LAW & COMPLIANCE

What to Do Following China’s New Crackdown on Commercial Bribery

On 4 November 2017, the Standing Committee of the National People’s Congress passed the amendment to the PRC Anti-Unfair Competition Law (AUCL), which provides more clarity on the scope of what constitutes commercial bribery.

The Amendment will become effective 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.

We anticipate that commercial bribery via third parties will be a focus of future investigations and enforcement in China, following a similar pattern of recent enforcement under US, UK and Brazilian anti-corruption laws

What it means for companies in China

The Amendment creates potentially greater risks for commercial bribery activities in China, including exposure to increased penalties. The Amendment reflects the legislators’ advanced understanding and awareness of the nature of commercial bribery, which follows global anti-corruption trends.

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, following a similar pattern of recent enforcement under US, UK and Brazilian anti-corruption laws.

The following table sets out a brief overview of the Amendment affecting commercial bribery.

Changes to China’s Anti-Unfair Competition Law

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