China’s New Anti-Trust Measures for Internet Platforms Focus on Exclusive Agreements and Big Data Price Discrimination

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China has officially launched new anti-trust regulations that target the conduct of online platforms and big e-commerce companies.

The State Administration for Market Regulation (SAMR) officially issued the “State Council Anti-trust Committee Anti-trust Guidelines for the Platform Economy Sphere” (国务院反垄断委员会关于平台经济领域的反垄断指南) on 7 February, following the issuance of a draft version of the Guidelines for the solicitation of opinions in November last year.

The final version of the Guidelines removes key provisions on the demarcation of relevant markets and determining market dominance, as well as contains more detailed measures on factors for determining monopolistic conduct and remedy measures.

The Guidelines focus in particular upon exclusive agreements and big data, clarifying new standards for determining whether conduct in these areas is monopolistic in character.

The Guidelines outline the factors for consideration in determining whether transaction limiting conduct has taken place, including whether platform operators have demanded that companies “pick one of two” (二选一) and refrain from conducting business on the platforms of competitors.

They provide more detailed and expanded standards for transaction limitation conduct, defining it as when platforms have applied penalties to businesses by measures such as search restrictions, traffic restrictions, technical barriers or the deduction of deposits, and such actions have directly caused harm to market competitors or consumers.

“Transaction limitation conduct” also includes the use of incentive measures by platforms to apply restrictions, such as discounts, traffic resource support and subsidies, in circumstances where they have the effect of clearly excluding or restricting market competition.

Another concern of the Guidelines is “big data price discrimination” (大数据杀熟), referring to the use of big data analysis to provide different prices to consumers based on their established preferences and payments conditions. Where platform operators possess market dominance and are found to have provided different prices or transaction conditions to different consumers, the Guidelines state that this could comprise discriminatory treatment.

Analysts said to Reuters that compared to the draft version the final iteration of the Guidelines will increase the difficulty of investigating abuse of market dominance by Chinese Internet giants such as Tencent and Alibaba.

“The extension of the law enforcement period for anti-trust measures is of increased benefit to the giants, and will weaken the effects of platform anti-monopoly measures,” said one source.

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