SPC releases first interpretation of the Anti-monopoly Law

Qihoo accused Tencent of abusing its dominant market position by introducing bundle sales to prevent its users from installing Qihoo's software. The three judges who presided over the case announced an adjournment on the same day the case was heard and gave no details of when it would be continued.

“Multiple cases factor into the Provisions with several of the articles indicating this,” said Fang Qi at Fangda Partners in Beijing, who specialises in anti-monopoly disputes. “The Court has taken into account examples from various cases already decided,” he added.

Article 10 of the Provisions is a direct result of the 2009 Renren v Baidu case. Renren sued Baidu, alleging Baidu had abused its dominant market position, violating the Anti-monopoly Law. Renren submitted a press release from Baidu citing their 70% market share.

Beijing First Intermediate People's Court heard what was the first private lawsuit under the new Law. The Court dismissed the press release as inadmissible. This move “was particularly unfair, especially as the defendant presented themselves as dominant in the market,” said Qi.

Article 9 also lowers the burden of proof as it ensures plaintiffs do not have to prove that public utility enterprises with legally granted monopoly positions have a dominant market position.

In addition, Article 12 allows expert witnesses from all backgrounds to testify in cases. Previously, only expert witnesses from economics and industry backgrounds were allowed. “By expanding the scope, the SPC has intentionally reduced the parties' difficulty in discharging their burden of proof,” said Zhou. In the Qihoo v Tencent case an English speaking witness with an economics background was used.

While the Provisions lower the burden of proof it is not thought they will significantly alter or change the Qihoo case. “There are not enough substantial changes to effect the case, rather they give more clear guidance,” notes Qi.

The Provisions clarify the issue of jurisdiction by stating that all intermediate courts located in provincial capitals and listed planning cities are eligible to hear civil anti-monopoly disputes. In a change from the Draft Provisions, other courts designated by the SPC may hear cases. It is unclear under what circumstances the SPC will allow this.

There are still areas of anti-monopoly disputes requiring clarification. For example, an interpretation or decision on what constitutes market dominance has yet to be decided by the courts. The country is also still waiting to see a plaintiff win a high profile anti-monopoly case. This raises questions over how and under what circumstances damages will be awarded.

Qi hopes the interpretation will give “courts more power to adjudicate cases. Without it, they may feel they do not have enough guidance”. This particularly holds true as anti-monopoly is a relatively new concept in China. There is always a spotlight on any court hearing an anti-monopoly case and judges can be reluctant to hand down far-reaching verdicts.

The Provisions represent an important step from the SPC, especially as the question of whether the plaintiff can meet the burden of proof is essential to litigation in China. By moving some of this burden to the defendant, it paves the way for a new era of anti-monopoly disputes.

A full text translation of the Provisions and a feature article analysing them will appear in the June issue of China Law & Practice.

By David Tring

Back to:

A guide to anti-monopoly reviews and disputes

Learning by example: Four conditional reviews

Coming soon: fast-track reviews

EU and US merger controls compared

Inspiring the Law

Full translations (free access):

PRC Anti-monopoly Law (中华人民共和国反垄断法)

Provisions on Several Issues Concerning the Application of the Law in Trials of Civil Dispute Cases Arising from Monopolistic Acts
(关于审理因垄断行为引发的民事纠纷案件应用法律若干问题的规定)