China’s Top Court Unveils New Guidelines to Tackle Algorithm-Driven Monopolies

China’s Top Court Unveils New Guidelines to Tackle Algorithm-Driven Monopolies

The Supreme People’s Court of China has announced a comprehensive set of judicial interpretations for civil antitrust lawsuits, set to take effect on July 1. This move aims to address the challenges posed by the rapid growth of the digital economy and emerging technologies, reinforcing China’s commitment to fair market practices and fostering healthy economic development.

The newly unveiled 51-article document covers a broad spectrum of issues, including procedural matters, market definitions, monopoly agreements, abuse of market dominance, and civil liabilities in antitrust cases. It represents a significant update to the previous guidelines released in 2012, coinciding with the second anniversary of the revised Antitrust Law.

He Zhonglin, Deputy Head of the Intellectual Property Court of the Supreme People’s Court, highlighted the evolving complexities of antitrust issues in the information technology and digital economy sectors. “While information technology and the digital economy promote economic growth and improve people’s livelihoods, they also bring new challenges to antitrust law enforcement and justice,” He noted.

To address these challenges, the new guidelines make several crucial adjustments. 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, taking into account the often bilateral or multilateral nature of platform competition.

In terms of monopoly agreements, Article 24 outlines regulations on horizontal monopolies through data, algorithms, technology, and platform rules, as well as vertical monopolies that use technical means to limit or automate the setting of resale commodity prices. Article 25 provides a judicial path for regulating monopolistic behavior that may arise from cross-platform most-favorable treatment clauses.

Regarding 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 to unfair pricing, below-cost sales, refusal to deal, exclusive dealing, tying, and discriminatory treatment within the digital economy.

The new guidelines also focus on the evidentiary burden and proof in antitrust civil litigation. Under the interpretation, plaintiffs can file civil lawsuits directly based on the Antitrust Law or after a decision by an antitrust enforcement agency. Courts will accept such cases if they meet legal conditions, but will not accept cases where the plaintiff only seeks a declaration of monopoly without demanding civil liability.

To enhance the handling of specialized issues, the interpretation allows parties to request expert advice and commission market research or economic analysis from professional institutions.

Tao Kaiyuan, Vice-President of the Supreme People’s Court, emphasized that the judiciary will continue to strengthen antitrust enforcement to promote fair competition and innovation. “This will contribute to the development of a unified national market and new quality productive forces,” she stated.

To aid understanding and application of the new judicial interpretation, the Supreme People’s Court has also released five recent antitrust cases. These include disputes over monopoly agreements and abuse of market dominance, providing valuable insights into the application of the updated Antitrust Law.