China Plans Big Fines for Tech Firms Abuse Competition Law

China’s market regulator is planning big fines for companies and tech platforms that benefit from unfair competition.

Amendments proposed on Tuesday by the market regulator to the law on unfair competition would allow fines 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 December 22, are part of a two-year-old crackdown on formerly freewheeling giant internet firms such as Alibaba, Tencent and others, which China has punished for activities from monopolistic behaviour to exploiting 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 analyzing user preferences and their trading habits, it added.

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Exclusive Agreements Banned

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 to $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.