Huang Pulin: Definition of commercial bribery practice

Author | Huang Pulin, Legislative Affairs Committee of the Standing Committee of the People's Congress of Fuzhou City, Jiangxi Province

Edit | Bruce

directory

1. What is bribery?

II. The former SAIC's definition of commercial bribery leads to the "generalization" of commercial bribery

III. The Anti-Unfair Competition Law was amended in 2017 to correct the generalization of commercial bribery

IV. The "Penetration Principle" in the Definition of Commercial Bribery

5. Application of law in cases of commercial bribery in the purchase and sale of drugs

6. Common types and disputes of commercial bribery in pharmaceutical enterprises

VII. Discussion on the definition and elements of commercial bribery under the new Anti-Unfair Competition Law

VIII. Examples of typical cases of commercial bribery

One

What is bribery?

1.1. Bribery Definition

——The Commercial Press, A Dictionary of Modern Chinese:

Bribery refers to the use of money and property to buy off others; Used to buy off other people's property.

——Baidu Chinese:

Bribery refers to the use of money or goods to buy others (to do bad things).

Bribery is often synonymous or similar to bribery or bribery.

1.2. Essential characteristics of bribery

1.2.1. Undue inducement;

1.2.2. The bribe giver intends to obtain assistance or opportunities;

1.2.3. The bribe party violates the duty of loyalty and integrity by selling the interests of others ("doing the generosity of others and enriching his own pockets").

1.3. What did the bribe taker sell?

Bribery is the exchange of official benefits (or status benefits) through bribery.

-- The bribe-taker, i.e., the bribe-taker, obtains improper benefits and betrays its duty of loyalty and integrity to others based on its position, contract, etc. (in essence, selling the interests of others), thereby providing assistance or opportunities to the bribe-giver.

-- Under normal circumstances, the self-interest of a market entity cannot become an improper interest that it sells due to bribery. That is, what the bribe-taker sells is essentially the interests of others, and the interests of others that he can influence based on the convenience of his position or status (the interests of others that he should protect based on his duty of loyalty and integrity).

1.4. Will there be bribery between the two parties to an ordinary civil and commercial transaction?

Buying and buying are both derogatory terms with strong moral overtones.

Ordinary people, enterprises, and each other, in civil and commercial transactions, giving each other benefits, gifts, and other benefits, generally does not belong to "bribery, buying" or "bribery".

-- If a party to a market transaction obtains benefits such as concessions from the other party to the transaction, there is no violation of the duty of loyalty and honesty when it transfers or sells its own interests, regardless of whether it is equivalent or not.

-- The reason why the bribe-taker is willing and able to be bribed is because he is betraying the interests of others and not his own.

1.5. Bribery, with inducements of interest

Bribery is generally used as a means of inducement of improper benefits. But bribery, as well as inducement of profit, is not the same.

The inducement of interests may be legitimate interests or improper interests. If there is no question of betraying the duty of faithfulness and integrity, even if it is inducement with improper benefits, it is not a bribe.

Gambling and prize sales are all inducements of interest, which may or may not be legal; Even if it's an unfair prize sale, even if it's gambling, it's not a bribe.

1.6. Is it bribery to increase or decrease the price in violation of the price limit regulations?

Those who violate the national price limit regulations to increase or reduce prices are generally price violations, rather than "buying" or "bribery".

For example, according to the provincial government's pricing catalogue, the installation fee for the renovation project of "one household and one meter" of tap water for residents in old urban communities shall be set by the government, and each household shall not exceed 1,200 yuan. The water company is asking for a price increase, not a bribe; In order to speed up the progress, residents voluntarily added more money, and it was not a bribe.

Two

The former SAIC's definition of commercial bribery led to the "generalization" of commercial bribery

2.1. Problems in the definition of commercial bribery of the former State Administration for Industry and Commerce

Black's Law Dictionary:

Commercial bribery refers to the way in which a competitor secretly buys the employees or agents of the counterparty to obtain a competitive advantage over its competitors.

The Anti-Unfair Competition Law of the People's Republic of China, whether it is the 1993 edition, the 2017 edition, or the 2019 edition, has not directly defined commercial bribery. However, the relevant regulations and normative documents of the former State Administration for Industry and Commerce have defined and required commercial bribery.

2.1.1. Paragraph 2 of Article 2 of the Interim Provisions on the Prohibition of Commercial Bribery (1996):

Commercial bribery refers to the use of property or other means by business operators to bribe other units or individuals for the purpose of selling or purchasing goods.

2.1.1.1. "Commercial bribery" is defined by "bribery", which is synonymous with repeated and circular definitions.

2.1.1.2. Wrongly limiting the bribe party to the other party's entity or individual, excluding third parties closely related to the transaction from the scope of the bribe-taker.

2.1.2. State Administration for Industry and Commerce, "Reply to Questions Concerning the Qualitative Treatment of "Capitation Fee" and "Parking Fee" Paid by Travel Agencies or Tour Guides Paid by Shopping Malls (Shang Shang Gong Zi [1999] No. 170):

Article 8 of the Anti-Unfair Competition Law prohibits business operators from using property or other means to bribe for the purpose of selling or purchasing goods, and in essence prohibits business operators from inducing transactions with improper benefits. Regardless of whether a business operator gives such an inducement to the counterparty or an individual, or to another person closely related to the transaction, and whether or not the giving or receiving of such benefits is recorded in the account, as long as the inducement is for the purpose of winning the transaction and affects the fair competition of other competitors in terms of quality, price, service, etc., it constitutes a prohibited commercial bribery.

-- It fits the characteristics of "undue inducement" and "intent to obtain help or opportunity" of bribery, but omits the characteristics of "the bribe-taking party violates the duty of loyalty and integrity".

2.1.3. The former SAIC's reply to define commercial bribery as "undue inducement".

(1) Reply of the State Administration for Industry and Commerce on the Qualitative Treatment of Payments and Charges for Insurance Agency Fees Exceeding the Standards Prescribed by the State (Shang Shang Gong Zi [1997] No. 256)

(2) "Reply on Whether the Doctor's Payment of CT "Referral Fees" to Doctors by Hospitals Constitutes an Act of Unfair Competition" (Shang Shang Gong Zi [1997] No. 257) - to doctors in other hospitals

(3) "Reply to the Question on the Qualitative Treatment of the Behavior of Selling Beer by Buying Bottle Caps" (Shang Shang Gong Zi [1997] No. 321) - Beer company to hotel waiter

(4) "Reply to the Question of Qualitative Treatment of Contracting Construction Projects by Bribery" (Shang Gong Zi [2000] No. 62) - property given by the construction enterprise to the construction unit

(5) Reply to the Question on the Qualitative Treatment of "Labor Fees" Illegally Received by Hospitals from Insurance Companies (Shang Shang Gong Zi [2000] No. 97)

(6) Reply to the Question of Whether the Behavior of Collecting Commercial Sponsorship Funds, Publicity Fees, and Advertising Fees from the Other Party in Counter Joint Ventures Can Be Characterized as Commercial Bribery (Shang Shang Gong Zi [2001] No. 152)

2.2. The "generalization" of commercial bribery law enforcement

Over the years, the former industrial and commercial authorities have investigated and dealt with a large number of commercial bribery cases from the perspective of "undue inducement to obtain trading opportunities or competitive advantages", involving a wide range of industries: medicine, insurance, construction, tourism, shopping malls and supermarkets, catering services, etc. Among them, a large number of cases have determined that the inducement of interests between the parties to the transaction constitutes commercial bribery, and even if both parties to the transaction are private institutions or individual industrial and commercial households, it is also determined to be commercial bribery.

For example, if a supplier pays a "fee for entering the market, a special fee, a fee for stacking heads" or other fees or rebates to a counterparty such as a shopping mall, a supermarket, or a restaurant, or provides free equipment such as a freezer, it will be investigated and punished as commercial bribery.

-- This raises questions about the "generalization" of commercial bribery law enforcement. There are also many administrative penalties that constitute commercial bribery between the parties to the transaction, which have been revoked by the court in administrative litigation.

2.2.1. Xiamen Jima paid the "special fee" commercial bribery case to the hotel

In 2004, the Xiamen Municipal Administration for Industry and Commerce determined that Xiamen Jima Liquor Co., Ltd. had paid money and materials to hotels and entertainment venues in the name of "special fees" and "sponsorship fees" to obtain the exclusive right to sell Great Wall wines, which constituted commercial bribery and imposed administrative penalties.

In 2005, the Xiamen Intermediate People's Court made a final judgment to revoke the administrative penalty imposed by the Xiamen Municipal Administration for Industry and Commerce, holding that although the express payment of "special fees" excluded competitors, it was not commercial bribery.

2.2.2. Exclusive sales agreement of China Resources Snow Beer Restaurant

In October 2006, the Chongqing Municipal Administration for Industry and Commerce filed a case for investigation on commercial bribery against China Resources Lanjian (Guang'an) Beer Co., Ltd. for signing an agreement with a restaurant to sell beer at a special venue, and obtaining the sole right to promote and sell beer by paying admission fees and corkage fees.

China Resources Snow Beer (China) Co., Ltd. reacted violently and publicly accused the Chongqing Municipal Administration for Industry and Commerce of maliciously "banning" Snow Beer, which is a practice of local protection in the name of commercial bribery investigation.

2.2.3. Fees such as pile fees will be charged between supermarkets and their suppliers

On the one hand, retail enterprises spend huge sums of money to build the sales terminal of a mature brand, and it is reasonable for them to require suppliers to pay a certain fee based on their brand equity, and the "entry fee" cannot simply be recognized as commercial bribery.

On the other hand, the issue of retailers forcibly charging unreasonable fees to suppliers should be regulated from the perspective of prohibiting the abuse of market dominance and comparative advantage, which is an act of attaching unreasonable trading conditions rather than commercial bribery.

-- Article 13 of the Measures for the Administration of Fair Trade of Retailers and Suppliers issued by the State Administration for Industry and Commerce of the Ministry of Commerce and Industry in 2006: Retailers shall not charge or indirectly collect fees that are not directly related to the sale of goods and should be borne by the retailer itself or for failing to provide services.

2.3. The harm of generalization of commercial bribery law enforcement

The "generalization" of commercial bribery law enforcement is not conducive to cracking down on real commercial bribery, and will even hinder normal business innovation and business competition.

-- Commercial bribery has a very strong moral judgment attribute.

-- Some commercial competition models and commercial marketing strategies, even if there is a suspicion of unfair competition, but there is no problem of violating the duty of loyalty and integrity, if they are generally identified as commercial bribery, it is easy to damage the international image of mainland enterprises, and it is also easy to cause relevant units and their responsible persons to be criminally filed at every turn.

Three

The Anti-Unfair Competition Law was amended in 2017 to rectify the generalization of commercial bribery

3.1. The Standing Committee of the National People's Congress removed the term "counterparty" from the list of bribe-taking entities

Although there are a lot of doubts about the "generalization" of commercial bribery, when the Anti-Unfair Competition Law was amended in 2017, the draft amendment drafted by the former State Administration for Industry and Commerce and submitted by the State Council to the Standing Committee of the National People's Congress for deliberation still intends to list "counterparties" and "third parties that may affect transactions" as subjects of commercial bribery.

However, during the deliberations of the Standing Committee of the National People's Congress, there were opinions that "the property given by a business operator to the counterparty of the transaction is a normal commercial act and does not belong to commercial bribery". In the second review draft of the revised draft, the term "counterparty" is deleted from the list of bribe-taking entities.

Article 7 of the Anti-Unfair Competition Law of 2017 restricts commercial bribery entities to three categories on the basis of clarifying that the purpose of commercial bribery is to "seek transaction opportunities or competitive advantages":

(1) the staff of the counterparty to the transaction;

(2) Units or individuals entrusted by the counterparty to handle relevant affairs;

(3) Units or individuals that use their authority or influence to influence transactions.

3.2. Does the subject of bribery include the counterparty of the transaction?

Article 7 of the amended Anti-Unfair Competition Law clearly excludes the first two types of bribery entities. So, does the third category of bribe-taking entities "units or individuals who use their power or influence to influence transactions" include the counterparty of the transaction?

Published by Law Press in 2018, the Interpretation of the Anti-Unfair Competition Law of the People's Republic of China, edited by Wang Ruihe, then director of the Economic Law Office of the Legislative Affairs Commission of the Standing Committee of the National People's Congress, pointed out on page 21:

This type of entity is generally independent of the parties to the transaction and has no direct relationship with the relevant affairs to be handled, but can only influence the business decisions of the counterparty or the behavior of the staff and trustees of the counterparty by virtue of its authority or influence, so as to help the bribe giver seek transaction opportunities or competitive advantages.

3.3. The legislative meaning of the amended Anti-Unfair Competition Law on commercial bribery

Judging from the interpretations written by the legislative staff who participated in the revision of the Anti-Unfair Competition Law in 2017, the original meaning of the legislation should be that, under normal circumstances, the counterparty to the transaction is not the subject of commercial bribery.

The essential characteristics of commercial bribery are: 1. Improper inducement, 2. The bribe giver intends to seek transaction opportunities or competitive advantages, 3. The bribe-taking party violates the duty of loyalty and integrity, and uses the convenience of its position, trustee status, authority or influence to sell the interests of others to help the bribe giver obtain transaction opportunities or competitive advantages.

3.4. Key points of the amendment to the Anti-Corruption Law on commercial bribery

3.4.1. Clarify the purpose and elements of commercial bribery: seeking transaction opportunities or competitive advantages. This is the difference from ordinary bribery.

3.4.2. Clarify that the subject of commercial bribery is the operator; Scope of bribe-taking entities: three categories.

3.4.3. Removal of rebate provisions.

3.4.4. It is clarified that bribery by the staff of the operator shall be recognized as the act of the operator; However, the proprietor has evidence to prove that the staff's conduct is unrelated to seeking trading opportunities or competitive advantages for the proprietor.

3.4.5. Increase the degree of administrative punishment for commercial bribery, increase the amount of fines to between 100,000 and 3,000,000 RMB, and increase the penalty of revocation of business licenses where the circumstances are serious, but limit the administrative punishment to bribe-givers (bribing others), and do not include bribe-takers.

3.5. Employees who pay bribes to gain a competitive advantage penalize their enterprises

3.5.1. Unfair competition case of Shanghai Yiben Trading Co., Ltd.:

In order to expand business and improve sales performance, the company's employees presented gold pendants to the purchasing manager of a trading firm and agreed to give rebates. Although the specific act of giving away the gold pendant was carried out by the company's employees, the purpose of the bribery was to allow the company to obtain trading opportunities or competitive advantages, so the bribery was carried out by the company.

3.5.2. If an enterprise explicitly prohibits employees from bribing others to obtain trading opportunities or competitive advantages through employee norms and company systems, can employees only be deemed to have paid bribes but not to be found to have committed commercial bribery?

——It is necessary to analyze the specific situation on a case-by-case basis to see whether the company condones, acquiesces, or induces employees to pay bribes, or whether it really strictly prohibits employees from giving bribes.

-- In the "Nestle employee bribery case", the Lanzhou Intermediate People's Court did not recognize the crime of offering bribes by the unit, but insisted on the crime of bribery by individual employees.

Four

The "Penetrating Principle" in the Definition of Commercial Bribery

4.1. Reasons for "penetration" of the counterparty

The subject of commercial bribery is limited to the staff of the counterparty, the trustee of the counterparty, and the units or individuals who use their authority or influence to influence the transaction, and generally does not include the counterparty.

However, under certain circumstances, discipline officers, anonymous agents, users of special financial funds dedicated to reimbursement and reimbursement, public hospitals that sell drugs at zero price difference or with a limited mark-up rate, primary and secondary schools that purchase school supplies or school uniforms for students, etc., although they participate in market transactions in their own names, are in essence agents, trustees or representatives of relevant stakeholders, and the legal consequences of relevant transactions are actually borne by relevant stakeholders.

4.2. Meaning and Application of the "Penetrating Principle".

After the Anti-Unfair Competition Law was amended and passed in 2017, Yang Hongcan, then director of the Anti-Monopoly and Anti-Unfair Competition Law Enforcement Bureau of the State Administration for Industry and Commerce, said in an exclusive interview with China Business Daily:

"The parties to the actual transaction should be analysed. For example, if the school is entrusted by all students to sign a school uniform purchase contract with the school uniform supplier, the two parties to the transaction shall be the supplier and the student, and the legal consequences of the transaction shall be borne by the student. If the supplier gives the school property or other economic benefits, it is suspected of constituting commercial bribery. ”

- The "penetration principle" penetrates the cloak of the nominal counterparty of the transaction, revealing that it is not the subject that actually suffers the consequences of the transaction, but the agent, representative and trustee of the actual counterparty. For example, schools purchase school uniforms on behalf of students, and public hospitals purchase drugs, medical equipment, and medical consumables on behalf of patients and medical insurance funds.

——Penetrate the superficial trading relationship, analyze the two sides of the actual transaction, and find out the actual trader represented or represented by one of the nominal parties involved in the transaction.

When the State Administration for Market Regulation (SAMR) studied and revised the supporting regulations on the prohibition of commercial bribery, it was suggested that public utility providers such as public hospitals should be identified as trustees of relevant public utility management departments or public utility service recipients. However, the regulations have not yet been revised.

4.3. "Penetration" of public utility service providers such as public hospitals in the transaction of medicines, etc.

In the purchase and sale of medicines, at present, based on the "penetration principle", the procurement of drugs, medical equipment or consumables by public hospitals is generally identified as "a unit or individual entrusted by the counterparty to handle relevant affairs", or "a unit or individual that uses authority or influence to influence the transaction". But controversy has always existed.

Just because hospitals and other public utility service providers participate in market transactions in the course of public services, it cannot be automatically determined that the public utility management department and the public utility service object are the substantive counterparties of the transaction. The application of the "penetration principle" in the definition of commercial bribery still needs to be further studied and demonstrated.

For the procurement of drugs, medical equipment and medical consumables by public hospitals, the current mainstream view still includes the penetration of public hospitals in the scope of commercial bribery. However, it must be handled prudently, and it is best to find out the impact of relevant procurement behaviors on the settlement price of medical insurance, and whether to use special financial funds.

Five

The law applies to commercial bribery cases in the purchase and sale of drugs

5.1. Relevant provisions of the Drug Administration Law (2019):

Article 141 Where a marketing authorization holder, a drug manufacturer, a drug dealer, or a medical institution gives or accepts kickbacks or other improper benefits in the purchase and sale of drugs, and the marketing authorization holder, drug manufacturer, drug dealer, or agent gives property or other improper benefits to the person in charge of the medical institution, drug procurement personnel, physicians, pharmacists, and other relevant personnel who use the drug, the market supervision and administration department shall confiscate the illegal gains. and impose a fine of not less than 300,000 yuan but not more than 3 million yuan; If the circumstances are serious, the business license of the drug marketing authorization holder, drug manufacturer and drug business enterprise shall be revoked, and the drug regulatory department shall revoke the drug approval certificate, drug production license and drug business license.

If a marketing authorization holder, a drug manufacturer, or a drug trading enterprise offers bribes to state employees in the development, production, and sale of drugs, the legal representative, the main responsible person, the directly responsible person in charge, and other responsible personnel shall be prohibited from engaging in drug production and business activities for life.

Article 142: Where a marketing authorization holder, the person in charge of a drug manufacturer, a drug trading enterprise, a purchaser and other relevant personnel accepts property or other improper benefits from other marketing authorization holders, drug manufacturers, drug dealers or agents in the purchase and sale of drugs, the illegal gains shall be confiscated and punished according to law; If the circumstances are serious, it is prohibited to engage in drug production and business activities for five years.

If the person in charge of a medical institution, drug procurement personnel, physicians, pharmacists and other relevant personnel accept property or other improper benefits from the marketing authorization holder, drug manufacturer, drug trading enterprise or agent, the competent health department or the unit shall give a sanction and confiscate the illegal gains; where the circumstances are serious, their practice certificates shall also be revoked.

5.2. Key points of the Drug Administration Act (2019) regarding the treatment of bribery

5.2.1. If a drug production and trading enterprise or medical institution gives or accepts kickbacks or other improper benefits in the purchase and sale of drugs, the market supervision department shall punish it in accordance with the first paragraph of Article 141 of the Drug Administration Law: the bribe-taking unit shall also be subject to administrative punishment; The expression "kickback" is retained, and the counterparty of the drug transaction accepts improper benefits and punishes both parties for bribery and bribery; The statutory minimum fine is higher than the anti-law (300,000 yuan).

5.2.2. If a drug production and trading enterprise or an agent gives improper benefits to the relevant personnel of the medical institution using its drugs, the market supervision department shall punish it in accordance with the first paragraph of Article 141 of the Drug Administration Law.

5.2.3. The relevant personnel of the drug production and trading enterprises shall confiscate the illegal gains and punish them according to law if they accept improper benefits from other drug production and trading enterprises or agents in the purchase and sale of drugs. (Article 142 (para)—Who is the penalty? What is the punishment?

5.2.4. Should a drug trading enterprise or its agent be punished for giving improper benefits to relevant personnel of other drug trading enterprises in the purchase and sale of drugs? Penalty under article 141, paragraph 1?

5.2.5. Bribery of personnel of medical institutions shall be handled by the health department or the unit to which they belong.

5.3. Doubts about the handling of bribery in the Drug Administration Law (2019).

5.3.1. Articles 141 and 142 of the Drug Administration Law are not logically rigorous.

The first paragraph of Article 141 separately stipulates that drug trading enterprises or agents give improper benefits to relevant personnel of medical institutions that use their drugs, but the provisions at the beginning of the paragraph on drug trading enterprises or medical institutions giving or accepting improper benefits in the purchase and sale of drugs shall also include the former. That is, there is an intersection between the two, and the logic is not rigorous enough. If the situation of "drug production and operation enterprises giving improper benefits in the purchase and sale of drugs" is not recognized, including the situation in which drug production and trading enterprises give improper benefits to the relevant personnel of medical institutions that use their drugs, then it cannot cover the situation where drug production and trading enterprises give improper benefits to relevant personnel of other drug production and trading enterprises in the purchase and sale of drugs, resulting in the latter being unable to apply the Drug Administration Law.

5.3.2. Does the Drug Administration Law break the Anti-Unfair Competition Law with respect to the acceptance of improper benefits by the counterparty of a drug transaction?

The provisions of the 2019 Drug Administration Law on the granting of improper benefits such as kickbacks in the purchase and sale of drugs are inconsistent with the provisions of the 2017 Anti-Unfair Competition Law on commercial bribery. How is it coordinated? Does the Drug Administration Law break through the anti-law with regard to the acceptance of improper benefits by the counterparty of drug transactions?

- Whose interests does a drug supplier betray when it gives money, rebates, or other benefits to its drug down-line distributors or down-line distributors (counterparties)? To whom the duty of fidelity and integrity has been violated?

- Whose interests are betrayed by drug suppliers when they pay money or benefits to private hospitals or individual clinics that are not covered by the medical insurance fund? To whom the duty of fidelity and integrity has been violated?

——Whose interests have been betrayed by medical equipment and consumables suppliers to private hospitals or individual clinics that are not included in the medical insurance fund, and bundled sales of medical consumables with medical equipment for free? To whom the duty of fidelity and integrity has been violated? What is the difference between this model and the fact that food suppliers can get the advantage of supplying drinks by putting freezers in hotels for free?

Six

Common types and disputes of commercial bribery in pharmaceutical enterprises

6.1. Gifts, sponsorship (funding) of property or funds to medical institutions or their departments, and linked to pharmaceutical procurement.

-- Article 141 of the Drug Administration Law shall apply to the gift or sponsorship of improper benefits to medical institutions or their departments in the purchase and sale of drugs. In the purchase and sale of medical equipment and consumables, the gift or sponsorship of improper benefits to medical institutions or their departments is determined to be "a unit entrusted by the counterparty to handle relevant affairs" in Article 7, Paragraph 1, Item 2 of the Anti-Unfair Competition Law, and it is also found to be a "unit that uses its authority or influence to influence the transaction" in Item 3, which can generally be supported by the court, but it is recommended to be handled cautiously and try to find out as much as possible the infringement of financial funds, medical insurance funds and patients' rights and interests by its model.

——Commercial bribery case of quality deposit of Dongxiang County Hospital of Traditional Chinese Medicine: At the end of 2003, a pharmaceutical company signed an agreement with Dongxiang County Hospital of Traditional Chinese Medicine to pay a one-time quality deposit of 300,000 yuan to the hospital for free use during the agreement period, and exclusively supplied all clinical drugs to the hospital during the agreement period (except for those that could not be supplied). As of August 2009, the company was the main supplier of clinical drugs for the hospital. The Fuzhou Municipal Administration for Industry and Commerce imposed administrative penalties on both parties for commercial bribery.

-- Commercial bribery case of Hefei Besien Medical Technology Co., Ltd.: In order to sell orthopedic ear models to a county hospital, 35,000 yuan was paid to the otolaryngology department of the hospital.

——Commercial bribery case of Shanghai Yongsui Medical Equipment Co., Ltd.: In 20-21, it sold sterile implantable orthopedic products to a people's hospital in other places, and paid more than 50,000 yuan in "disinfection fees" to the hospital. (Penetrating as a trustee)

-- It is advisable to be more cautious about whether the gift or sponsorship of property to private hospitals or individual clinics that are not included in the medical insurance in the purchase and sale of medical equipment and consumables can be identified as commercial bribery.

6.2. Free delivery of medical equipment bundled consumables to medical institutions.

——Pharmaceutical companies sign agreements with hospitals to provide free medical equipment to hospitals (free rental or use before gifting, etc.), "bundle" with the procurement of designated medical consumables, and the equipment delivery enterprises will exclusively supply relevant consumables to hospitals, or limit the minimum quantity of consumables purchased by hospitals from the delivery enterprises, etc., to obtain exclusive trading opportunities or competitive advantages. The expenditure on medical equipment is made up by the sales of consumables, and "the wool is out of the sheep", which is ultimately borne by patients and medical insurance funds. In practice, some public hospitals have illegally contracted their imaging centers and testing centers to pharmaceutical companies in disguise, and the pharmaceutical companies have put some medical equipment and bundled consumables for sale, and the medical testing qualifications and personnel are still provided by the hospitals, and the medical testing activities are still carried out by the hospitals.

- Paragraph 4 of Article 39 of the Law on Basic Medical Care and Health Promotion:

Medical and health establishments must not lease or contract medical departments.

——Although this model reduces the amount of funds for the purchase of large-scale medical equipment at a specific point in time, it avoids competition mechanisms such as bidding in the procurement of equipment and consumables, artificially increases the profit margins of enterprises investing in equipment and consumables, and increases the medical burden of patients and medical insurance funds as a whole.

——Under this model, the excess profits of the equipment and consumables put into the enterprise mean that the hospital's income will be reduced accordingly, which will affect the time of price adjustment, cost accounting and price adjustment range when the medical insurance price is adjusted. Therefore, the hospital in this case is generally identified as a "unit entrusted by the counterparty to handle relevant affairs" under Article 7, Paragraph 1, Item 2 of the Anti-Unfair Competition Law, or as a "unit that uses its authority or influence to influence the transaction" in Item 3, so as to determine that this model is commercial bribery.

——In 2019, "Jiangsu Baichen Medical Technology Co., Ltd. was suspected of unfair competition": the testing system and auxiliary facilities were donated to the hospital, "the reagents required for the testing system were provided by the company, and the hospital was not allowed to import similar machines and related reagents from a third party".

6.3. Giving money or property to physicians, medical technicians, etc. at medical institutions

Including giving money and property in the name of promotional fees, publicity fees, sponsorship fees, scientific research fees, labor fees, consulting fees, commissions, etc., or reimbursement of various expenses, etc., is a typical bribery and bribery of the staff of the counterparty to the transaction.

-- Hangzhou Jianning Pharmaceutical Technology Co., Ltd. commercial bribery case: kickbacks to the staff of the pharmacy department of a county hospital. Commercial bribery case of Shanghai Fumei Dongjia Pharmacy: bribing hospital physicians according to drug sales, and transferred to criminal cases.

6.4. Arrange travel, inspection, entertainment and other activities for physicians, medical technicians and other personnel of medical institutions

-- Typical bribery and bribery of the staff of the other party to the transaction.

-- Shanghai Mylan Pharmaceutical Consulting Co., Ltd. suspected of unfair competition: In order to obtain the drug clinical trial project of the Shanghai Public Health Clinical Center, the person in charge of the center arranged for a specific related person to travel to Beijing and paid for it, and provided travel cash and air tickets for a person in the center. In 2020, Shanghai Jinshan Municipal Supervisor imposed a fine of 150,000 yuan.

6.5. Remuneration such as "lecture fees" shall be paid to physicians, medical technicians and other personnel of medical institutions in the form of self-organized or sponsored (subsidized) academic activities.

-- Closely related to the sales of pharmaceutical products, and the remuneration paid is unreasonable.

- "Unfair Competition Case of Alpha Wassermann (Beijing) Pharmaceutical Consulting Co., Ltd. Shanghai Branch": In order to promote its drugs, the branch organized a number of lectures in 2018 and paid so-called "lecture fees" to doctors at or above the level of attending clinical physicians who did not attend the lectures. In 2019, the Shanghai Jing'an District Municipal Supervision Bureau found that "the party paid the doctor's lecture fee in the name of giving lectures at false meetings, and the doctor took advantage of his position in medical services to promote patients to purchase the relevant drugs promoted by the party", violating Article 7, Paragraph 1, Item 1 of the Anti-Unfair Competition Law, and imposed a fine of 480,000 yuan.

6.6. Implement sales incentive and reward policies for physicians, medical technicians and other personnel in medical institutions.

-- The subjects of bribery include not only doctors and hospital-related procurement personnel who have the right to prescribe and purchase drugs in hospitals, but also pharmacists and sales personnel in pharmacies.

- "GlaxoSmithKline Commercial Bribery Case": In order to expand the sales of its pharmaceutical products, GlaxoSmithKline "bribed non-state staff engaged in medical work in various forms of medical institutions in many places across the country, and the amount was huge." On September 19, 2014, the Intermediate People's Court of Changsha City, Hunan Province, sentenced GlaxoSmithKline to a fine of RMB 3 billion for offering bribes to non-state functionaries.

Seven

Discussion on the definition and elements of commercial bribery under the new Anti-Unfair Competition Law

7.1. SAMR wants to "restore" the counterparty of the transaction as the subject of bribery?

In November 2022, the State Administration for Market Regulation's Anti-Unfair Competition Law (Draft Revisions for Solicitation of Comments) proposes to re-include "counterparty" in the scope of commercial bribery subjects of commercial bribery: it is proposed to change "staff of the counterparty to the counterparty" in the first paragraph of Article 7 to "counterparty or its staff".

-- It may be that the "penetration principle" has been applied too much in the fields of medicine and other fields, so that the State Administration for Market Regulation wants to "restore" the transaction counterparty as a bribe-taking entity. But this is suspected of "turning back the clock on history". When the Anti-Unfair Competition Law was amended in 2017, the Standing Committee of the National People's Congress deliberately deleted the term "counterparty" from the list of bribe-taking entities listed in the draft. If the "restoration" is successful, it will once again lead to the generalization of commercial bribery and the omission of the element of loyalty and integrity. There is considerable opposition to the State Administration for Market Regulation's idea of amending this law.

7.2. Discussion on the definition of commercial bribery

Commercial bribery refers to the act of a business operator paying or promising to pay benefits to a third party that may affect the transaction, or to a counterparty that participates in market transactions in its own name but is in fact an agent representative of a relevant interested party, inducing it to violate the statutory or agreed duty of honesty and fidelity in order to seek transaction opportunities or competitive advantages.

7.3. Discussion on the constituent elements of commercial bribery

7.3.1. Subject requirements for commercial bribery:

-- The bribe giver of commercial bribery is a business operator, and is a legal person, other economic organization, or individual engaged in commodity business or for-profit services. Where an employee of a proprietor offers bribes for the sale or purchase of goods or services by the proprietor, it shall be found that the proprietor offered bribes.

- The bribe taker is not necessarily a business operator, but should be a person closely related to the market transaction of the bribe giver (or its principal), and under normal circumstances, the bribe taker is an employee, manager, agent, trustee of one party to the transaction, and other third parties who can control and influence the transaction party or its trading behavior, and are closely related to the transaction matter.

Under special circumstances, anonymous agents, users of special financial funds dedicated to reimbursement and reimbursement, public hospitals that sell drugs at zero price difference or with a limited mark-up rate, primary and secondary schools that purchase school supplies or school uniforms for students, etc., participate in market transactions in their own names, but are in fact agents, trustees or representatives of relevant stakeholders, and may also become bribe-takers.

7.3.2. Subjective elements of commercial bribery:

Both the giver and the bribe recipient are subjectively deliberate. Obtaining a trading opportunity or competitive advantage for oneself or the principal is the purpose of the bribe giver to give the bribe taker, and the bribe taker knows that he should know the purpose of the bribe giver to give him the benefit. Competitive advantage does not require a successful transaction or a successful transaction every time.

7.3.3. Object requirements for commercial bribery:

Commercial bribery undermines the order of fair competition and violates the obligations of integrity, loyalty and good faith owed by employees and managers and agents, as well as generally accepted business ethics.

7.3.4. Objective elements of commercial bribery:

Objectively, commercial bribery should have the following circumstances:

7.3.4.1. The bribe giver gives or promises to give an improper advantage, induces the bribe to provide the bribe giver (or its principal) with a trading opportunity or competitive advantage, or induces the bribe taker to help the bribe giver (or its principal) obtain a trading opportunity or competitive advantage. The bribe giver may entrust or borrow others to go around several times to give bribes.

7.3.4.2. The bribe taker accepts or intends to accept improper benefits, takes advantage of his identity closely related to the transaction matter, violates his duties and obligations of integrity, loyalty and good faith in accordance with the law or contract, betrays or damages the interests of the state, the interests of the entrusting party, the interests of the supervised service provider or other related third parties, gives or promises to give the bribe giver (or its principal) a commercial competitive advantage, and helps or promises to help the bribe giver (or its principal) obtain trading opportunities or competitive advantages.

-- The bribe-taker's identity convenience closely related to the transaction, including the position convenience obtained as a result of the work relationship, and the influence or convenience obtained by the bribe taker on the transaction matter due to the contractual relationship such as investment control relationship, agency, service, and other relationships.

7.3.4.3. The opportunities for fair competition in terms of quality, price, service, etc., are adversely affected by the competitors of the bribe giver (or its principal), the legitimate rights and interests of the relevant business operators are harmed, and the order of fair competition in a specific market is jeopardized.

7.3.4.4. Transaction opportunities or competitive advantages herein include directly facilitating the bribery's (or its principals') transactions, directly hindering the bribery's (or its principals') competitors' transactions, directly forming a specific exclusive market, and also including the bribe-giver's (or its principals') obtaining a dominant position in a particular market, advantageous trading opportunities and other competitive advantages, without necessarily succeeding in the transaction or every transaction success.

7.3.4.5. The solicitation of bribes by one party to the transaction in a strong position, and the solicitation of bribes by a third party who can control and influence the transaction, have some of the same appearance as the general arbitrary collection and apportionment, but there are obvious differences in substance:

-- Although the person being asked for bribes has paid unreasonable additional benefits such as money, but at the same time has obtained a trading opportunity or competitive advantage over its competitors;

-- In the general situation of arbitrary fees and apportionment, the disadvantaged party is equally forcibly charged unreasonable money, and the person who is arbitrarily charged and apportioned does not get the trading opportunity or competitive advantage over its competitors.

Eight

Examples of typical cases of commercial bribery

8.1. Whether the property management company charges those who recycle waste products in the community constitutes commercial bribery

On the grounds of ensuring the safety of the community, the property company signs an agreement with one or more waste recyclers, and the qualification to recycle waste in the community within the agreed period is "bought out" by the contractor, and the property management company collects the service fee, management fee or entry fee paid by the contractor, and prohibits others from entering the community to recycle waste - the waste recycler gains a competitive advantage.

There are also property companies that do not "sell out" the waste recycling qualifications of the community, but require those who recycle waste in the community to pay a certain "service fee, management fee or entry fee", otherwise, they are not allowed to enter the community to purchase waste or are not allowed to take the purchased waste out of the community, but as long as they pay money, they can enter the community to collect waste. - Waste recyclers do not have a competitive advantage.

- Transactions between owners and waste recyclers, where property companies are "units that use their power or influence to influence transactions". If the waste recycler does not gain a competitive advantage, it does not constitute commercial bribery, but is the injured party of the forced transaction.

8.2. Does collusive bidding between bidders to accept improper benefits constitute commercial bribery?

Dongxiang County Land Management Bureau 2002 storefront land use right auction case:

- At the time of the auction of the last 7 storefronts, there were 22 bidders. At that time, the 22 bidders gathered together to discuss the joint price reduction, not to grab the price, and discussed to determine the 7 winning bidders to bid for the land of the 7 stores by drawing lots, and then the winning bidders each gave 5,000 yuan to the 15 unsuccessful bidders. In the end, the 7 winning bidders who won the lottery won the bid at the lowest price at one time. After that, each of the 7 winning bidders took out 5,000 yuan for a total of 35,000 yuan to the 15 unsuccessful bidders to divide equally, and the 15 unsuccessful bidders each received 2,333 yuan.

-- The auction in this case was not organized by the auction company, and the Auction Law did not apply. In the bidding process, the unsuccessful bidder is the subject that can influence the auction transaction.

8.3. Rebates will be given to travel agencies at scenic shopping spots

Commercial bribery case of Xiamen Ruixinshun Trading Co., Ltd.:

In December 2020, an international travel agency Co., Ltd. in Xiamen arranged for tourists to go to Ruixinshun Company to purchase goods in the process of providing travel services for the group of tourists, and the tourists did not have the right to choose the shopping stores. Ruixinshun company pays travel agency rebates according to 80% of the amount of tourists' consumption. A fine of 300,000 yuan.

8.4. Food suppliers bribe hotel employees

8.4.1. Case of Shanghai Yongxiang and other food sales companies bribing the executive chef of a five-star hotel:

Bi, the executive chef of a five-star hotel in Shanghai, took advantage of his position to select food sales companies such as Shanghai Yongxiang as designated suppliers to increase transaction opportunities in food procurement, and received rebates of 7%-8% of the purchase amount.

8.4.2. Case of Shanghai Shangwei Business Development Co., Ltd. bribing the head chef of the hotel:

In 2018, in order to obtain more trading opportunities, the company offered a bribe of 29,205 yuan to Wang Moumou, then the head chef of a bakery in a large hotel in Pudong. A fine of more than 40 yuan was confiscated.

8.5. The logistics enterprise bribes the employees of the partner in order to obtain empty container space

Commercial bribery case of Shanghai Fanjiang International Logistics Co., Ltd.:

Affected by the new crown epidemic, the resources of empty container space in sea transportation are relatively tight. From January 2020 to May 2021, in order to give priority to the empty container space resources of a company in Shanghai, the party asked Wen, a salesman with the right to allocate empty container space resources, to help the partner obtain empty containers and complete the business order six times under the condition of promising to give a "benefit fee" in advance. Subsequently, Wen was given 9,800 yuan in cash in 6 installments. More than 480,000 yuan was fined and confiscated.

8.6. Bribing the person in charge of the sanitation center for the purpose of selling sanitation equipment

Commercial bribery case of Shanghai Jinyuan Environmental Sanitation Equipment Co., Ltd.:

According to the materials transferred by the Commission for Discipline Inspection and Supervision, from 2016 to 2019, the company's legal representative Yang presented 140,000 yuan in cash to Cai, the former director of a city appearance and environment office in Jinshan District, Shanghai, and completed 6 environmental sanitation equipment sales transactions totaling more than 1.33 million yuan with the firm, making a profit of more than 200,000 yuan. The Municipal Supervision Bureau fined the company more than 40 yuan, and Cai was dealt with separately by the Jinshan District Commission for Discipline Inspection and Supervision.

8.7. Can a tourism operator be punished for accepting commercial bribes?

Article 51 of the Tourism Law:

Tour operators shall not give or accept bribes when selling or purchasing goods or services. Article 104: Where a tour operator violates the provisions of this Law by giving or accepting bribes, the market supervision and administration department shall punish him in accordance with the provisions of relevant laws and regulations; If the circumstances are serious, the competent department of tourism shall revoke the business license of the travel agency.

At present, the national legislation does not impose administrative penalties on the acceptance of bribes by tour operators.

(This article only represents the author's point of view and does not represent the position of intellectual property)

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