The Standing Committee of the National People’s Congress passed the Amendment to the PRC Anti-Unfair Competition Law (AUCL) in November 2017, which provides more clarity on the scope of what constitutes commercial bribery. The Amendment took effect on 1 January 2018 and is the first amendment to the AUCL since its implementation in 1993. This important development indicates that China’s anti-corruption campaign continues to escalate.
The Amendment creates potentially greater risks for commercial bribery activities in China, including exposure to increased penalties. It reflects the legislators’ advanced understanding and awareness of the nature of commercial bribery.
Multinational companies in China will find that the Amendment clarifies the activity of commercial bribery, which requires a purpose of “seeking transaction opportunities or competitive advantage”. A transaction counterparty is no longer expressly listed as a potential bribe recipient, and bribe recipients are now clearly stated to include third parties engaged by a transaction counterparty. We anticipate that commercial bribery via third parties will be a focus of future investigations and enforcement in China, which follows a similar pattern of recent enforcement under US, UK and Brazilian anti-corruption laws.
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Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker McKenzie by e-mailing Danian Zhang (Shanghai) at danian.zhang@bakermckenzie.com
