Competition Enforcement in Digital Markets in China

• DOI: http://doi.org/10.1177/0003603X221126157
• Published date: 01 December 2022
• Date: 01 December 2022
• Subject Matter: Articles

https://doi.org/10.1177/0003603X221126157

The Antitrust Bulletin

2022, Vol. 67(4) 579 –599

© The Author(s) 2022

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DOI: 10.1177/0003603X221126157

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Article

Competition Enforcement in Digital

Markets in China

Ken Dai* and Jet Deng*

Abstract

Compared with the size of China’s digital market, competition enforcement in China in this area

is relatively underexplored. It had been almost an entirely blank space until the end of 2020. This

article summarizes the enforcement actions that have been taken to date, from few distant cases

in which former authorities tentatively approached competition issues in this area, to more recent

landmark cases in which more sophisticated analysis is provided and hefty fines are imposed. This

article traces the enforcement history, thereby explaining the reasons of some China-featured

situations, for example, a large amount of existing gun-jumping cases. It also studies some comparable

enforcement decisions with a common issue, for example, dominance abuse in the digital market and

a controversial topic in China—“choose one from two.” Enforcement trends are also discussed to

predict future development in this regard.

Keywords

Anti-Monopoly Law, SAMR, platform economy, VIE, choose one from two, exclusive dealing

I. Overview

Under the digital economy, the development speed of platform enterprises far exceeds that of traditional

enterprises. On November 11, 2021, the “Double Eleven” festival of the year (similar to Black Friday),

Alibaba’s B2 C online retail platform Tmall reached a total turnover of 540.3 billion RMB (about US$80

billion) in a single day. When these platform enterprises gradually grow into industry giants, they also

gradually have the ability to continuously extend their boundaries and expand the accessible market,

thereby eroding the competitiveness of the market step by step. Therefore, just as in mature jurisdictions

such as the United States or the European Union (EU), it is very important for China, a developing

economy, to build a complete antitrust supervision system in the field of digital economy.

This article will discuss the antitrust enforcement in digital economy in China, including more than a

decade of “laissez-faire” approach and the abrupt changes in recent two years. Section II summarizes the

updates of antitrust legislations on platform economy. Section III introduces the institutional changes of

China’s antitrust enforcement authorities in response to the need of enhancing antitrust supervision.

*Dentons, Shanghai, China

Corresponding Authors:

Ken Dai, Dentons, 9th/24th/25th Floor, Shanghai World Financial Center, No. 100 Century Avenue, Pudong New Area,

Shanghai 200120, China.

Email: jianmin.dai@dentons.cn

Jet Deng, Dentons, 16-21F, Tower B, Zhaotai International Center, 10 Chaoyangmen Nandajie, Chaoyang District Beijing

100020, China.

Email: zhisong.deng@dentons.cn

1126157ABXXXX10.1177/0003603X221126157The Antitrust BulletinDai and Deng

research-article2022

580 The Antitrust Bulletin 67(4)

Section IV deals with several milestone merger control cases in digital markets involving Variable

Interest Entities (VIE) dilemma, gun-jumping penalty with remedial conditions, and a prohibition deci-

sion. Section V discusses the complexity of antitrust enforcement in digital markets and four typical

cases on abuse of dominance involving “choose one from two” and quasi-public service. Section VI

looks at the private antitrust litigations in digital markets. Section VII introduces the local legislation on

digital platform at the provincial level. Section VIII provides the conclusion and look-forward.

II. Updates of Antitrust Legislations on Platform Economy

China’s Anti-Monopoly Law was promulgated in 2007 and took effect in 2008 (the “2008 AML”).1 It

did not specifically address digital economy, which to certain extent contributed to the reality that the

antitrust enforcement had been absent in platform economy until the end of 2020. But beginning in

2020, the authorities began to take actions within the general framework of the 2008 AML. As a civil

law jurisdiction, to effectively regulate antitrust behaviors in the platform economy, China needs to

update the statute or provide another codified legal basis. Before the amendment of the 2008 AML, a

specific guideline has been released. Recently, with the amendment, specific provisions have been

introduced to the new Anti-Monopoly Law (the “2022 AML”).

On February 7, 2021, the Anti-Monopoly Commission of the State Council of the People’s Republic

of China adopted the Antitrust Guidelines for the Platform Economy2 (“Platform Guidelines”), which

is the first antitrust guidelines in the world focused on the platform economy. While staying within the

regulatory framework set by the 2008 AML, the Platform Guidelines made a number of noteworthy

breakthroughs and clarifications by taking the industry-specific features into account. Hot issues such

as “choose one from two,” “big data kills familiarity,” hub-and-spoke agreements, most-favored-nation

clauses, and the notability of VIE structure M&A are all included.

After that, the provisions focusing on Internet-based platform operators have been introduced to the

amendment of the AML, although they are more about declarative statements rather than operational

rules. The 2022 AML was approved on June 24 and will take effect on August 1. Specifically, Article 9

provides that platform operators cannot use data and algorithms, technology, capital advantages, and

platform rules to engage in monopolistic behaviors, and Article 22 provides that operators with domi-

nant market position cannot use data and algorithms, technology, and platform rules to engage in the

behaviors of abusing market dominance.

All the above updates in antitrust legislations on platform economy show China’s determination to

intensify antitrust scrutiny in this area, combat monopolistic practices, and prevent disorderly expan-

sion of capital, which have been reflected by recent antitrust enforcement practices.

III. Enhancement of the Antitrust Enforcement Authority

A. Pre-SAMR Era

Following the enactment of the 2008 AML, initially an antitrust enforcement system made up of three

agencies was established, that is, the Antitrust Bureau of the Ministry of Commerce (“MOFCOM”), the

Price Supervision, Inspection and Antitrust Bureau of the National Development and Reform Commission

1. Zhonghua Renmin Gongheguo Fanlongduanfa,

中华人民共和国反垄断法

[Anti-Monopoly Law of People’s Republic of

China] (promulgated by the Standing Comm. Nat’l People’s Cong., Aug. 30, 2007, effective Aug. 1, 2008), http://www.

gov.cn/flfg/2007-08/30/content_732591.htm. (In Chinese)

2. Guowuyuan Fanlongduan Weiyuanhui Guanyu Pingtai Jingji Lingyu De Fanlongduan Zhinan,

国务院反垄断委员会关

于平台经济领域的反垄断指南

[Anti-Monopoly Guidelines of the Anti-Monopoly Commission of the State Council on

Platform Economy] (promulgated by the Anti-monopoly Comm’n of the State Council, Feb. 7, 2021, effective Feb. 7,

2021), https://gkml.samr.gov.cn/nsjg/fldj/202102/t20210207_325967.html. (In Chinese)