Over the past year, nearly 7000 enterprises have benefited. Shanghai has clearly stated "no" and will not implement administrative coercive measures in the field of excessive application of seizure and seizure of market supervision. | Shanghai | Enterprises

In February this year, the Market Supervision Bureau of Putuo District discovered during an inspection of a chain hotel that the hotel provided self-service breakfast but did not obtain a food business license. According to the Food Safety Law, law enforcement officers have the right to seal hotel kitchens, restaurants, and seize equipment and facilities. However, to the hotel's surprise, law enforcement officers not only failed to impose such penalties, but also actively provided guidance to help the hotel successfully obtain a food business license. The hotel manager sighed, "Thanks to the list of mandatory measures not to be implemented under Shanghai's administrative supervision, we have felt an inclusive and open business environment."

Shanghai explicitly stated "no" to the possible excessive application of administrative coercive measures. In July 2022, Shanghai launched the "List of Administrative Compulsory Measures Not to be Implemented in the Field of Market Regulation", which clarifies the seven categories of situations in which administrative compulsory measures are not implemented in the field of market regulation, and many of the provisions are proposed for the first time in the country.

This reform, known as "blade in", aims to address the immediate pain points of enterprises and is another reform measure in Shanghai, following the launch of the list of non punishment for minor violations. What is the significance of this reform? What are the feelings of enterprises and law enforcement personnel since the list was released and implemented one year ago?

"The burden that enterprises cannot bear"

The so-called administrative coercive measures refer to the temporary control of the property of administrative counterparties by administrative organs in accordance with the law, or the temporary restriction of the personal freedom of citizens, in order to stop illegal activities. In practice, it mainly manifests as sealing places, facilities or property, seizing property, freezing deposits, remittances, etc. Although these measures are temporary controls, they may still have a significant impact on the parties involved.

For example, if a bakery is found to have quality issues with a batch of bread, law enforcement agencies may seal all inventory flour, the entire warehouse, or even the entire bakery. Once the entire factory is sealed off, the enterprise can only suspend production and business. For example, a wooden box operated by a company is suspected of having substandard quality, and the company's production line simultaneously produces up to 100 types of products, with the wooden box being just one of them. But once the law enforcement department seals down the production line, it means that all 100 products will be shut down.

How should law enforcement choose in this situation? If the entire factory and production line are sealed off, it would be legal, but is it really appropriate?

"In specific law enforcement, whether to implement sealing and seizure, and how to define the scope of implementation, all test the professionalism and integrity of law enforcement personnel, and also relate to the operation and development of market entities." said Liu Yanhao, Deputy Director of the Municipal Bureau of Justice.

In a research activity with the theme of "improving the business environment", everyone was impressed by such a case. A medical device manufacturer has added a small light to the medical equipment for the convenience of users. Due to such changes not being approved and suspected of being illegal, law enforcement agencies seized all inventory of such medical equipment, causing the company's production to come to a basic halt. At the symposium, the person in charge of the enterprise sighed and said, "Because of a small lamp, sealing off so many devices at once is an unbearable burden for the enterprise!"

"In fact, the vast majority of enterprises that are subject to administrative enforcement measures, due to suspected illegal activities, will believe that they are at fault first and will cooperate with enforcement measures such as seizure and detention. Only a very small number of enterprises will complain and advocate for excessive application and abuse of administrative enforcement power by law enforcement agencies." said Li Qiang, Director and Managing Partner of Guohao Law Firm.

In an interview, an entrepreneur bluntly stated that although seizure and detention are only temporary controls, once a company's factory or business premises are sealed, the impact on its reputation and production operations may be devastating. The losses suffered by the company as a result may be enormous and far greater than the consequences that illegal behavior should bear. This has also become the biggest concern for enterprises in their business development.

"Bottom line" and "Inclusion"

How to solve the pain points of enterprises and provide a relaxed and secure production and operation environment?

In July 2022, Shanghai launched the "List of Administrative Compulsory Measures Not to be Implemented in the Field of Market Regulation", followed by the "List of Administrative Compulsory Measures Not to be Implemented in the Tax Field", which respectively clarified the seven categories of mandatory measures not to be implemented in the field of market regulation and five categories in the tax field.

"The two lists are not only restrictions and norms for frontline law enforcement units and personnel, but also protection and guidance for market entities. They are a positive traction for regulatory activities, corporate interests, and market order." Liu Yanhao said.

In July 2022, Shanghai launched the "List of Administrative Compulsory Measures Not to be Implemented in the Field of Market Regulation"

There are two keywords behind the list——

One keyword is "bottom line". "The purpose of administrative supervision is to safeguard public interests. This is the bottom line of administrative supervision and the prerequisite for not implementing compulsory measures." Liu Yanhao said that after market entities discover their own violations, they should take the initiative to correct and strive to eliminate harmful consequences. When law enforcement units investigate and deal with them, they should cooperate with law enforcement activities, bear corresponding responsibilities in accordance with the law, assist in achieving "restoring economic and social order", and ensure that public interests are protected.

In order to firmly adhere to the bottom line, the list of mandatory measures not to be implemented has set four prerequisites in accordance with the law: "stopping illegal behavior, avoiding harm, controlling the expansion of danger, and preventing evidence damage". Only when all four prerequisites are met can mandatory measures not be implemented.

Another keyword is "inclusion". Within the legal framework and under the premise of safeguarding public interests, enterprises should be given as much space as possible and administrative management objectives should be achieved in a way that minimizes the impact on the parties involved.

The reporter noticed that the list of administrative compulsory measures not to be implemented in the field of market supervision clearly defines two aspects: "those who have the legal right to implement compulsory measures, under what circumstances should they not be implemented" and "those who really need to implement compulsory measures, how should they be limited to the minimum scope". Many regulations have appeared for the first time in China, with unprecedented inclusiveness. For example, if there is evidence to prove that the raw materials, auxiliary materials, agricultural inputs, etc. involved in the case meet mandatory standards, and if the production and operation tools, equipment, etc. involved in the case can be used for other legal production and operation activities, they will not be sealed or seized.

The list also clarifies the priority order of the objects of enforcement measures - in cases where it is necessary to implement them, the "property" involved in the case should be sealed or seized first; Only those who still cannot safeguard public interests can seal off the "facilities" involved in the case; If it still cannot be done, the "place" involved in the case can be sealed; The scope of seizure must also be limited to the minimum range to minimize the impact on the production and operation of the parties involved. For example, if sealing a room can achieve administrative management purposes, it is not allowed to seal one floor; if sealing a building can achieve it, it is not allowed to seal the entire factory area. After receiving the list, grassroots law enforcement officer Chen Gang felt that the previously blurred boundaries became clearer.

"The two lists are more about summarizing, clarifying, and making explicit the rules that were previously implicit but not clear enough in law enforcement," said Yu Xiaoqiong, Director of the Administrative Law Enforcement Coordination and Supervision Department of the Municipal Bureau of Justice.

Reform with the blade facing inward

The two lists may seem lightweight, but their implementation is not easy.

For law enforcement units, seizure and detention are a sharp sword, a powerful tool to encourage enterprises to cooperate with investigations and fulfill penalties, and also a power granted to law enforcement units by laws and regulations. "Even if this power is not implemented, it is still a form of deterrence." Ding Deying, director of Shanghai Junlun Law Firm, said that the introduction of the list is an explicit waiver of some power by law enforcement units to regulatory objects, and it is a "proactive and inward oriented" reform. "

This reform measure has greatly benefited enterprises. Data shows that as of July 5, 2023, the city's market supervision departments have not implemented administrative compulsory measures on 6917 business entities, which has played a positive role in boosting enterprise confidence and accelerating economic recovery after the epidemic.

"I only let go of my nervousness when I learned that the regulatory authorities only detained the batch of leather clips involved in the case." The head of a leather product company said that a certain batch of leather clips produced by the factory was suspected of violating the law. Although the manufacturer immediately stopped producing this type of leather clip, they were worried. "We are very worried that raw materials will be seized or the production line will be sealed, so other goods orders cannot be delivered on time and we will have to pay a large amount of liquidated damages." What comforted the company was that after careful investigation by law enforcement personnel, only the remaining leather clips of the same batch in the warehouse were sealed, and the production line can continue to be used. ". A week later, the case was investigated and the sealed wallet was returned. The production of other products by the manufacturer was not affected. "This kind of protection for the enterprise gives us a sense of security," said the person in charge of the enterprise. Providing greater space to business entities will earn them greater confidence in the development environment and also contribute to more dynamic economic development. Professor Zhang Zhiyuan, Executive Vice Dean of the School of Discipline Inspection and Supervision at East China University of Political Science and Law, said, "Weightlifting can be seen lightly. The respect and protection of the interests of suspected illegal enterprises indirectly reflect that legitimate operating enterprises have more sufficient support, protection, and tolerance in Shanghai.".

It is worth noting that the Shanghai list is different from other places. The list of administrative compulsory measures that are not implemented in China is mostly similar to the list of minor violations that are not subject to administrative penalties. It is a list style rule that specifies which illegal acts are not subject to compulsory measures under what circumstances. "The Shanghai list is a general rule that is fully applicable to the investigation and punishment of various illegal activities in the fields of market supervision and taxation. This also means that the scope of application of the Shanghai list is wider, and the scope of benefits for enterprises is greater," said Yu Xiaoqiong.

"The rule of law is the best business environment. Market supervision departments use refined law enforcement and inclusive and prudent supervision to cultivate economic vitality and innovation momentum, enhance market expectations and corporate confidence, and promote high-quality economic and social development," said Ni Junnan, Director of the Shanghai Municipal Bureau of Market Regulation.