By Luo Yanjie

As the mid-autumn festival is drawing on, the producers and sellers of moon cakes in cities throughout China (note: the link is in Chinese) are keen in the promotion of the snack. And by the investigation of some reporters, some merchants even try to get a big order for the moon cake by risking the kickback, and by one case, the reporter pretended to order 200 boxes of moon cakes in the name of a company, the kickback offered to him is 6% of each 10 thousand purchase, that means a total feedback of RMB 2, 400 will be paid to the reporter for the 200 boxes purchase. And in addition to the official kickback, another part of rebate from the salesman is also available.

For the above kickbacks, all the parties involved in this transaction has actually violated the law, even a criminal liability shall be taken by them when a gravity circumstance. The food industry is a field accessible for foreign investment, and therefore the foreign invested company could also face the problem of kickback, now we would like to share our detailed opinions as follows:

I. the civil liability for kickback

By Article 8 of Anti-unfair Competition Law,

“An operator may not practice bribery by using money, gifts or other means to sell or buy goods. Where an operator secretly pays a kickback to the other party, be it an entity or individual, without accounting for it in the books, he shall be punished for offering a bribe; where the other party, be it an entity or individual, secretly accepts a kickback without accounting for it in the books, it or he shall be punished for taking a bribe.”

It could be concluded that the kickback in the account shall be illegal while that out of the account record shall violate the law. Therefore, either the company or the staff (the individual could also be the operator in law) is violating the law. And in addition to the infringement liability as charged by other operators, by the Anti-unfair Competition Law, they may also face the punishment of penalty of more than RMB 10, 000 but less than RMB 200, 000, and the confiscation of the illegal income. (when no criminal liability shall be thereby prosecuted)

As to the kickback receiver, within the scope of civil law, despite no direct legal liability is provided in the Anti-unfair Competition law, with it only regulates the misconduct shall be disposed as bribery. Considering most kickback receivers are the employees of the company, their kickback receiving shall be violate Article 39 of the Labor Contract Law in which there stipulates the situation of “gross negligence, jobbery and thereby cause gross damages to the employer”. And the employer has the right to terminate the employment by the payment of compensation.

II. The criminal liability for kickback provider and receiver

By the Anti-unfair Competition Law, the reception of kickback could be deemed as bribery, and naturally the kickback giving shall be bribe. Therefore, except to the civil liability as analyzed above, the kickback could also lead to a criminal liability:

For the giver, by Article 164 of the Criminal Law,

“Offering property to company and enterprise work personnel for improper benefits shall in cases involving relatively large amounts be punished with imprisonment or criminal detention for less than three years, for cases involving a large amount, with imprisonment of over three years but less than 10 years, and with fine.”

Namely the crime of bribe to non state staffs could be established, and according to the judicial interpretations, the threshold for this crime is RMB 10, 000 above for the individual and RMB 200, 000 for the units.

For the receivers, they may be prosecuted the crime of bribe receiving by non state staffs, as provided in Article 163 of the criminal law:

“Enterprise work personnel who make use of their job opportunity to demand property from others, or illegally receive others property in exchange for benefits, shall, in cases involving relatively large amounts, be punished with imprisonment or criminal detention for less than five years; for cases involving a large amount, with imprisonment of over five years, and may be subject to forfeiture of property.”

And by the 2^nd paragraph of this article

“receive personal kick-backs and commissions in various forms in violation of state rules, shall be punished according to provisions under the preceding paragraph”.

Accompany with the judicial interpretation, once the kickback has been over RMB 5, 000, the criminal liability could be purchased.

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