On 2 January, the draft revised Antimonopoly Law (hereinafter referred to as the Draft for Consultation) was published. One of the main points is to take into consideration the new form of the Internet.
When it is determined that operators have market dominant position, the Anti-monopoly Law>the revised draft specifically mentioned that``it is necessary to consider the network effect, economy of scale, locking effect, ability to master and process relevant data and so on. ``.
If the draft for comments is settled, what impact will it have on the new Internet format? How to determine that Internet operators abuse the dominant position in the market? What will be the impact on the handling and punishment of the e-commerce dispute?
Liu xu, a part-time researcher at the intellectual property and competition law research center of tongji university, said in an interview with the press that the introduction of the dominant factors of the market position of the operators in the internet field reflects to a certain extent the reference of the anti-monopoly law to the relevant legislative practice and law enforcement practice of the european and american countries, which is helpful for our country to realize the \"zero breakthrough\" of anti-monopoly law enforcement in the internet industry, and also helps to restrain the discretion of the judges in the relevant judicial trials, which is more beneficial to the Internet enterprises in our country to reasonably evaluate the anti-monopoly risk of restricting competition behavior in combination with their own reality.
Article 21 of Chapter III,\"Abusing the dominant position of the market \", stipulates that if an operator has a dominant position in the market, it shall be determined on the basis of the market share of the operator in the relevant market and the competitive situation of the relevant market, the ability of the operator to control the market for sale or purchase of raw materials, and the financial and technical conditions of the operator.
At the end of article 21, the draft of the request for comment mentioned that \"the determination of the dominant market position of the operators in the field of the Internet should also take into account such factors as network effect, economies of scale, lock-in effect, ability to hold and process relevant data.\" This is not directly stipulated in the current Antimonopoly Law.
Article 11 of the Interim Provisions on the Prohibition of the Abuse of Dominance of the Market, which came into effect on September 1,2019, has first stipulated that \"in accordance with Articles 18 of the Anti-monopoly Law and Articles 6 to 10 of these Provisions, it is established that the operators of new economic forms such as the Internet have a dominant position in the market, and may take into account the competitive characteristics of the relevant industries, the mode of operation, the number of users, the network effect, the lock-in effect, the characteristics of technology, the ability to innovate and process the relevant data and the market forces of the operators in the relevant market,\" Liu told reporters. Therefore, it is also coordinated that the draft of soliciting opinions introduces the considerations of market dominance in the Internet industry, and article 11 of the Provisional Regulations on the Prohibition of the Abuse of Market Dominance.
\"If you look closely at it, you will find that the wording of the draft is less competitive,'business model','number of users','technical characteristics','market innovation' and'market power of the operator in the associated market'. There are still differences on whether these elements are also included in the internet industry's market dominance.\" said Liu Xu.
At a special news conference on August 30,2019, the Director of the Antimonopoly Service of the State Administration of Market Regulation, Wu Zhenguo, responded to the Provisional Regulations on the Prohibition of the Abuse of Market Dominance and categorized it into three areas:
The first is to clarify the market share to determine the range of indicators. According to the Antimonopoly Law, market share is an important basis for determining whether the operator has a dominant market position. With regard to the determination of market share, the Provisional Regulations on the Prohibition of the Abuse of Dominance of the Market made clear that, in addition to the amount of sales and the quantity of sales, other indicators were included to provide a basis for a more scientific determination of the market share of operators in the Internet field.
The second is to determine the market dominance of the special considerations. Article 11 of the Interim Provisions on the Prohibition of Abuse of Market Dominance lists the factors that can be considered when determining that the operators of new economic forms such as the Internet have a dominant position, which is conducive to guiding the practice of law enforcement in determining whether the operators of the Internet field have a dominant market position.
The third is to provide for the sale of goods at a price below the cost of special circumstances. Article 15 of the Interim Provisions on the Prohibition of Abuse of Dominant Market Position stipulates that when determining that an operator sells goods at a price lower than the cost, the free mode in a new economic form, such as the Internet, should consider comprehensively the free commodities provided by the operator and the related fee-paying commodities, thus reflecting the consideration of the operating characteristics of a new economic form such as the Internet.
In 2013, when the Supreme People's Court of Guangdong Province tried the case of the abuse of the dominant position of Qihu v. Tencent in 2010, the two sides of the defense and defense conducted a battle on the consideration of Tencent's number of users, network effect and locking effect in the field of instant communication. For example, Qihu claims that Tencent QQ has a market dominant position in the instant messaging software and service market. ``QQ'' requires its users to choose one between QQ and 360 browsers, and to bind security software products in QQ software, which belongs to the monopoly position of QQ in the instant communication market to limit competition, which belongs to abuse the dominant position of the market.
Tencent, for its part, believes that instant messaging has a wide range of related goods and services, including instant messaging, instant messaging for email, instant messaging for SNS social networking sites, instant messaging for Weibo and mobile instant messaging services. Tencent advocates that the relevant market be identified as the entire Internet application platform.
After going through the second instance of the Supreme People's Court, Qihu finally sued. The Supreme People's Court issued a moral critique of Tencent's coercion of users to choose one.
\"Through Qihu v. Tencent, let's look again at the considerations of the dominant market position of the Internet industry in the draft for comment. During the 3Q war, Tencent's instant-messaging app had an obvious scale effect because it had far more users than its competitors. And instant messaging involves the bilateral market, one is QQ users, the other is advertising through QQ advertisers. After the launch of wechat can be a surge in users in the short term, the exclusion of mobile end instant messaging and social network applications of other competitors, is because qq open to wechat address book, qq friends can be one-click wechat friends.\" Liu xu further explained that when a certain internet enterprise is stronger in scale effect and network effect, it will have a strong locking effect on users, so that even if the service quality of the enterprise becomes worse, it is difficult for users to give up completely or replace it with other competing products.
"Even if these considerations ultimately prove objectively that an Internet company has a dominant market position, it is the discretion of the judge or the law enforcement agency whether the court or the law enforcement agency will draw conclusions against the company because of these factors.” The decisive factors that govern the exercise of these discretionary powers may not be included in the anti-monopoly law and in the draft request for comment." Liu Xu told the surging reporters.
Are the considerations of the dominant market position of Internet operators available for use in other areas? Liu told surging reporters that in economic theory, market entry barriers, scale effects, network effects, transformation costs, multi-host, sunk costs and other factors, not only in the Internet industry, telecommunications, finance and other traditional industries can also be considered as market dominance.
"There are some differences in statistics between traditional and Internet industries.” For example, there is a phenomenon that free products and fee products are related to each other in the Internet industry. Therefore, when deciding whether an internet enterprise has a dominant position in the free service market, it may be necessary to take into account the analysis of the charge market, and at the same time, to avoid using the economic analysis method of relying on price data to analyze the free products in order to avoid the wrong conclusion. said Liu Xu.
The Guangdong Provincial Higher People's Court heard that when it heard the case of Qihu v. Tencent's abuse of market dominance, it used the supposed monopolist test to define the relevant product market. The test would have to assume whether a company's loss of users would not be worth more than a 5 to 10% increase in the price of a particular product. However, because the Guangdong Provincial Higher People's Court used this method to analyze Tencent QQ's free service to belong to the market, rather than QQ membership fees after the rise in the situation, has been criticized by academia. In this regard, the Supreme People's Court corrected it in the second instance judgment.
On August 8,2019, the General Office of the State Council issued its guidance on promoting the healthy development of platform economic norms. The guidance noted that the State Administration of Market Supervision and Administration was responsible for \"formulating relevant regulations on the supervision and administration of network transactions, investigating and punishing illegal acts such as abusing market dominant position to restrict transactions and unfair competition in the Internet field according to law, strictly prohibiting the platform from unilaterally signing exclusive service provision contracts and ensuring fair participation of relevant market subjects in market competition in the platform economy.\"
On August 30,2019, Wu Zhenguo said the state encouraged and supported the development of new economic formats such as the Internet, and antitrust law enforcement agencies adhered to the principle of tolerance and prudence and carried out competition regulation in the new economic field of the Internet according to law.
On november 5,2019, deputy director of the antitrust bureau of the state administration of market supervision and administration, xu lefu, explained the harm of the e-commerce platform at the \"forum on administrative guidance for standardizing network business activities\" held in hangzhou, and made it clear that \"the act of\" choosing one from two \"suspected of constituting monopoly behavior should be filed for investigation in due course.
Internationally, antitrust investigations into the Internet are better known as the 2017 European Union's ruling that Google abused its dominant market position and intended to direct customers to Google's shopping search business. To that end, the eu issued a record euro-billion-dollar ticket to google.
In addition, foreign antitrust law enforcement agencies have reviewed a large number of mergers and acquisitions of Internet companies, such as Facebook's acquisition of WhatsApp, Google's acquisition of doubleClick, a price comparison site. European and american countries have also investigated cases of limited competition agreements imposed by high-tech companies, such as the european union and the u.s., which have investigated apple's manipulation of e-book prices, and germany, which has investigated online hotel-booking restrictions on hotels entering its platforms to offer better offers on other platforms.
\"As can be seen from some cases, the absence of special regulations on the Internet industry does not prevent foreign antitrust law enforcement agencies from conducting antitrust investigations into the Internet industry and investigating restrictions on competition. This is the same at home and abroad. However, antitrust enforcement agencies in europe and the united states have made a lot of positive attempts to find out more operable practical experience, and some of them have been refined into statutory law. For example, germany's anti-restricted competition law stipulates that when the turnover of a high-tech company is not up to the threshold of merger review, it can be subject to merger review after the valuation of the high-tech enterprise has reached a certain threshold at the time of acquisition, thus protecting the effective competition of the relevant market of the high-tech enterprise.\"
Liu Xu further said that corporate mergers and acquisitions, abuse of market dominance will bring irreversible changes to the market structure. Therefore, the Internet industry's anti-monopoly law enforcement, cannot wait for the end of the \"anti-monopoly law\" before starting to file an investigation. In reality, the antitrust investigation of Didi's acquisition of Uber China in 2016 is still pending, and in 2015, JingDong's report on Ali's abusive market dominance was inconclusive, and even Internet giants such as Tencent, Alibaba, Ctrip and Meituan have been involved in mergers and acquisitions over the past 11 years, and have not carried out centralized antitrust declarations of operators as other industries have done, and have not been publicly filed for investigation.
\"From the existing laws and regulations, antitrust enforcement agencies can fully apply the provisions of the existing Anti-Monopoly Law to investigate and deal with Internet giants. However, China's anti-monopoly law enforcement agencies have long been afraid of the Internet industry to carry out anti-monopoly law enforcement psychology, worried that anti-monopoly law enforcement will hinder the development of some Internet giants. Such a mentality, on the one hand, let Internet enterprises more unscrupulous organization to implement restrictions on competition, on the other hand, it is easy to lead more Internet enterprises in their respective segments of the market to emulate these restrictions on competition behavior, further deterioration of China's Internet industry competition order, damage to the survival and development of small and medium-sized enterprises space. \"said Liu Xu.