What Is Institutional Abuse?

Introduce the definition of abuse of market dominance, expressions, legal regulations, behavioral definitions and harms.

Abuse of market dominance

Right!

Introduce the definition of abuse of market dominance, expressions, legal regulations, behavioral definitions and harms.

Chinese name

Abuse of market dominance

Foreign name

abuse of dominant position

Predatory pricing

Predatory pricing

Manifestations

Improper price behavior

Also known as

Abuse of dominant market position

Field

economic

Abuse of market dominance, also known as abuse of dominant market position, is the abuse of this position by enterprises after gaining a certain dominant market position, unfair dealing with other entities in the market, or exclusion of competitors.

Structural theory

Different market structures will inevitably lead to differences in economic operations.

Improper price behavior

(1) Dominant enterprises obtain excess

Identification of relevant markets

1. Relevant market: Selling to common buyers

Antitrust laws regulate abuses of market dominance because they

Interim Provisions Prohibiting Abuse of Dominant Market Position

(Promulgated by Order No. 11 of the State Administration of Market Supervision on June 26, 2019)

Article 1 In order to prevent and stop the abuse of market dominance, these regulations are formulated in accordance with the Anti-Monopoly Law of the People's Republic of China (hereinafter referred to as the Anti-Monopoly Law).

Article 2 The State Administration of Market Supervision and Administration (hereinafter referred to as the State Administration of Market Supervision) is responsible for anti-monopoly enforcement of abuses of market dominance.

According to the second paragraph of Article 10 of the Antimonopoly Law, the General Administration of Market Supervision authorized the market supervision and administration departments (hereinafter referred to as provincial market supervision departments) of various provinces, autonomous regions, and municipalities directly under the Central Government to take charge of antitrust law enforcement within their administrative regions.

The anti-monopoly law enforcement agencies referred to in these regulations include the General Administration of Market Supervision and the provincial market supervision department.

Article 3 The General Administration of Market Supervision is responsible for investigating and punishing the following abuses of market dominance:

(1) Crossing provinces, autonomous regions, and municipalities directly under the Central Government;

(2) The case is more complicated or has a significant influence throughout the country;

(3) The General Administration of Market Supervision considers it necessary to investigate directly.

The abuse of market dominance listed in the preceding paragraph may be investigated and dealt with by the market supervision department at the provincial level.

When the provincial market supervision department investigates and punishes the abuse of market dominance according to its authorization, it finds that it is not within the scope of the department's investigation or punishment, but if it is necessary to be investigated and dealt with by the General Administration of Market Supervision, it should report to the General Administration of Market Supervision in a timely manner.

Article 4 When investigating and abusing market dominance, antitrust enforcement agencies shall treat all operators equally.

Article 5 The dominant market position refers to the market position in which the operator has the ability to control the price, quantity or other transaction conditions of goods or services (hereinafter collectively referred to as commodities), or can impede or affect the ability of other operators to enter the relevant market.

The other trading conditions mentioned in this article refer to other factors that can have a substantial impact on market transactions in addition to commodity prices and quantities, including commodity varieties, product quality, payment conditions, delivery methods, after-sales service, transaction options, and technical constraints.

The provisions in this article can hinder and affect other operators from entering the relevant market, including excluding other operators from entering the relevant market, or delaying other operators from entering the relevant market within a reasonable time, or causing other operators to enter the relevant market but enter the cost. Significantly increase, unable to effectively compete with existing operators, etc.

Article 6 According to Article 18 (1) of the Antimonopoly Law, to determine the market share of the operator in the relevant market, consideration may be given to the specific commodity sales amount, sales volume or other indicators of the operator in the relevant market in a certain period of time. .

To analyze the competition of relevant markets, factors such as the development of the relevant market, the number and market share of existing competitors, the degree of product differentiation, innovation and technological changes, sales and procurement models, and the situation of potential competitors can be considered.

Article 7 According to the second paragraph of Article 18 of the Antimonopoly Law, to determine the ability of an operator to control the sales market or the raw material procurement market, the ability of the operator to control the upstream and downstream markets of the industrial chain and the ability to control sales channels or procurement channels may be considered. , The ability to influence or determine the price, quantity, contract duration or other trading conditions, and the ability to give priority to obtaining the raw materials, semi-finished products, parts, related equipment and other resources that are necessary for the production and operation of the enterprise.

Article 8 According to Article 18, Paragraph 3 of the Anti-Monopoly Law, to determine the financial and technical conditions of an operator, the operator's asset size, profitability, financing capabilities, research and development capabilities, technical equipment, technological innovation and application capabilities may be considered. , Intellectual property rights, etc., and how and how the financial resources and technical conditions can promote the business expansion of the operator or consolidate and maintain the market position and other factors.

Article 9 In accordance with Article 18, Paragraph 4 of the Antimonopoly Law, to determine the degree of dependence of other operators on the transaction of the operator, consideration may be given to the transaction relationship, transaction volume, and transaction continuity between the other operator and the operator. Time, the difficulty of switching to other trading counterparties within a reasonable time, and other factors.

Article 10 In accordance with Article 18, Item 5, of the Antimonopoly Law, to determine the degree of difficulty for other operators to enter the relevant market, market access, the difficulty of obtaining necessary resources, the control of procurement and sales channels, and the scale of capital investment may be considered. , Technical barriers, brand dependence, user conversion costs, consumption habits and other factors.

Article 11 According to Article 18 of the Anti-Monopoly Law and Articles 6 to 10 of these regulations, the operators of new economic formats such as the Internet are deemed to have a dominant market position. They may consider the competition characteristics, business models, number of users, and Internet Effects, lock-in effects, technical characteristics, market innovation, the ability to grasp and process relevant data, and the market power of operators in related markets.

Article 12 According to Article 18 of the Anti-Monopoly Law and Articles 6 to 10 of these Provisions, if the operator in the field of intellectual property rights is determined to have a dominant market position, he may consider the substitution of intellectual property rights and the downstream market for the use of goods provided by intellectual property rights. Factors such as the degree of reliance, the ability of the counterparty to check and balance the operator, and other factors.

Article 13 recognizes that two or more operators have a dominant market position. In addition to considering the factors specified in Articles 6 to 12 of these regulations, market structure, relevant market transparency, degree of homogeneity of related products, Factors such as consistency in operator behavior.

Article 14 It is forbidden for a market-dominant operator to sell goods at unfairly high prices or buy goods at unfairly low prices.

In determining unfair high prices or unfair low prices, the following factors may be considered:

(1) Whether the sales price or purchase price is significantly higher or lower than the price at which other operators sell or purchase the same or comparable products under the same or similar market conditions;

(2) Whether the sales price or purchase price is significantly higher or lower than the price at which the same operator sells or purchases goods in other regions with the same or similar market conditions;

(3) Whether the sales price exceeds the normal range to increase the sales price or reduce the purchase price under the condition that the costs are basically stable;

(4) Whether the price increase of the sale of goods is significantly higher than the cost increase, or whether the price reduction of the purchase of goods is significantly higher than the cost reduction of the counterparty to the transaction;

(5) Other relevant factors to be considered.

In determining that market conditions are the same or similar, consideration should be given to factors such as sales channels, sales models, supply and demand conditions, regulatory environment, transaction links, cost structure, and transaction conditions.

Article 15 It is forbidden for an operator with a dominant market position to sell goods at a price below cost without justified reasons.

When selling a product at a price that is deemed to be lower than the cost, it is important to consider whether the price is lower than the average variable cost. Average variable cost refers to the cost per unit that changes with the number of goods produced. In the free mode in the new economic formats such as the Internet, comprehensive consideration should be given to the free goods provided by the operator and related charged goods.

The "justified reasons" referred to in this article include:

(1) reducing prices to deal with live commodities, seasonal commodities, commodities whose expiry date is about to expire, and backlogs of commodities;

(2) Selling goods at reduced prices due to debt settlement, production change, or business suspension;

(3) Promoting new products within a reasonable period of time;

(4) Other reasons that can justify the act.

Article 16 It is forbidden for an operator with a dominant market position to refuse to conduct transactions with the counterparty of the transaction without proper reasons:

(1) Substantial reduction in the number of existing transactions with counterparties to the transaction;

(2) delaying, interrupting the existing transactions with the counterparty to the transaction;

(3) refusing to conduct new transactions with counterparties;

(4) setting restrictive conditions to make it difficult for counterparties to conduct transactions with them;

(5) Refusing to deal with counterparties in the production and operation activities, using their necessary facilities on reasonable conditions.

In determining the abuse of market dominance by the operator in accordance with Item 5 of the preceding paragraph, comprehensive consideration shall be given to the feasibility of investing in or constructing the facility separately with reasonable investment, and the degree to which the transaction counterparty may effectively rely on the facility to carry out production and operation activities Factors such as the possibility of the operator to provide the facility and the impact on its own production and operation activities.

The "justified reasons" referred to in this article include:

(1) Unable to conduct transactions due to objective reasons such as force majeure;

(2) The counterparty to the transaction has bad credit records or the deterioration of business conditions, which affects transaction security;

(3) Transactions with counterparties will cause improper impairment of the interests of the operators;

(4) Other reasons that can justify the act.

Article 17 It is forbidden for an operator with a dominant market position to engage in the following restricted transactions without justified reasons:

(1) restricting the counterparty to a transaction to only conduct transactions with it;

(2) restricting the counterparty to a transaction to only conduct transactions with its designated operator;

(3) Restricted counterparties may not conduct transactions with specific operators.

Engaging in the above-mentioned restricted transactions may be directly restricted, or may be restricted in disguise by setting trading conditions and the like.

The "justified reasons" referred to in this article include:

(1) Necessary to meet product safety requirements;

(2) Necessary for protecting intellectual property rights;

(3) Necessary for the protection of specific investments made against transactions;

(4) Other reasons that can justify the act.

Article 18 It is forbidden for an operator with a dominant market position to tie up goods without justified reasons, or to attach other unreasonable trading conditions when trading:

(1) bundling or combining sales of different commodities in violation of trading practices, consumption habits, or disregarding the functions of the commodities;

(2) Additional unreasonable restrictions on the duration of the contract, the method of payment, the method of transportation and delivery of goods, or the method of providing services;

(3) Additional unreasonable restrictions on the sales area, sales target, and after-sales service of the product;

(4) adding unreasonable fees in addition to the price during the transaction;

(5) Attach transaction conditions unrelated to the subject of the transaction.

The "justified reasons" referred to in this article include:

(1) It conforms to proper industry practices and trading habits;

(2) Necessary to meet product safety requirements;

(3) Necessary for the realization of specific technologies;

(4) Other reasons that can justify the act.

Article 19 It is forbidden for an operator with a dominant market position to exercise the following differential treatment on trading conditions for counterparties with the same conditions:

(1) Implementing different transaction prices, quantities, varieties, and quality levels;

(2) implementing preferential conditions such as different quantity discounts;

(3) implementing different payment terms and delivery methods;

(4) Implement different after-sales service conditions such as warranty content and duration, maintenance content and time, spare parts supply, and technical guidance.

The same conditions mean that there are no substantial differences in transaction security between transaction counterparties in terms of transaction safety, transaction costs, scale and capabilities, credit status, transaction links, and transaction duration.

The "justified reasons" referred to in this article include:

(1) Implementing different trading conditions according to the actual needs of the counterparty to the transaction and conforming to legitimate trading habits and industry practices;

(2) Preferential activities carried out within a reasonable period for the first transaction for new users;

(3) Other reasons that can justify the act.

Article 20 The anti-monopoly law enforcement agency shall consider the following factors as "unfair" as referred to in Article 14 and "justified reasons" as mentioned in Articles 15 to 19:

(1) Whether the relevant behavior is required by laws and regulations;

(2) the impact of relevant behaviors on social public interests;

(3) the impact of relevant behaviors on economic operation efficiency and economic development;

(4) Whether the relevant behavior is necessary for the normal operation of the operator and the realization of normal benefits;

(5) the impact of relevant behaviors on the business development, future investment and innovation of the operator;

(6) Whether the relevant behavior can benefit the counterparty or consumer of the transaction.

Article 21 The General Administration of Market Supervision determines that other abuses of market dominance should meet the following conditions:

(1) the operator has a dominant market position;

(2) The operator has implemented acts of excluding or restricting competition;

(3) the operator does not have a valid reason for carrying out the relevant behavior;

(4) Operator-related behaviors have the effect of excluding or restricting market competition.

Article 22 Operators in the fields of water supply, power supply, gas supply, heat supply, telecommunications, cable television, postal services, transportation and other public utilities shall operate in accordance with the law and shall not abuse their dominant market position and harm consumers' interests.

Article 23 Antitrust law enforcement agencies have discovered suspected abuse of market dominance in accordance with their functions and powers, or through reports, transfers from higher authorities, transfer from other agencies, reports from lower agencies, and active reporting by operators.

Article 24 Where the report is made in writing and provides relevant facts and evidence, the anti-monopoly law enforcement agency shall conduct necessary investigations. Written reports generally include the following:

(1) Basic information of the informant;

(2) Basic information of the person being reported;

(3) relevant facts and evidence of suspected abuse of market dominance;

(4) Whether they have reported to the other administrative organs or filed a lawsuit in a people's court on the same fact.

The anti-monopoly law enforcement agency may require the reporter to supplement the report materials according to the needs of the work.

Article 25 The anti-monopoly law enforcement agency shall, after necessary investigations into suspected abuse of market dominance, decide whether to file a case.

The provincial market supervision department shall file the record with the General Administration of Market Supervision within 7 working days from the date of filing the case.

Article 26. When investigating and abusing market dominance, the General Administration of Market Supervision may entrust provincial market supervision departments to investigate.

Provincial market supervision departments may entrust subordinate market supervision departments to investigate when investigating and abusing market dominance.

The entrusted market supervision department shall, within the scope of entrustment, conduct the investigation in the name of the entrusting agency, and may not entrust other administrative agencies, organizations or individuals to conduct the investigation.

Article 27 When investigating and prosecuting suspected abuse of market dominance, the provincial market supervision department may consult the relevant provincial market supervision department to assist in the investigation as required, and the relevant provincial market supervision department shall assist.

Article 28 Where an anti-monopoly law enforcement agency imposes an administrative penalty on an abuse of market dominance, it shall make a written decision on administrative punishment in accordance with the law.

The contents of the administrative penalty decision include:

(1) Basic information such as the name or address of the business operator;

(2) the source of the case and the investigation process;

(3) facts of the violation and relevant evidence;

(4) the status and reasons for the adoption of the statement and defense of the operator;

(5) the content and basis of administrative punishment;

(6) The implementation method and time limit of administrative punishment;

(7) Channels and deadlines for applying for administrative reconsideration or filing an administrative lawsuit against the decision of administrative punishment;

(8) The name of the antitrust law enforcement agency that made the administrative penalty decision and the date of the decision.

Article 29 During the period of investigation, an operator suspected of abusing market dominance may apply for suspension of the investigation and promise to take concrete measures to eliminate the impact of the behavior within the period approved by the antitrust law enforcement agency.

An application for suspension of the investigation shall be made in writing, signed and sealed by the person in charge of the operator. The application should specify the following:

(1) the facts of suspected abuse of market dominance;

(2) Commitment to adopt specific measures to eliminate the consequences of the acts;

(3) the time limit for fulfilling the commitments;

(4) Other contents that need to be promised.

The anti-monopoly law enforcement agency shall, after verifying the investigation of suspected abuse of market dominance, consider that it constitutes a suspected abuse of market dominance, and shall make a decision in accordance with the law, and shall no longer accept applications for suspension of investigations.

Article 30: According to the application for suspension of the investigation by the operator under investigation, the anti-monopoly law enforcement agency decides whether to suspend the investigation after considering the specific circumstances of the nature, duration, consequences, social impact, measures promised by the operator, and their expected effects. .

Article 31 Where an anti-monopoly law enforcement agency decides to suspend an investigation, it shall make a decision to suspend the investigation.

The decision to suspend investigation shall contain the facts of the suspected abuse of market dominance by the operator under investigation, the specific content of the commitment, the specific measures to eliminate the impact, the time limit for fulfilling the commitment, and the legal consequences of failure to fulfill or fail to fulfill the commitment.

Article 32 Where an investigation is decided to be suspended, the anti-monopoly law enforcement agency shall supervise the performance of the undertaking by the operator.

The operator shall report to the antitrust enforcement agency in writing the performance of the commitment within the prescribed time limit.

Article 33 If the anti-monopoly law enforcement agency determines that the operator has fulfilled its commitments, it may decide to terminate the investigation and prepare a decision to terminate the investigation.

The decision to terminate the investigation shall state the facts of the suspected abuse of market dominance by the operator under investigation, the specific content of the commitment, the performance of the commitment, and the supervision.

Under any of the following circumstances, the anti-monopoly law enforcement agency shall resume the investigation:

(1) The undertaking has not fulfilled or fully fulfilled the undertaking;

(2) The facts on which the decision to suspend investigation has changed significantly;

(3) The decision to suspend investigation is based on incomplete or untrue information provided by the operator.

Article 34 Before making a decision to suspend investigation, terminate an investigation or notify an administrative penalty, the provincial market supervision department shall report to the General Administration of Market Supervision.

After the provincial market supervision department sends the decision of suspension of investigation, decision of termination of investigation or decision of administrative punishment to the operator under investigation, it shall file a record with the General Administration of Market Supervision within 7 working days.

Article 35 After an administrative decision is made by an anti-monopoly law enforcement agency, it shall be announced to the public according to law. Among them, the administrative penalty information shall be publicized to the society through the national enterprise credit information publicity system.

Article 36 The General Administration of Market Supervision shall strengthen guidance and supervision of provincial market supervision authorities in investigating and abusing market dominance, and unify law enforcement standards.

Provincial market supervision departments shall investigate and punish abuses of market dominance in strict accordance with relevant regulations of the General Administration of Market Supervision.

Article 37 If an operator abuses the dominant market position, the anti-monopoly law enforcement agency shall order it to stop the illegal behavior, confiscate the illegal income, and impose a fine of 1% to 10% of the previous year's sales.

Anti-monopoly law enforcement agencies should consider factors such as the nature, circumstances, extent, and duration of illegal acts when determining the specific amount of fines.

Operators who abuse market dominance due to abuse of administrative power by administrative organs and organizations authorized to manage public affairs by laws and regulations shall be dealt with in accordance with the provisions of the preceding paragraph. Operators can prove that their abuse of market dominance is caused by passive compliance with administrative orders, and they can be lightened or mitigated according to law.

Article 38 If there is no provision in the present Regulations regarding the investigation and punishment procedures for the abuse of market dominance, it shall be implemented in accordance with the "Interim Provisions on Administrative Penalty Procedures for Market Supervision and Administration," except for the relevant time limit, case registration and case jurisdiction.

Where an anti-monopoly law enforcement agency organizes an administrative penalty hearing, it shall be implemented in accordance with the "Interim Measures for the Market Supervision and Administration of Administrative Penalty Hearings."

Article 39 These Provisions shall become effective on September 1, 2019. On December 31, 2010, the Provisions of the Administration for Industry and Commerce on Prohibiting the Abuse of Dominant Market Position promulgated by Order No. 54 of the former State Administration for Industry and Commerce was repealed simultaneously. ^[3]