Shanghai competition regulations boost compliance management

Shanghai competition regulations boost compliance management, 上海新反不正当竞争条例敦促企业加强合规管理

Effective from 1 January 2021, the Shanghai Anti-Unfair Competition Regulations require all business operators in Shanghai to strengthen their internal controls and compliance management. This is the first time that the concept of a compliance programme has been introduced into Chinese laws and regulations.

The above-mentioned regulations constitute the first set of amended local rules since the national Anti-Unfair Competition Law was revised in 2018. These developments have a significant impact on the prevention and enforcement of commercial bribery, and the management of compliance risks. Key points include:

(1) The introduction of the concept of “compliance management” into legislation, which requires business operators to establish and improve their compliance programmes – preventing commercial bribery is an explicit requirement of such compliance management;

(2) The granting of power to authorities for an inspection of an organisation’s implementation of their compliance programme in preventing commercial bribery; and

(3) The attachment of great importance to guidance from industry bodies and authorities on the establishment and improvement of compliance programmes.

Implications for business in China

Article 24 of the regulations specifically provides that business operators shall “strengthen internal control and compliance management, and consciously resist unfair competition acts”.

This development is the first time the requirement of a compliance programme has been introduced into Chinese laws and regulations, and is in line with similar requirements of the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act (UKBA). However, unlike the FCPA and the UKBA, it is not clear whether an effective compliance programme will mitigate or eliminate liability under the regulations. There is also no indication as to whether the lack of an effective compliance programme would be a ground for liability or penalty.

Despite this lack of clarity, the key message from the regulations is that business operators in China urgently need to prioritise the implementation of an effective compliance programme. As a further incentive, the regulations specifically empower authorities to inspect the implementation of an organisation’s compliance programme when conducting investigations on commercial bribery.

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 Howard Wu (Shanghai) at