Certain Regulations on Prohibiting Unfair Competition in prize-attached Sales

Article 1 With a view to preventing unfair competition in sales with prize, these Regulations are formulated in accordance with the relevant provisions of the Law of the People's Republic of China on Countering Unfair Competition (hereinafter refereed to as the Anti-Unfair Competition Law).

Article 2 Prize-attached sales mentioned in these Regulations refer to the activities of operators of providing incidentally Articles, money or other economic interests for the purchasers when selling products or providing services, which include prize-attached sale which awards all of the purchasers and lottery-attached sale which awards part of the purchasers.

All those sales adopting such accidental methods as drawing lots and picking winning numbers to determine whether the purchaser could win the prize belong to lottery sale.

This regulation is not applicable to lottery-attached donation collection and other activities of selling lottery tickets approved by the relevant authorities of government.

Article 3 The following deceptive prize-attached sales are prohibited:

1) Falsely claiming to offer a prize-attached sale or making false representation on prize type, probability of winning, highest amount of prize, total amount of prize as well as the variety, quantity, quality and offering methods of prize.

2) Adopting unfair method to intentionally let persons designated win the lottery.

3) Intentionally not putting the commodities and lottery tickets with the prize-winning tokens on market or not putting them on market together with other commodities and lottery tickets; intentionally putting the commodities and lottery tickets with tokens containing different amount of bonus or different prize on market at different time.

4) Other deceptive prize-attached sales.

The acts in Item 4) of the previous paragraph shall be determined by the administrative authorities for industry and commerce at or above provincial level. Such determination should be filed to the State Administration for Industry and Commerce.

Article 4 The highest amount of bonus in lottery-attached sales shall not exceed 5,000 Yuan.

The value of material objects or other economic interests apart from cash that are used as prize shall be converted according to the normal prices of the same types of commodities or services on the market in the same period of time.

Article 5 Operators shall not promote the selling of low-quality and high-price commodities by means of prize-attached sales.

``Low-quality and high-price commodities'' mentioned in the previous paragraph shall be determined by the administrative authorities for industry and commerce in accordance with the prices and quality of the same type of commodities in the same period of time as well as the complaints of the purchasers, and shall be determined by the administrative authorities for industry and commerce together with other relevant authorities if necessary.

Article 6 When sponsoring prize-attached sales, operators should make clear representation to the purchasers of the prize type, probability of winning, amount of prize or variety of prize, time and way for conversion, etc.. For the lottery-attached sale with non-immediate disclosure of winners, the presentation should also include the time, locale and way of disclosure of winners as well as the time and method of informing the winners.

The operators shall not change the items in the representation which has been disclosed to the public.

The operators should announce at all times the circumstances of conversion in the lottery-attached sale with immediate disclosure of winners.

Article 7 Where there is a violation of Article 3, 4 or Item 1 of Article 5 of these Regulations, penalties shall be granted according to the provisions of Article 26 of the Anti-unfair Competition Law by the administrative authorities for industry and commerce.

Those withhold the truth in violation of Article 6 of these Regulations shall be regarded as deceptive prize-attached sales, and shall be dealt with according to the stipulation of the previous paragraph.

Article 8 Parties concerned who suffer from the infringement of unfair competition in prize-attached sales may bring a suit to the people’s court for compensation in accordance with Article 20 of the Anti-unfair Competition Law.

Article 9 Prize-attached sales belong to the practices prohibited by the Anti-unfair Competition Law that took place before the implementation of the Law shall not be continued after the implementation of the Law. Nevertheless, in case the scheduled time for disclosure of winners and conversion is after December 1, 1993, the operators shall perform their duties according to the fixed items on the scheduled time.

Article 10 These Regulations shall go into effect on the day of their promulgation.

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