China's top court issues interpretation to tackle algorithm-driven monopolies

The Supreme People's Court of China unveiled new judicial interpretations for civil antitrust lawsuits on Monday, set to take effect on July 1. The guidelines aim to address challenges posed by emerging economic models and international competition, showcasing China's commitment to fair market practices and economic development.

The 51-article document covers a wide range of issues, including procedural matters, market definition, monopoly agreements, abuse of market dominance, and civil liabilities in antitrust cases.

In a move to address challenges posed by the booming digital economy, Deputy Head of the Intellectual Property Court of the Supreme People's Court He Zhonglin responded to the evolving complexities of antitrust issues in information technology and the digital economy.

He said that while information technology and digital economy promote economic growth and improve people's livelihood, they also bring more new challenges to anti-monopoly law enforcement and justice.

He pointed out that though price competition among digital economies has diminished, competition on quality, diversity and innovation has increased. Therefore, the new interpretation makes adjustments and new regulations to address certain issues.

For example, Article 15 of Section 2 specifically addresses analysis methods for hypothetical monopolists, focusing on quality decline and cost increases. Articles 16 and 17 provide guidance on defining relevant products and market geographies, considering the often bilateral or multilateral nature of platform competition.

Regarding monopoly agreements, Article 24 made stipulations about horizontal monopoly through data, algorithms, technology and platform rules, and vertical monopoly which uses technical means to limit or automate the setting of resale commodity prices. Article 25 outlines the judicial regulation path for monopolistic behavior that may be triggered by cross-platform most-favorable treatment.

On the abuse of market dominance, Articles 30 and 32 detail the calculation of market share and assessment of market dominance for platform operators. The judicial interpretation also applies principles and analytical approaches for unfair pricing, below-cost sales, refusal to deal, exclusive dealing, tying, and discriminatory treatment to the digital economy. 

In addition to that, Article 42 provides guiding provisions on the selective application of antitrust and e-commerce laws to the abuse of market dominance by platforms.

Another key focus in drafting the new judicial interpretation is to tackle evidentiary burden and proof in antitrust civil litigation.

Under the new interpretation, plaintiffs can file civil lawsuits directly based on the Antitrust Law or after an antitrust enforcement agency's decision. The court will accept such cases if they meet legal conditions. However, it will not accept cases where the plaintiff only seeks a declaration of monopoly without demanding civil liability.

The new interpretation allows parties to request expert advice on specialized issues and commission market research or economic analysis from professional institutions.

To help people understand and apply the new judicial interpretation, the supreme court has also released five recent antitrust cases, which include disputes over monopoly agreements and abuse of market dominance, providing valuable insights into the application of the updated Antitrust Law.

Tao Kaiyuan, vice-president of the Supreme People's Court, said the judiciary will continue to strengthen antitrust enforcement to promote fair competition and innovation, contributing to the development of a unified national market and new quality productive forces. This new interpretation coincides with the second anniversary of the revised Antitrust Law, updating the previous version released in 2012.

From 2013 to 2023, Chinese courts concluded 977 first-instance antitrust civil cases. The Supreme Court's Intellectual Property Court, established in January 2019, has accepted 178 antitrust cases and concluded 131 of them, some having significant social impact, as of May 2024.