On 18 March 2013, the Ministry of Commerce (MOFCOM) promulgated the Provisions on Regulating Competitive Activities in Outbound Investment and Co-operation ("Provisions"), which is set to become effective on 17 April 2013.
The Provisions encourage fair competitive activities of Chinese enterprises in their outbound investment and co-operation. The following competitive activities are considered unfair under the Provisions: -
i. giving commercial bribes to pursue business opportunities;
ii. unfair price competition for the purpose of edging out competitors;
iii. collusive bidding;
iv. defaming business reputation of competitors;
v. making false representations of business performance and achievement; and
vi. other competitive activities to be considered unfair under law.
The Provisions specify that the Administrative Regulation on Overseas Project Contracting, the Administrative Regulation on Foreign Labour Service Co-operation and the Administrative Measures on Outbound Investment shall be strictly observed by Chinese enterprises. If a Chinese enterprise conducts any act in violation of the Provisions, the MOFCOM will impose sanctions in accordance with those administrative regulations and measures.
In accordance with the Provisions, the MOFCOM, together with other authorities, will establish and maintain a system to record unfair competitive activities conducted by Chinese enterprises in overseas investment and co-operation. Such Chinese enterprises will not be able to enjoy any preferential treatment and support available under the State policy for a period of three years.
With China's "going global" strategy, overseas investment by Chinese investors has increased significantly during the past ten years. The Provisions mark the attempt of the government to regulate the issues of unfair competition amongst Chinese investors so as to promote healthy competition.
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