Overview
On June 27, 2025, China’s National People’s Congress Standing Committee enacted a landmark revision to the Anti-Unfair Competition Law (AUCL), effective October 15, 2025. This sweeping update is the most significant since the law’s original passage in 1993 and its last major overhaul in 2017. The new AUCL is a direct response to the rapid evolution of China’s digital economy, the dominance of platform-based commerce, and the increasing complexity of market competition.
The revised AUCL introduces robust new measures targeting digital competition, platform practices, data rights, and traditional unfair competition behaviors. The law’s clear focus is on fostering high-quality, fair, and innovative market development, while strengthening the regulatory framework for both domestic and foreign market participants.
A defining feature of the 2025 revision is the explicit addition of an extraterritoriality clause. Article 40 of the new AUCL states:
“Where an act of unfair competition as prescribed by this Law is committed outside the territory of the People’s Republic of China, which disrupts the order of market competition within the territory of the People’s Republic of China or damages the legitimate rights and interests of domestic business operators or consumers, this Law shall apply.”
This provision extends the AUCL’s reach beyond China’s borders. Foreign companies, regardless of their physical presence in China, may be subject to the AUCL if their conduct outside China disrupts the Chinese market or harms the interests of Chinese business operators or consumers. In practical terms, any foreign entity doing business with Chinese companies, or whose actions affect the Chinese market, must now treat AUCL compliance as a core legal requirement.
Key Changes and Their Implications
1. Enhanced Brand Protection
- Expanded Definition of Confusion: The revised AUCL broadens the scope of “confusion” to include not only the unauthorized use of well-known trademarks and trade names, but also the use of such marks as search keywords - even if not visible in search results. This directly addresses the long-standing debate over “hidden” keyword use in online advertising, now explicitly regulated as a form of unfair competition.
- New Prohibitions on Commercial Defamation: The law strengthens prohibitions against fabricating or spreading false or misleading information that damages the commercial reputation or product reputation of competitors. It also covers acts of instructing others (such as hiring third parties or “water armies”) to engage in such conduct, reflecting enforcement trends in the digital marketing and influencer space.
2. Data Rights and Digital Economy Regulation
- Data Scraping and Use Restrictions: For the first time, the AUCL explicitly prohibits the unauthorized acquisition or use of data held by other operators through improper means, such as bypassing technical protection measures. This is a significant development for companies relying on data aggregation, scraping, or competitive intelligence, and aligns with China’s broader push to clarify commercial data rights.
- Platform Rule Abuse: The law introduces a new prohibition against platform operators abusing their rules to orchestrate or direct others to engage in unfair practices, such as fake transactions, fake reviews, or malicious returns. This targets both direct and indirect manipulation of platform ecosystems.
- Algorithm and Technical Manipulation: The AUCL addresses the use of algorithms, data, and technical means to interfere with the normal operation of competitors’ online products or services, including forced redirects, malicious incompatibility, and other disruptive behaviors.
3. eCommerce and Platform-Specific Rules
- Anti-Involution (Excessive Competition) Measures: The revision introduces rules to curb “involution” (excessive, destructive competition) on digital platforms. Notably, platforms are now prohibited from forcing or indirectly forcing merchants to sell below cost according to platform pricing rules, a response to widespread concerns about predatory pricing and merchant exploitation.
- Protection for SMEs: Large enterprises are forbidden from abusing their financial, technical, or channel advantages to impose unreasonable payment terms or conditions on small and medium-sized enterprises (SMEs), including delayed payments for goods, projects, or services.
- Platform Fair Competition Obligations: Platforms must now establish clear internal rules for fair competition, set up complaint and dispute resolution mechanisms, and report unfair competition incidents to local authorities. This codifies a higher standard of compliance and self-regulation for platform operators.
4. Strengthened Enforcement and Penalties
- Significantly Increased Fines: The law raises the maximum penalties for a range of unfair competition behaviors. For example, violations involving commercial bribery, trade secret infringement, commercial defamation, and digital unfair competition can now result in fines up to RMB 5 million, with personal liability for key individuals in certain cases.
- Civil, Administrative, and Criminal Liability: The law clarifies that violators may face civil, administrative, and even criminal liability, with priority given to compensating victims in cases of insufficient assets.
- Extraterritorial Reach: The AUCL now applies to unfair competition acts conducted outside China if they disrupt the domestic market or harm the interests of Chinese operators or consumers, signaling a new era of “long-arm” enforcement.
Following this legislative overhaul, it is expected that key regulatory bodies, such as the State Administration for Market Regulation (SAMR) and other sectoral authorities, will issue detailed implementation rules and industry-specific regulations.
Takeaways for Key Stakeholders
- Brand Owners: The expanded definition of confusion and explicit regulation of keyword advertising require immediate review of online marketing and search strategies. Companies should audit their use of competitors’ marks in both visible and hidden contexts.
- Data-Driven Businesses: Any data collection, aggregation, or competitive intelligence activities involving third-party data must be reassessed for compliance with the new restrictions on data acquisition and use.
- eCommerce Platforms and Merchants: Platforms must update their internal rules, pricing policies, and compliance programs to avoid new forms of liability, especially regarding pricing, merchant treatment, and complaint handling. Merchants should be aware of new protections against forced low pricing and delayed payments.
- All Market Participants: The increased penalties and broader scope of liability underscore the need for robust compliance programs, staff training, and proactive risk management.
Conclusion
China’s 2025 Anti-Unfair Competition Law revision represents a comprehensive modernization of the country’s competition regime, with far-reaching implications for brand protection, data rights, eCommerce, and platform governance. While the 2025 AUCL sets out the overarching legal framework, its practical application will be significantly shaped by the detailed rules and industry-specific guidance to be issued by government agencies. Businesses operating in or with China should promptly review their practices, update compliance protocols, and prepare for more rigorous enforcement in both the digital and traditional marketplace. Remaining vigilant and responsive to regulatory developments will be essential for ensuring full and effective compliance.
