New Trends of the Regulations on the Commercial Bribery in China
The 2015 ‘Amendments to the Criminal Law (the 9th edition)’, and ‘Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues concerning the Application of Law in Handling of Criminal Cases of Embezzlement and Bribery’ are just like ‘a tossed stone raises a thousand ripples’. Is it a symbol that the administration on the commercial bribery (‘CB’) will become more critical?
However, according to the ‘2015-2016 China Anti-Commercial Bribery Research Report’, the SAIC system has investigated 4,521 CB cases in 2013, 2,986 in 2014, and 669 in the first half year of 2015. In addition, all level people’s courts have concluded 290,00 corruption and bribery cases in 2013, 31,000 in 2014, and 34,000 in 2015. In consideration of the efforts putting on the administration of the corruption and bribery cases in the recent years, the corruption and bribery cases did not increase obviously. So, the legislation changes have not reinforced the enforcement.
But such interpretation is one-sided. The reason for the decrease of CB cases investigated by the SAIC system, is that the adjustment of the SAIC system and the combination of different SAIC departments. In view of the following indications, a new round of anti-commercial bribery enforcement is not far away.
Firstly, from the legislative perspective, the ‘Anti-Unfair Competition Law (Revised draft)’(released in February 2016) has made many changes on the definition of CB, which refers to a business operator providing or promising to provide economic benefits to the opposing part in a transaction, or to a third party able to influence the transaction, to entice it to seek a transaction-related opportunity or a competitive advantage for the business operator; the categories of CB, which has listed some activities (e.g. certain sales rebates) which could not be decided firmly as a CB activity in accordance with the current laws and regulations.
In fact, the above definition of CB is not new, the ‘Opinions on Correctly Grasping the Policy Borderlines in the Specific Campaign against Commercial Bribery’(Zhong Zhi Hui Fa [2007] No.4) released by the central leading team of managing CB, has prescribed the similar provisions, which has also been mentioned in the typical case published by SAIC. After the ‘Anti-unfair Competition Law’ has come into force, the enforcement authorities would draft the implementation rules in handling the relevant cases. Coincidentally, the ‘Reply of SAIC to the Proposal proposed in the Third Session of the 12th National Committee of the CPPCC National Committee on a Special Governance on Commercial Bribery in the Traditional Industries’, SAIC has pointed out that while determining a CB activity, several factors shall be taken into consideration, e.g. whether the methods in obtaining a competitive advantage is legal, the market position and the competition status of the party, whether the consumer has adequate choices, the characteristic of the industry, and the influence of the receiving party on the relevant transaction. It has also emphasized that in 2015, SAIC has planned a 3 years’ specific governance on the serious issues related to the unfair competition, which will focus on the industries, e.g. the internet; sale and maintenance of automotive and parts; furniture, decoration materials, decoration; public enterprises and etc. This Reply is a little bit later than the ‘Anti-Unfair Competition Law (Revised draft)’, so the factors on defining a CB activity and the focused industries have reflected some characteristics of the incoming CB regulations.
There is another noteworthy phenomenon, which starts from June 2016, Guangdong province, other provinces and cities have released relevant regulations on the supervision on the market, in which the provisions on the enforcement procedures, requirements on the evidence, rules on the punishment and etc., related to CB cases, have been further clarified.
Therefore, with the completion of the reform of the SAIC system, and the development of the relevant legislative process, there might be a significant change on the quantity of CB cases and the strength of the enforcement.
Secondly, the supporting rules on anti-commercial bribery would be gradually released. For example, in April 2016, SAIC has implemented the ‘Credit Business Blacklist System’. According to this system, those enterprises which have been punished for the unfair competition activities, including CB activities, within 2 years by more than 3 times, these enterprises would be listed in this blacklist, and be disclosed to the public. In addition, the legal representative, the person in charge of those enterprises could not take the role as the legal representative, or the person in charge of other enterprises within 3 years. The Supreme People’s Procuratorate has released a series of regulations on the file checking system of the bribery crime.
Last but not least, from the prospective of the enforcement, ‘2015-2016 China Anti-Commercial Bribery Research Report’ has stated that 3 categories would become the focus in the later future. There are the third-party irregularities, improper discounts and cash rebate. Furthermore, telling from the typical cases published by SAIC, and the relevant comments, there are some new focus of the enforcement, such as the complimentary equipment bundled product sales, contrary to commercial practices such as warranty or performance bond cases.