11 January 2021
As a new way of stimulating consumption, sales promotion has shown a strong effect on consumption with the continuous refresh of transaction volume on e-commerce platforms during promotion seasons such as "6.18" and "Double Eleven". For companies as operators, promotion has become an important means for companies to expand sales. For the market supervision department, it is imperative to improve the supervision rules, strengthen the supervision force, and strengthen the regulation and supervision of the promotion behavior. In this context, my country’s first "Interim Regulations on Standardizing Promotional Behaviors" (hereinafter referred to as "Regulations") specifically aimed at sales promotion behaviors were promulgated on November 5, 2020.
The content of the "Regulations" involves unfair competition, prices, consumer rights protection and other aspects. On the basis of the original "Anti-Unfair Competition Law", "Price Law" and "Consumer Rights Protection Law", it further emphasizes It is the obligation of business operators not to use false commercial information, fictitious transactions or evaluations to make false publicity or misleading commercial publicity to deceive or mislead consumers or the relevant public when carrying out promotional activities. The "Regulations" also added some new regulations on sales promotion. For example, a general definition of "promotional behavior" was made, and the requirements for rewarded sales were further refined, and relevant regulations on price promotion behaviors were added, especially the price benchmark in price promotion was clearly defined. In addition, the "Regulations" also stipulate the responsibilities and obligations of e-commerce platforms and commercial bribery in promotional activities. After the promulgation of the "Provisions", the "Provisions on Prohibition of Unfair Competition in Rewarded Sales Activities" (hereinafter referred to as "Prohibition Provisions") shall be repealed simultaneously.
It can be said that the promulgation of the "Regulations" puts forward new requirements for the majority of operators and e-commerce platforms. Operators need to conduct self-inspection and self-inspection in a timely manner and re-examine their related sales and promotion behaviors. Below, the author summarizes the new aspects of the "Regulations" that deserve special attention for enterprises as operators:
Operators need to judge which business activities are "promotional activities"
The promotional activities regulated by the "Regulations" include business activities such as rewarded sales and price promotions. Compared with the previous laws and regulations, the "Regulations" expand the relevant concepts involved in promotional activities. For example, Article 12 of the "Regulations" added "In order to promote mobile clients, attract customers, increase visibility, obtain traffic, increase click-through rates, etc., operators provide items, bonuses or other benefits incidentally" as rewarded sales. behavior. This means that new promotion models such as Weibo, official account forwarding or comment lottery, mobile client new user discounts, group discounts and other new promotion models will be included in the scope of supervision of the market supervision department. Article 2 of the “Regulations” provides a general provision for sales promotion. Operators “for the purpose of selling goods, providing services, or gaining competitive advantages, carry out promotions through rewarded sales, prices, free trials, etc.”, they should all be Included in the scope of supervision. In the specific business activities, which business behaviors belong to this type of promotion behavior, it is necessary to make professional and specific judgments in combination with actual business activities.
Operators have strict disclosure obligations in promotional activities
The "Regulations" have repeatedly emphasized the publicity obligations of business operators in promotional activities. For example, it is required to "show activity information clearly and conspicuously." Regarding prize-winning sales, in contrast to the "Prohibition Regulations" regarding the publicity of prize-winning sales, the object is "purchasers". Articles 13 and 14 of the "Regulations" remove the publicity related to prize-winning sales only for buyers. The information of the event stipulates that the information related to the rewarded sales needs to be "clearly announced", and more than a dozen items of information are listed. Regarding price promotion, the "Regulations" clarified that operators need to clearly indicate the conditions and time limit for price promotion, and especially set requirements for the indication or indication of price benchmarks. If the benchmark is not marked or indicated, the lowest transaction price within seven days before the promotion shall be used as the benchmark, and if there is no transaction within seven days, the last transaction price before the promotion shall be used as the benchmark. The obligation to disclose the price promotion benchmarks of merchants means that for the prohibition of “price increase first, discount later,” and other behaviors such as public decrease and dark increase, the first product may not use “original price” for price promotion.
Prizes or gifts in promotional activities must comply with relevant national regulations
Article 10 of the "Regulations" puts forward clear requirements for prizes or gifts in promotional activities, and cannot be infringing or substandard products, and products that the state has explicitly eliminated and stopped selling. Therefore, when carrying out promotional activities, operators should self-check whether the prizes or gifts meet the requirements in advance, and whether they comply with regulations such as the "Product Quality Law", "Food Safety Law", "Medicine Circulation Supervision and Administration Measures", etc. Or the gifts are not compliant and are punished by the market supervision and management department.
Put forward higher requirements for operators' internal compliance management
On the one hand, Article 19 of the “Regulations” requires that operators who conduct prize-winning sales promotion activities should establish files to truthfully, accurately and completely record prize-setting rules, publicity information, prize redemption results, award-winning personnel, etc., and properly keep both Years and accept supervision and inspection according to law. If the regulations are violated, the market supervision and management department may impose penalties. This puts forward higher requirements for the establishment and preservation of relevant files of operators. On the other hand, Article 9 of the "Regulations" requires operators not to use financial or other means to bribe others in the name of promotion in order to seek trading opportunities or competitive advantages. This also puts forward requirements for operators to strengthen anti-corruption compliance and strengthen internal personnel management.
The promulgation of the "Regulations" has greatly strengthened the regulation and supervision of the market supervision department for the promotion of enterprises to expand sales, and has put forward regulatory requirements for enterprises as operators and e-commerce platforms. Companies as operators urgently need to improve their business compliance after the "Regulations" are promulgated. In terms of external business activities, firstly, companies should combine professional legal opinions and determine which behaviors will be recognized as "promotional behaviors" in the "Regulations" based on their own business activities and fall into the key supervision scope of market supervision and management departments; secondly, When companies conduct promotional activities, they also need to combine professional legal opinions to formulate a complete disclosure system in accordance with the "Regulations", standardize publicity and promise fulfillment, and avoid non-compliance of gifts or prizes. In terms of business compliance within the enterprise, a comprehensive internal control and compliance system such as a rewarded sales file system should be set up in accordance with the "Regulations", and employee training should be strengthened to prevent commercial bribery in the form of promotion.
For further information, please contact:
Peng Qiao, R&P China Lawyers
info@rplawyers.com
