China plans stiff fines in tech-related changes to competition law

China’s market regulator proposed amendments on Tuesday to a law on unfair competition, making provisions for fines ranging as high as a 5% share of a firm’s annual revenue to punish such practices by internet companies.

The changes, open for public comment until Dec. 22, are part of a two-year-old crackdown on formerly freewheeling giant internet firms, which China has punished for activities from monopolistic behaviour to exploit consumers.

Operators must not use data, algorithms, technology or any capital advantages to engage in unfair competition, the State Administration for Market Regulation (SAMR) said in a revised draft of the measures.

To protect consumers, operators would be barred from using algorithms to give users “unreasonably different treatment or unreasonable restrictions”, by analysing user preferences and their trading habits, it added.

Another new rule, in the third set of alterations to the law since it was adopted in 1993, prevents a business in an advantageous position from forcing a counterparty to sign exclusive agreements.

Also, such businesses should not block external links or services from their platforms without a reason, the regulator said.

Operators infringing such provisions can face fines ranging from 1% to 5% of annual revenue, with legal representatives subject to fine of 100,000 yuan to 1 million yuan ($14,008-$140,080).

Authorities have been particularly concerned over “disorderly expansion” of online platforms, which they accuse of exploiting advantages in capital, and have vowed to “perfect” legal rules against unfair competition.

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