Ethical Interpretation of Competitive Order: Research on the Anti-Unfair Competition Law

Author: Xie Xiaoyao
Publisher:
Publishing Date: April 1, 2005
Features: When writing the word "competition," one cannot help but feel a sense of apprehension. Competition permeates the entire natural world, the biological realm, and human society, making it an exceptionally high-frequency term. The Lisbon Group pointed out in The Limits of Competition that "if someone were to compile a bibliography for the 'entry on competition/competitiveness' in books published in English over the past 15 years, the resulting volume could be thousands of pages thick." However, the accumulation of knowledge does not eliminate differences in understanding. A very unique phenomenon is that despite the long-standing perception of the field of competition as an exceptionally "flourishing" intersection of law and economics, academia has generally maintained a very cautious attitude and a strong critical spirit toward "competition." Critiques of competition law theory and the judicial process have primarily targeted the interpretive capabilities and theoretical approaches of scholars and judges. In their view, economic theory and analytical models have naturally become the basic tools for constructing and implementing legal systems. Competition legislation and enforcement largely depend on the level of market analysis achieved through the application of economic knowledge. "Understanding competition and antitrust law is difficult. If there is any possibility of understanding it, it requires familiarity with the economic theories and principles that underpin the legislation." "Before accurately applying antitrust law or trade regulations to a market, an in-depth study of the characteristics of that market is necessary." Meanwhile, scholars and judges have always been plagued by an "ignorance" regarding competition, lacking the necessary interpretive capabilities. Some scholars have criticized that many people unfamiliar with economics often draw incorrect conclusions from simple observations when it comes to competition. The American economist Lloyd Reynolds even sarcastically remarked, "The Supreme Court has ruled that a 'grouping' oligopoly, with a market share as small as 20%, is illegal, while a 'good' oligopoly, with a market share as large as %." In China, scholars have also raised similar criticisms. Competition law covers a broad range, including antitrust legislation aimed at maintaining free competition and anti-unfair competition law aimed at ensuring fair competition. The evolution of antitrust legislation from structuralism to behavioralism and then to efficiency-based approaches has raised higher demands for the integration of economic theory into legal theory, which is merely a of the knowledge of the field of competition law. In fact, our understanding of competition system law lacks not only economic knowledge but also the ability to overcome the limitations of legal formalism, which cannot be achieved simply by introducing certain disciplinary methods. The study of competition system law is situated at the intersection of knowledge from different disciplines, with uncertain and open boundaries, which determines its marginal characteristics and makes it impossible to have a single analytical and research method. The pluralistic understanding and interpretation of legal systems are not merely a piling up and spreading of knowledge materials across different fields. The perspectives or "gazes" of different disciplines actually imply a "problem consciousness." A single, dogmatic, and formulaic interpretation and interpretation of legal provisions will ignore the external perspective of understanding the system, and knowledge will become generalized and stale. The diversification of interpretive tools and cognitive methods can lead cognition toward innovation, pursuing knowledge insights with keen insight from different perspectives of thinking, reducing superficial repetition, and exploring the internal logic of things' development on the basis of the breadth and depth of existing practice and theory, while dedicating itself to thinking about various contradictions. Through the process of proposing and solving problems, new achievements in understanding are obtained, which are more intellectually contributive. China promulgated the Anti-Unfair Competition Law as early as September 1993, yet the disorder and chaos in market competition have not been fundamentally curtailed. The rampant production and sale of counterfeit goods, false advertising, and other phenomena in the current economic life are clear evidence of this. In the past, when economic life encountered large or small problems, contradictions, or issues, we often turned to law, and calls for legislation would surge one after another. After legislation was enacted, we then blamed its incompleteness and poor enforcement. As a result, some people have argued that China's legislation is too vague, incomplete, and lacks operability, advocating for the use of a technical means to meticulously draft a comprehensive and detailed law to regulate all kinds of unfair competition behaviors. Can unfair competition behaviors be fully regulated through the careful design of human wisdom? Clearly, this legislative call implies an ideal logic of order constructionism. In academia, many scholars tend to view the Anti-Unfair Competition Law as a law of state intervention, part of the state's regulation and restructuring of market order in the face of market failure. This legal order comes from external intervention by state factors. However, this popular theory cannot answer the following question: When the norms followed by individuals in the market are based on external intervention, are the rules predictable and calculable? If the government can effectively intervene in the market by designing competition order, how can we explain the chaos in the actual competition order? Clearly, viewing the Anti-Unfair Competition Law as merely legislation for state intervention in the economy ignores a comprehensive focus on the market's own operation. The general public's understanding of the Anti-Unfair Competition Law is even more concerning. A survey in one region found that most respondents had a shallow understanding of the Anti-Unfair Competition Law. Among unit questionnaires, 4.5% were very familiar, 35.74% had general knowledge, 46.25% knew but did not understand, and 13.51% had no knowledge. Among non-unit respondents, 2.46% were very familiar, 39.9% had general knowledge, 52.99% knew but did not understand, and 4.65% had no knowledge. In my opinion, the above deviations are due to our lack of the necessary interpretive capabilities and methods for the Anti-Unfair Competition Law. The topics of competition law are beyond my capabilities, so to limit errors to a smaller scope, my reflections on competition order are limited to the "fairness" of competition, focusing on the study of the Anti-Unfair Competition Law, while excluding the currently more fashionable Antitrust Law from consideration. Of course, since the two have no clear knowledge boundaries, this division is not strictly meaningful. The theme of this book is "A Moral Interpretation of Competition Order," and I must declare that morality is not a sermon. Linking competition order to moral issues, I aim to clarify: What is the morality of the market system? Whose morality is it? How does it arise? What impact does it have on market order? What are the standards? This is a crucial issue for understanding the Anti-Unfair Competition Law. Invoking moral principles in law and using them as the criteria to measure "fairness" and "unfairness," thereby determining "legal" and "illegal," establishes moral requirements for competition through legal form. Directly adopting moral principles as legal norms can alleviate and overcome the inherent contradictions and limitations of codified legislation. However, it is generally believed that morality is characterized by non-codification and flexibility, while market competition often requires institutional certainty. What is the rationality of introducing moral rules into law? How can moral norms both exhibit flexibility in responding to social changes and yet obtain corresponding certainty? How do moral norms function? Under the influence of moral norms, how do models of rights and obligations change? In this book, I follow the above questions to argue that the Anti-Unfair Competition Law can be seen as a remedial protection measure for intellectual property rights. This supplementary norm introduces a moral justification for rights, shifting the objective argumentation from the statutory source of rights to a direct inquiry into the "legitimacy" basis of rights, thereby expanding the scope and extent of rights protection to a moral right that should exist. The scope and extent of intellectual property protection are thus expanded. Similarly, when the Anti-Unfair Competition Law expands the review of statutory obligations to the reasonable propriety of behavior, the scope of obligations is also expanded. The legal maxim "where there is no law, there is freedom" is constrained by moral obligations, and the norms of competition behavior are extended. Some behaviors that are not explicitly prohibited by law must be prohibited if they harm the competition order.
Legal and moral norms are extremely important for maintaining competition order, which is self-evident. But does this mean that to maintain the orderly development of competition order in the face of ever-changing competitive behaviors, we can meticulously design a perfect order rule? The government's efforts to regulate and standardize the market economy order are certainly important, but does this mean that the market competition order is a norm derived from external authority, and order is the result of "rectification" by administrative authorities? In recent years, moral education has been conducted from the central to the local level, and some localities and departments have even strived to promote the codification and legalization of moral construction, thereby promoting the healthy development of competition order. Can morality really be artificially created? This book argues that competition order is the product of interactions among the actors in competition, an intrinsic rule that is self-generated and spontaneous. Whether it is law or morality, both are derived from experiential knowledge in the process of competition, not the result of human design or planning. Overemphasis on the government's construction of order can hinder the mechanism by which institutions generate themselves according to their own logic and also increase uncertainty factors in transactions. Individuals in the market are not only participants in the formation of market order but also effective maintainers of competition order. The legal order of the Anti-Unfair Competition Law cannot be effectively implemented without the effective use of social spontaneous forces.
The duality of knowledge and ignorance reflects both the breadth and depth of existing understanding and the breadth and depth of exploration into unknown realms. It is the "unknowing" within knowledge, the knowledge of the unknown. Here, a phenomenon known as the "Meno Paradox" emerges: people are always faced with a logical dilemma—there is no need to seek what they already know, because they know it; and they will not seek what they do not know, because they do not yet know that they do not know it. Exploring the unknown through the known must, to a certain extent, rely on theoretical assumptions and methods of thinking. Problems and methods are interrelated. The formulation, deduction, and argumentation of problems are guided by certain methods of thinking, and different methods lead to different "problems" and conclusions. Meanwhile, the application of methods depends on the consideration and questioning of problems, determined by the "truth" or "falsity" of problems. The meaning and value of problems.
Market competition requires a sound order, an undeniable proposition. How is this order constructed and maintained? Different standpoints, analytical platforms, foundational assumptions, and interpretive methods will lead to different conclusions. The interpretation of competition order in this book is primarily based on the following standpoints and methods:
1. Market Orientation: In resource allocation and coordination of interpersonal relationships, the market and the government are not at the same logical starting point or functional order. The market plays a foundational and primary role, occupying a priority position. Logically, the market precedes the government, and government intervention is based on the foundational regulation of the market. Intervention is only introduced after "market failure." Although intervention comes from the tangible hand of the state, it is rooted in the soil of the market. It is the market's demand for freedom that leads to intervention, and intervention is intervention to maintain free competition. Without intervention in freedom, there is no freedom from intervention. Intervention is merely another manifestation of a free market. Before the government intervenes in economic life, it must first consider the market's foundational coordinating function.
2. Epistemology: Bounded Rationality: Humans are not omniscient sages and do not possess natural judgment capabilities over their own interests and the market. All are bounded in rationality and are "opportunists" in reality. Human bounded rationality is a result of "constructive ignorance" in knowledge, meaning that only a small portion of knowledge is concentrated in one person's mind, and no one possesses complete knowledge. Free competition is both a mechanism for knowledge dissemination and a mechanism for institutional creation. Competition enables humans to accumulate and build upon effective knowledge from past experiences, forming habits, morality, and law. It is precisely in this sense that bounded rationality also determines that law and morality in competition order are not the result of a priori human design, as no individual or organization possesses such a capability. The Anti-Unfair Competition Law uses a morally flexible and adaptable norm to regulate behavior, reflecting that the maintenance of competition order must rely on the experiences and habits of human cooperation. Good habits have the function of guiding future behavior orientation.
3. Individualistic Orientation: The individualistic stance assumes that the introduction of institutional rules is based on a logical starting point of the individual. All behavior revolves around the maximization of individual interests. Human behavior can be guided by incentives, but it is difficult to allocate them through centralized means. The need for individuals to maximize their interests also suggests that through institutional incentives and constraints, individual behavior can be effectively guided to satisfy the needs of society while pursuing personal interests. The moral norms of the Anti-Unfair Competition Law originate from interactions in empirical life. The maintenance and constraint of moral rights and obligations can provide incentives for "compliant" behavior by parties, while state intervention in market competition order may hinder the market regulation and generation of interests.
4. Cost Analysis and Benefit Equilibrium: The essence of competition is to ensure the efficient allocation of resources among multiple alternative uses, making cost analysis an important variable in understanding the system. However, in market competition, the equally important protection of diversified subjects, interests, and value orientations requires no simple. To a certain extent, the Anti-Unfair Competition Law aims to maintain the entire competition order, and this order can only be established on the effective assessment and weighing of different interests. In the process of interpreting the order, the legal text, as a "materialized" norm and a repository of past experiential knowledge, naturally plays a significant role. Emphasizing the interpretation of the provisions of the Anti-Unfair Competition Law is particularly meaningful for deepening the understanding of competition order and strengthening the implementation of the law. Currently, during the revision process of the Anti-Unfair Competition Law, a very strong voice is calling for the formulation of more meticulous, detailed, and specific provisions, which also reflects society's various expectations of legal texts. This expectation is a hope for the predictability, calculability, and stability of competition order. However, legal texts have always been descriptions and portrayals of the living social reality. The interpretation of legal texts must not only know "what is" but also know "why it is." Behind rigid legal provisions lies a series of subtle, thought-provoking social stories, full of rational, wise, and tension-filled economic logic. How to read this hidden story is the key to grasping where the system comes from and where it is going, as well as revealing its profound implications. Therefore, a reasonable approach is to use legal texts to interpret the rational life of the socio-economic level and to observe the distance between the legal texts through the real situation of economic life. In China, the Anti-Unfair Competition Law has been in effect for 20 years since its promulgation. As legislation marking the starting point of the market economy era, it needs to transcend the limitations of specific time and space with the changing times. The interpretation of the system requires more use of the rich and diverse socio-economic life to reflect and critique the existing text. To a certain extent, the degree of our analysis and understanding of the economy and society determines our ability to interpret the text. In this book, I focus on reading the system while also expressing a higher enthusiasm for reading the socio-economy. The reading of order must not only focus on the law of the text but also take into account the "law in action." During the writing of this book, I collected a large number of judicial rulings and administrative enforcement practices, and I was deeply moved by how these vast legal resources have not been sufficiently valued or utilized by academia. Law is a rational discipline related to "social practice." It is certainly highly practical, using real-life legal phenomena, economic forms, and specific cases as its raw materials and blueprints. From this perspective, law is practical, relying on the "living law." However, in many of our theoretical studies, we often overlook the practical nature of the law, disregard the rich judicial rulings and practices, and lightly dismiss judicial materials, failing to recognize and summarize many valuable experiences. The practicality of law does not diminish its highly rational and humanistic nature. Applying rigid legal provisions to the living reality is absolutely not an "automated vending machine"-style physical task but an active rational process. Practitioners must use certain paradigms to transform legal texts and condensed experiences into concrete practices in real life, seeking their "alive" expression. The moral stance, sense of justice, social concern, historical insight, professional standards, and logical deduction abilities of practitioners will all invisibly influence the "results" of their practice. It is difficult to imagine "matching" without a certain rational thinking and humanistic concern. How to interpret the order through existing rulings is also an important issue I strive to address in this book.