Sustainability of China's anti-monopoly law in the digital era : an observation on the 'choosing one from two' jurisprudence from China

Wang, Jing (2022) Sustainability of China's anti-monopoly law in the digital era : an observation on the 'choosing one from two' jurisprudence from China. In: 19th Asian Law Institute Conference, 2022-05-28 - 2022-05-29, University of Tokyo.

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Abstract

This paper addresses inconsistencies in the application of China's abuse of dominant position test set out in China's Anti-Monopoly Law ("AML") and considers whether the AML's abuse of dominant position test is sustainable in its current form, particularly given the new challenges posed by restrictive practices practised by major players in digital markets. In April 2021, China's antitrust regulator – The State Administration for Market Regulation ("SAMR") – fined Alibaba (a massive Chinese multinational specializing in e-commerce, retail, Internet, and technology) an equivalent to USD $2.8 billion for abuse of dominance contrary to the AML's abuse of dominance provision, Art. 17(4). SAMR found that Alibaba (over 50% market share ) had abused its dominant position by imposing a "choosing one from two" restrictive practice on traders, whereby they could not sell their products on other competing platforms, if they wished to sell on Alibaba's business to consumer (“B2C”) online shopping platform. In October 2021, SAMR had fined China's largest online food delivery platform – Meituan – an equivalent to USD $530 million for abusing its dominant position contrary to AML Art 17(4) because it prohibited restaurants selling takeaway food via the Meituan platform (over 60% market share ) from offering their product via Meituan's main competitor platforms. However, the same Article has not been applied consistently: In 2013, Tencent’s (China’s equivalent of Facebook) practice of “choosing one from two” was not condemned as contrary to Art 17(4), even though Tencent had over 80% market share! Tencent’s “choosing one from two” terms forced consumers to make a choice between taking a competitor’s antivirus software (“Qihoo 360”) or Tencent’s antivirus service: Consumers choosing Qihoo 360’s antivirus product meant that the consumer lost access to Tencent’s widely popular Instant Messaging service, effectively meaning loss of access to IM for social and professional purposes (for consumers in China) to most IM users in China. Tencent held over 80% of the IM market share, yet was held not to be acting contrary to the AML. Such difference in treatment of "choosing one from two" practices in China calls into question the AML's sustainability as a foundational competition law, and highlights major inconsistencies in competition law enforcement in the digital markets in China. In 2021, China published the "Amendments to the AML" Bill, seeking to reform the AML, as well as seeking to make the AML fit-for-purpose in the digital era. In this paper the author will address the question of whether the sustainability of AML Article 17 can be achieved following the proposed Bill's amendments, which seek to render the AML more suitable for application to digital markets competition issues. A conclusion will be drawn after critical analysis of leading decisions, new proposed guidelines and policy objectives.

ORCID iDs

Wang, Jing ORCID logoORCID: https://orcid.org/0000-0002-9180-7525;
CORE (COnnecting REpositories)