercial bribery’

Drafted in 1993 when the Chinese economy was fundamentally different from that of today, the original AUCL defined commercial bribery as providing bribes in the form of money, property or other benefits for the purpose of selling or purchasing goods. The definition became outdated once the Chinese economy underwent its dramatic transformation, which led authorities at various levels to adopt broad interpretations of the law and inconsistency and unpredictability in enforcement. The amended AUCL redefines the purpose of commercial bribery to prohibit bribes as improper benefits given “to obtain a transactional opportunity or a competitive advantage”.

Apr-Jun 2018 Issue

Kirkland & Ellis International LLP