By Harry Liu, Sam Li, Olivia Xia  King & Wood Mallesons’ Dispute Resolution group

On 4 November 2017, the Anti-Unfair Competition Law Amendment (“AUCLA) was ratified by the Thirtieth Meeting of the Standing Committee of the Twelfth National People’s Congress after three rounds of review[1]. It will come into effect on 1 January 2018. It has greatly improved the Anti-Unfair Competition Law (“AUCL”) which was enacted back in 1993.

Commercial bribery, as an integral concern of the AUCL, has been in the spotlight during the amendment process.
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By King & Wood Mallesons’ International Dispute Resolution Group

In recent years, several large multinational pharmaceutical companies have been found to be in violation of the Anti-Unfair Competition Law. Compliance in the area of commercial bribery is increasingly a focus of the Chinese authorities. Most recently, pharmaceutical companies have been punished in China for commercial bribery. Not only the companies, but also individual employees who have violated Chinese law, are being charged and prosecuted.

The State Administration of Industry and Commerce, as well as the administrative agencies of industry and commerce at lower levels, are primarily responsible for the enforcement of the anti-commercial bribery laws. The focus has been enforcement of the Anti-Unfair Competition Law and the Interim Provisions on Prohibition of Commercial Bribery (“Interim Provisions”).
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By King & Wood Mallesons’ Compliance Group

In order to strengthen the administration of pharmaceutical industry, to regulate the purchase of drugs, medical devices and medical disposables, to prohibit illegal transactions and to fight against commercial bribery, on December 25 the National Health and Family Planning Commission (the “NHFPC”) published the amended “Provisions on the Establishment of Commercial Bribery Blacklist in the Pharmaceutical Purchase and Sales Industries” issued by the former Ministry of Health on January 19, 2007. The New Provisions will come into effect on March 1st, 2014.
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By Liu Xiangwen, Monique Carroll and Zhu Yuanyuan King & Wood Mallesons’ Dispute Resolution Group

Much has been written on bribery and corruption in China, including the differences between criminal bribery and commercial bribery, and of course, the need for an effective compliance programme. However, foreign companies operating in certain complex or sensitive industries in China need to do more than instil an anti-corruption policy. What is needed is an in-depth understanding of the unique legal environment in their industries. This is because in some industries, particular conduct or business models permitted elsewhere, may be very sensitive and considered bribery or corruption. We recommend that companies operating in China adapt their compliance programme to account for industry specific regulations and sensitivities and undertake regular internal compliance audits as a check on the effectiveness of the compliance programme and to ensure that it remains up-to-date.
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By Liu Xiangwen, Monique Carrroll, Yang Jianyuan and Zhu Yuanyuan

The ‘why’

Due to the sensitivity of commercial bribery, corporations can be reluctant to instigate internal anti-commercial bribery investigations as a check on the effectiveness of their compliance program. Often an internal investigation will only be commenced when a serious problem emerges in the internal management system, a judicial or governmental investigation is initiated or a complaint is received accusing the corporation of serious compliance issues. However, given the increasing global focus on anti-bribery and corruption compliance, the value of regular internal compliance investigations or ‘audits’ has increased. The objective of a compliance audit is to identify and deal with any problems or risk areas before they are obvious to third parties and escalate to the media’s attention. Where the audit uncovers a serious problem that must be reported to regulators, the company will be in a much better position to pro-actively manage the situation – hopefully with the result of minimizing any penalties imposed on the company.

Over the medium to long term, regular compliance audits will strengthen the compliance and risk awareness of both the company and its employees and therefore contribute to an enterprise culture of compliance. Such a culture would in turn contribute to the long-term and sustainable development of the company.
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By Ariel Ye and James Rowland

On 29 December 2010 the Information Office of the State Council (China’s cabinet) published a report detailing China’s past and present anti-corruption efforts (the "White Paper").1 This has been followed in quick succession by the publication of a report including the key facts and figures relating to China’s anti-corruption efforts in 2010 and a public statement by President Hu Jintao in his address to the Central Commission for Discipline Inspection that the Chinese government will wage a more forceful fight against corruption in future and that "More efforts should be made to investigate graft in key industries and key posts".2


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作者:叶渌罗必成 金杜争议解决组

2010年12月29日,国务院新闻办公室发布了一份详细介绍中国过去及目前反腐败建设的报告(以下称“白皮书”1。 中国政府之前发布了关于2010年反腐败建设主要事实和数据的报告。此外,国家主席胡锦涛在中央纪律检查委员会全体会议上的公开讲话中表示,中国政府将会采取更强有力的措施遏制腐败,并且“应该加大对重要行业中贪污和重要职位贪污的调查”2 。在此基础上,中国政府发布了白皮书。


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