China’s revised Anti-Unfair Competition Law targets involutionary competition and digital-era risks

知识亮点 20 August 2025

On 27 June 2025, the amended Anti-Unfair Competition Law of the People’s Republic of China (中华人民共和国反不正当竞争法) (“2025 AUCL”) was passed and promulgated by the Standing Committee of the National People’s Congress, and will take effect on 15 October 2025. This is the third revision since the AUCL came into force in December 1993, with prior revisions made in 2017 and 2019. In comparison with the most recent version of the AUCL, which was issued in 2019, the 2025 AUCL introduces eight new articles and revises or refines 16 existing provisions.

This article discusses the key amendments in the 2025 AUCL underscoring China’s commitment to addressing emerging unfair competition issues in the rapidly evolving digital economy, which are primarily aimed at:

• regulating emerging unfair business practices in relation to the digital economy by curbing “involutionary competition (内卷in Chinese)” and abuse of technologies and data, particularly by online platforms;
• refining the scope of “acts of confusion”; and
• enhancing anti-commercial bribery measures and penalties.

Regulating emerging unfair business practices

One of the main regulatory and policy trends in China in 2025 is to tackle “involutionary competition”, that is, self-reinforcing cycles of hyper-intense, destructive competition where the focus is on lowering prices rather than on genuine and long-term technological evolution or value creation, resulting in eroding returns and value for all market participants. As a key regulatory measure of the anti-involution campaign, along with tackling online unfair competition conduct, the 2025 AUCL seeks to address emerging unfair business practices in the digital economy as discussed below.

Expansion of methods

The 2025 AUCL expands the recognised means of engaging in online unfair competition, moving beyond “technical means” to encompass the “use of data, algorithms, technology, and platform rules”. It regulates the deployment of digital tools through online platforms’ operational chains, from algorithm design to data collection and user interaction, by prohibiting: (i) the collection and use of data through fraudulent or coercive means, or circumventing or sabotaging technical frameworks (e.g. by breaching Application Programming Interface (API) rate limits, maliciously hijacking online traffic, etc.); and (ii) the abuse of platform rules to instigate false transactions, fake reviews, or malicious return of goods.

Platform operators’ conduct and responsibility

The 2025 AUCL prohibits abusive practices such as forcing sellers on platforms to sell at below-cost price. In facilitating on-the-ground implementation, platform operators will need to take on the responsibility of governing, monitoring, and managing unfair competition conduct on their respective platforms by: (i) specifying fair competition rules; (ii) establishing reporting, complaint, and dispute resolution mechanisms for unfair competition conduct; and (iii) reporting and retaining records of unfair competition incidents of business operators.

Safeguards for SMEs

The 2025 AUCL broadens the traditional concept of “abuse of dominant market position by enterprises” in antitrust law by emphasising fairness and reasonableness in transactions between large enterprises and small and medium-sized enterprises (“SMEs”). A large enterprise (even if not in a dominant market position) may be found to have engaged in unfair competition if it leverages its advantages in capital, technology, channels, industry influence, or other areas to: (i) compel SMEs to accept transaction terms that are evidently unreasonable, including through unfair payment schedules, methods, conditions, and liability provisions; or (ii) delay payment to SMEs, including for goods, construction projects, or services.

Refining the scope of “acts of confusion”

The 2025 AUCL broadens and refines the scope of prohibited “acts of confusion”, mainly through the following:

• Adding online names, social media account names, application names and icons into the protected group along with trademarks and tradenames. This amendment is part of the wider regulatory effort to keep pace with the rapidly evolving digital economy and user generated-media ecosystem, extending protection to emerging digital identifiers against misleading online
• Enhanced protections against misuse of trademarks. Complementing and extending intellectual property law protections, the 2025 AUCL deems it an act of confusion for a business operator, without authorisation, to: (i) use another party’s registered trademark or unregistered well-known trademark in such business operator’s trade name; or (ii) set another party’s product name, enterprise name (including abbreviations and trade names), registered trademark, or unregistered well-known trademark as a search keyword, thereby misleading consumers into believing that such business operator’s products are affiliated with that other party.
• Imposing liability on business operators who assist others in committing acts of confusion. This amendment addresses the common problem that deceptive acts are typically the result of collaboration between multiple parties. For instance, where an e-commerce platform knowingly facilitates confusing advertisements (e.g. by providing technical infrastructure or a virtual platform for the unauthorised use of another entity’s registered trademark), both the business operators directly engaging in the act and the platform operator abetting such act will be liable for having engaged in unfair competition.

Enhancing anti-commercial bribery measures and penalties

The 2025 AUCL addresses commercial bribery by introducing a prohibition on not only the offering of bribes by businesses, but also the acceptance of bribes by employees, agents, and third parties who influence transactions. This reflects a broader and more complete anti-corruption strategy that holds both sides of a bribery transaction accountable, particularly important in unbalanced business relationships where more dominant counterparts (such as platform operators) may seek to extort or unlawfully solicit benefits from weaker parties (such as SMEs).

The 2025 AUCL also introduces personal liability for a legal representative, principal person in charge, or other directly responsible individual of a business that commits a bribery offence, ensuring that key personnel cannot shield themselves behind the corporate veil when anti-bribery rules are breached.

The maximum fine for entities engaging in commercial bribery has been increased from RMB3 million to RMB5 million (approximately US$418,000 to US$697,000), while individuals accepting bribes may be fined up to RMB1 million (approximately US$139,000), in each case in addition to the confiscation of illegal gains by the authorities. These changes demonstrate the importance of the 2025 AUCL and China’s resolve to tackle commercial bribery as a major unfair and illegal business practice. Maximum fines and penalties for various other violations have also been similarly increased.

Extraterritorial application

Notably, the 2025 AUCL introduces an extraterritorial application provision, such that acts of unfair competition committed outside China fall within its scope if they disrupt the domestic market or harm the lawful rights and interests of Chinese businesses or consumers. This has significant implications both to Chinese enterprises with an international presence, and to multinational enterprises with a presence in or nexus to China, whether through supply chains, consumer markets, or other means.

Practical implications

Against the backdrop of the ever-advancing digital economy, the 2025 AUCL underscores China’s commitment to fostering a fair, open, orderly, and competitive market environment, while adapting to emerging technological challenges and evolving business models. It aims to foster a healthy and sustainable market environment and counter the damaging impact of involution.

Businesses will need to promptly review, update, and align their processes and practices with the new legal requirements against unfair competition by establishing robust internal control systems and policies and by monitoring compliance across all operations. These include marketing, advertising, procurement, third-party partnerships, and sales practices - particularly those with online or digital elements. Detailed implementation guidelines and clarifications, particularly the metrics and criteria that will be used to interpret “large enterprises” and “below-cost price”, are pending. However, the substantiveness of the 2025 AUCL’s requirements and its forthcoming commencement on 15 October 2025 mean that it is important for businesses (especially “large enterprises” and platform operators that have larger scales of business) to start their internal review processes proactively and promptly.

Given the law’s extraterritorial reach, foreign companies engaging in business activities that involve China or Chinese consumers - especially if they have an entity in China, or other businesses/assets in or potential risk exposure within China - should review and manage their practices more closely to ensure compliance with the 2025 AUCL.