[co-author: Ken Dai]

On June 27, 2025, China adopted a revised revision of its Anti-Unfair Competition Law (“AUCL”), which will take effect on October 15, 2025. As one of the two pillars of China’s competition law framework—alongside the Anti-Monopoly Law (“AML”)—the AUCL targets a wide range of unfair business practices, including deceptive advertising, commercial bribery, trade secret misappropriation, and digital market misconduct. While the AML addresses monopoly agreements, abuse of dominance, merger control, and administrative restraints on competition, the AUCL plays a complementary role by focusing on dishonest and anti-competitive conduct outside the scope of traditional antitrust law.

The 2025 revision of the AUCL significantly expands and updates the law to address emerging challenges in both traditional and digital markets. Key changes include new provisions prohibiting the abuse of a superior bargaining power—such as delaying payments to SMEs—and banning platforms from forcing operators to sell below cost. The law also introduces more detailed rules on online unfair practices, targeting behaviors such as manipulative keyword search rankings, data misuse, fake transactions and reviews, malicious returns, and shirking platform responsibilities. These revisions reflect a stronger regulatory push to curb “involutionary” competition and promote fair, innovation-driven growth.

This article focuses on two key aspects of the 2025 AUCL revision that have drawn particular attention: (1) the new prohibition on abuse of a superior bargaining power, and (2) the broadened rules on digital unfair competition, and their potential impact on corporate conduct and compliance.

Ⅰ. Legislative Background: Responding to Emerging Competitive Challenges

Since its enactment in 1993, China’s AUCL has undergone three major revisions—in 2017, 2019, and 2025. These successive updates reflect the AUCL’s expanding role in regulating market misconduct during China’s transition to a more innovation- and rules-based economy.

The 2017 revision represented a major structural update to the AUCL. It clarified the main categories of unfair competition, removed overlapping provisions with the AML, and for the first time introduced rules specifically targeting online unfair practices. The amendment also improved the liability framework by prioritizing civil remedies and clarifying the dual-track enforcement system combining administrative penalties with private litigation. The 2019 amendment focused narrowly on strengthening protections for trade secrets, signaling heightened legislative attention to intellectual property rights.

The 2025 revision directly addresses emerging risks in China’s platform-driven economy, including intensified forms of “involutionary” competition. It introduces new provisions targeting exploitative practices such as coercive low-price sales and abuse of superior bargaining power, while broadening the AUCL’s reach over digital misconduct—including data misuse, algorithmic manipulation, fake transactions, and malicious user behavior.

Collectively, these amendments illustrate a clear legislative trajectory: from refining foundational rules, to strengthening enforcement in key areas, to actively addressing new and complex forms of competition in a data-driven economy.

Ⅱ. Introducing a Prohibition on Abuse of Superior Bargaining Power: A Targeted Response to Payment Practices by Large Enterprises

One of the most notable changes in the 2025 AUCL revision is the introduction of a prohibition on abuse of superior bargaining power. This concept—unlike abuse of market dominance under the AML—does not concern a firm’s position in the overall market, but rather its relative advantage within a specific business relationship. While abuse of dominance typically harms the competitive process or excludes market rivals, abuse of a superior bargaining power targets dependency within individual transactions—often affecting weaker counterparties such as SMEs.

Although drafts dating back to 2016 initially proposed a broader framework to parallel the AML’s abuse of dominance regime, the final version reflects a more focused and pragmatic approach. It targets two types of conduct that are especially prevalent in practice: imposing significantly unfair contract terms on SMEs, and delaying payment under supply, service, or construction agreements.

Globally, the concept of superior bargaining power has appeared in jurisdictions such as Germany, Japan, South Korea, and France. Given that asymmetries in bargaining power are widespread in commercial practice, and definitions of “superior bargaining power” often remain vague, enforcement in jurisdictions like Japan or Germany has remained cautious.

In light of these challenges, China’s final version of Article 15 adopts a restrained and targeted approach. The statutory language is deliberately flexible:

• The provision adopts a targeted scope, applying only to large enterprises when dealing with SMEs, and focusing narrowly on two types of misconduct: imposing manifestly unfair contract terms and delaying payment for goods, services, or construction. This design responds to growing concerns over large companies imposing harsh payment conditions on upstream suppliers, especially in sectors marked by intense price competition. It reflects not only the policy goal of curbing “involutionary” competition, but also the AUCL’s core function of safeguarding weaker market participants, while avoiding unnecessary overlap with antitrust regulation.
• Enforcement is expected to be measured. Authority is limited to provincial-level regulators or above, and companies must first be given a rectification period before fines are imposed (which can reach up to RMB 5 million). This approach not only helps effectively restore market order but is also more acceptable to businesses.

While the new rule represents a clear regulatory signal, its practical implementation will depend on further clarification. Open questions remain as to how key terms such as “superior bargaining power,” “large enterprise,” and “unreasonable terms” will be defined. It also remains unclear whether the two types of misconduct listed in Article 15—unreasonable trading conditions and delayed payments—are independent triggers or must be read together. Legal overlap with the Civil Code, AML, and E-Commerce Law may also raise coordination challenges in enforcement.

That said, payment delays and abusive contract terms imposed by dominant buyers are likely to become a compliance focus in the near term. Businesses—especially large manufacturers, platforms, retailers, and supply chain hubs—should proactively review their contract templates and payment practices to mitigate risk. In June 2025, several leading automotive manufacturers, including BYD, reportedly adopted a 60-day payment standard for supplier invoices following regulatory pressure, signaling more structured regulatory expectations for large enterprises across industries.

III. Tackling “Involutionary” Competition in Digital Economy

Enforcement and judicial experience over the past several years revealed that the enumerated items were too limited to capture the evolving landscape of digital misconduct. By 2022, most unfair competition cases involving internet platforms had to rely on the catch-all clause, which lacked clearly defined legal criteria and often led to inconsistent outcomes in court. This unpredictability undermined legal certainty and compliance planning for businesses.

The 2025 revision addresses these concerns by codifying additional forms of misconduct that have become prevalent in practice. It adds two new sub-clauses targeting (1) improper data scraping and (2) malicious transaction interference. It also modernizes the provision’s operative language by expanding the scope of covered conduct from “technical means” to include data-driven and algorithmic practices, as well as the use of platform rules—bringing the legal framework more in line with the realities of platform governance and algorithmic business models.

In addition to updating the dedicated internet clause, the AUCL revision introduces several new provisions that further regulate platform behavior. For example:

• Article 14 prohibits platform operators from coercing or effectively forcing merchants to sell below cost, a practice often used to sustain predatory pricing strategies or claim “lowest price” guarantees;
• Article 21 imposes general duties on platforms to promote fair competition, including the establishment of internal rules, complaint channels, and obligations to address and report detected misconduct.

Together, these updates reflect a deliberate regulatory strategy to curb exploitative, zero-sum tactics among digital platforms and protect the long-term competitiveness of China’s digital economy. They also send a strong signal that “involutionary” competition—defined by downward price spirals and excessive pressure on SMEs—is not compatible with sustainable, innovation-led growth.

(a) Unfair Data Scraping and Misuse

One of the key additions in the 2025 AUCL revision is Article 13(3), which explicitly prohibits the unfair acquisition and use of data held by other operators: “Operators shall not obtain or use data legally held by other operators through fraudulent means, coercion, bypassing, or damaging technical management measures, nor shall they harm the legitimate rights and interests of other operators or disrupt market competition.”

Prior to this clarification, Chinese courts and authorites have long grappled with how to define the legal boundaries of unauthorized data acquisition and use:

• Some courts treated unauthorized data scraping as a violation of the AUCL’s general principle clause (Article 2), which prohibits conduct contrary to commercial ethics and good faith. For example, in Weibo v. Maimai (2016)¹ , the defendant collected user data beyond the authorized scope during a partnership and continued using the data after termination. The court emphasized a “triple consent” model—requiring user consent, platform consent, and continued authorization—and found that the defendant’s conduct violated good faith principles. A similar approach appeared in Hangzhou Network Co. v. Shanghai Information Co. (2021)² , where the defendant scraped pharmaceutical product information from a mobile app. The court focused on factors such as the cost of data generation, the scale and completeness of the scraping activity, and the potential harm caused, ultimately finding a violation of Article 2.
• Other courts relied on the catch-all clause in the former Article 12, which prohibited any conduct that disrupts the normal operation of a competitor’s online products or services. In Douyin v. Liujie (2021) ³, the defendant unlawfully obtained and publicly displayed non-public information such as user rewards and broadcaster income from Douyin’s live-streaming platform. The court held that the defendant failed to justify its data sources or scraping methods, and ruled that the conduct constituted unfair competition under Article 12(2)(iv).
• In the case of Zhenjiang Weifeng Computer Software Co., Ltd.⁴, the Zhenjiang AMR found that the company used crawling tools to extract product data from an e-commerce site and automatically repost it to a competing platform. Authorities found that this behavior substantially replaced the original service provider’s function and harmed normal market operations, constituting violations of both Article 2 and Article 12(2)(iv) of the AUCL.

While the 2022 draft version of the AUCL proposed more detailed criteria for assessing improper data conduct⁵—such as whether the scraping increased operational costs, amounted to functional substitution, or harmed consumers—the final text adopted a more concise formulation. Article 13(3) now explicitly prohibits the use of improper means to obtain or use data held by other operators, including fraud, coercion, and the circumvention of technical safeguards. The rule does not distinguish between public and non-public data, nor is protection limited to data of commercial value or subject to technical restrictions. This open-ended drafting approach leaves room for future clarification but also introduces interpretive flexibility that will likely depend on enforcement priorities and case-specific assessments.

(b) Abuse of Platform Rules and Malicious Transactions

The 2025 AUCL revision also targets a rising form of unfair competition in the platform economy. Article 13(4) states: “Operators must not abuse platform rules to directly or instruct others to engage in fraudulent transactions, fake reviews, or malicious returns, which harm the legitimate rights of other operators and disrupt market competition.”

This provision addresses a growing pattern in China’s highly competitive e-commerce sector. In pursuit of market share, platforms often implement aggressive policies—such as “refund-only” or expedited return mechanisms—to enhance user engagement and retention. They also feed merchant ratings, transaction authenticity, and return rates into algorithms that dynamically determine merchant rankings and visibility. Some competitors have begun to exploit these mechanisms to undermine rivals—for example, by placing fake orders, submitting artificial reviews to trigger platform penalties, or inflating return rates through bulk purchases and returns. Unlike traditional forms of reputational harm, these tactics weaponize platform enforcement systems to reduce a competitor’s exposure and disrupt their normal operations.

To address such conduct, the State Administration for Market Regulation (“SAMR”) introduced Article 16 of the Interim Provisions on Online Unfair Competition on September 1, 2024. The rule prohibits operators from using technical means—either directly or through third parties—to disrupt competitors’ operations by: (1) generating large volumes of short-term transactions or positive reviews to trigger platform penalties such as lower search rankings or product delisting; (2) placing bulk orders without payment; or (3) initiating mass returns or refusing deliveries. While the 2022 draft revision of the AUCL proposed to codify these behaviors in detail, the final 2025 law opted for a more general clause, now set forth in Article 13(4)—that captures these malicious transaction practices in broad terms.

In April 2025, enforcement authorities in Hangzhou applied this provision in a case involving a brand management firm that repeatedly placed and returned bulk orders at non-compliant merchants to coerce price adjustments.⁶ The practice caused financial losses and triggered platform algorithm penalties—such as reduced search visibility and transaction volume. The firm was fined RMB 200,000 for unfair competition under Article 16 of the Interim Provision.

(c) Forcing Merchants to Sell Below Cost

Article 14 of the 2025 AUCL introduces a new provision addressing a recurring concern in China’s platform economy: “Platform operators shall not compel or indirectly compel merchants on the platform to sell products below cost in accordance with platform pricing rules, thereby disrupting market competition.”

The provision aims to curb a distinct form of “involutionary” competition, whereby platforms—seeking increased traffic or market share—pressure merchants into unsustainable price reductions. Common tactics include algorithmic undercutting, automated price matching, and mandatory “lowest price on the internet” labeling. Such practices distort fair competition, erode profit margins, and ultimately diminish the quality and diversity of market offerings.

By prohibiting the imposition of below-cost pricing, the 2025 revision reinforces the AUCL’s foundational principle: that market competition should be driven by product quality, innovation, and service—not destructive price wars.

However, the provision is deliberately narrow in scope to preserve commercial flexibility and avoid overregulation. It only applies where:

• There is coercive conduct by the platform—e.g., price changes imposed without merchant consent or penalties for non-compliance;
• The selling price is demonstrably below cost, not merely low-margin or break-even; and
• The conduct disrupts market competition, rather than merely affecting individual pricing.

This calibrated approach reflects the legislature’s attempt to strike a balance: it targets clear abuses of pricing power while allowing platforms and merchants to engage in legitimate promotional strategies within reasonable commercial limits.

(d) Platform Governance for Ensuring Fair Competition

Article 21 of the revised AUCL introduces a new set of governance responsibilities for platform operators, marking a shift in regulatory expectations from reactive enforcement to proactive ecosystem management. Unlike the provisions in Chapter II on specific unfair competition behaviors, this rule appears in Chapter III on investigations—a placement that signals regulators now view platforms as quasi-regulators within their own marketplaces.

Under this rule, platform operators are required to:

• Incorporate fair competition principles into their service agreements and transaction policies;
• Establish internal procedures for receiving and addressing complaints, reports, and disputes related to unfair competition;
• Monitor and take timely and lawful corrective actions against unfair conduct by merchants operating on the platform;
• Preserve relevant evidence and report serious violations to the local supervisory authorities.

This provision effectively imposes both ex ante and ex post obligations: (i) Ex ante, platforms must design transparent and enforceable governance frameworks to prevent unfair practices among merchants; (ii) Ex post, they must act swiftly upon detecting violations—by intervening, documenting, and reporting where appropriate.

IV. Procedural Refinements and Outlook on Supporting Rules

In addition to expanding substantive provisions, the AUCL introduces several important procedural enhancements. One notable development is the formalization of a “regulatory interview” mechanism. Enforcement authorities are now empowered to conduct non-punitive interviews with companies suspected of unfair competition to encourage voluntary rectification before initiating formal investigations. This “soft law” approach lowers enforcement costs, gives companies a window for self-correction, and reduces legal friction. Notably, the final text broadens the scope of interview targets by replacing “legal representative or principal person in charge” with “relevant responsible persons,” easing compliance burdens for businesses.

On the sanctions side, the revision significantly raises the upper limits for monetary penalties, signaling more aggressive enforcement. Penalties have been significantly increased: up to RMB 5 million for unfair digital conduct under Article 13; RMB 2 million for coercive below-cost pricing or “choose-one” practices under Article 14; and RMB 5 million for persistent abuse of superior bargaining power under Article 15. These enhancements reflect a broader policy shift toward deterrence and compliance-by-design, encouraging companies to strengthen internal controls and proactively engage with regulators to mitigate legal risks.

Companies should be aware that obstructing or refusing to cooperate with investigations may itself constitute a standalone violation. Early-stage regulatory interviews may offer a valuable opportunity to contain regulatory risk and resolve concerns before formal penalties are triggered. Proactive engagement—paired with timely remediation—can be instrumental in achieving favorable outcomes.

While the AUCL revision strengthens the statutory foundation, effective implementation will still rely on a robust framework of supporting regulations and interpretive guidance. Businesses are advised to closely monitor the development of these instruments and adjust compliance strategies accordingly to minimize risks arising from interpretive uncertainty.

V. Conclusion: A Policy-Driven Shift To Rectifying Involutionary Competition

The 2025 revision of the AUCL marks a broader policy shift in China’s approach to market regulation. Against the backdrop of slowing growth and economic restructuring, Chinese authorities are increasingly focused on addressing “involutionary” competition—where players compete on low prices and short-term tactics at the expense of innovation, efficiency, and sustainability. This trend has drawn high-level political attention, with recent statements by central leadership calling for systemic reforms to restore healthy market dynamics.

The amended law introduces targeted tools to curb predatory pricing, platform abuses, malicious manipulation of rules, and exploitative conduct against SMEs. While these changes raise the compliance bar—particularly for digital platforms and large enterprises—they also open new avenues for businesses to defend against unfair tactics.

Looking ahead, the practical impact of the AUCL revisions will hinge on the rollout of implementing rules and enforcement guidelines. As with many legal reforms in China, broad legislative language will be refined through administrative regulation and case-by-case enforcement. Companies should monitor these developments closely and ensure that both internal policies and external partnerships reflect the new risk landscape.

¹ Beijing Intellectual Property Court, Civil Judgment No. (2016) Jing 73 Min Zhong 588.

² Shanghai Intellectual Property Court, Civil Judgment No. (2021) Hu 73 Min Zhong 912.

³ Hangzhou Intermediate People’s Court of Zhejiang Province, Civil Judgment No. (2022) Zhe 01 Min Zhong 1203.

⁴ Market Supervision Administration of Jiangsu Province, Typical Cases of Network Unfair Competition, available at: https://www.samr.gov.cn/xw/zj/art/2025/art_0d043840ec9445a689496bcf30c94820.html.

⁵

Article 18 of the Draft for Public Comments of the AUCL (Revised Version), released in 2022:

Business operators shall not engage in the following conduct that constitutes the improper acquisition or use of other operators’ commercial data, harms the lawful rights and interests of other operators or consumers, and disrupts the order of fair market competition:

(1) Illegitimately acquiring other operators’ commercial data by means such as theft, coercion, fraud, or electronic intrusion, including by circumventing technical protection measures, thereby unreasonably increasing other operators’ operational costs or affecting their normal business activities;

(2) Acquiring or using another operator’s commercial data in violation of agreed terms or reasonable and legitimate data scraping protocols, in a manner that substantially substitutes for the related products or services provided by the other operator;

(3) Disclosing, transferring, or using commercial data of other operators obtained through improper means, in a manner that substantially substitutes for the related products or services provided by the other operator;

(4) Other means of illegitimately acquiring or using commercial data in violation of the principles of good faith and commercial ethics, which seriously harm the lawful rights and interests of other operators or consumers and disrupt the order of fair competition.

For the purposes of this Law, “commercial data” refers to data lawfully collected by operators, which possess commercial value and are subject to appropriate technical protection measures.

The acquisition, use, or disclosure of data that is identical to information freely available to the public shall not be deemed improper under the first paragraph of this Article

⁶ SAMR, Release of Five Typical Cases of Online Unfair Competition, available at: https://www.samr.gov.cn/xw/zj/art/2025/art_0d043840ec9445a689496bcf30c94820.html.