Since the Anti-Monopoly Law (AML) came into effect on 1 August 2008, a number of private antitrust actions have been brought in Chinese courts against domestic business giants including Shanghai Shanda Interactive Entertainment, China Mobile, Baidu, Sinopec Beijing Oil Products and China Netcom. After more than a year, the first court decision was handed down on 23 October 2009.
Shanda Case
The Shanghai No. 1 Intermediate People’s Court dismissed the abuse of dominant position case against Shanda and Shanghai Xuanting Entertainment Information Technology.
Beijing Sursen Electronic Technology, an online digital book operator, sued defendants Shanda and Xuanting for allegedly abusing their market-leading position for online literature under the AML. Sursen was seeking a public apology and RMB16,820 (US$2,463) in damages.
Sursen claimed that it had commissioned two authors to write a sequel to a popular novel originally published by the defendants. According to Sursen, the authors were later “threatened” by the defendants and, as a result, stopped writing the sequel.
The court rejected Sursen’s claim, holding that Sursen had failed to present sufficient evidence to prove that the defendants had either held a dominant position in the market for online literature or had forced the authors to stop writing a sequel to the novel. In addition, the court found that the defendants had been justified in their actions as they were merely attempting to protect their intellectual property rights.
After the decision was handed down, Shanda’s general counsel, Jerry Zhang, noted that the company had anticipated the decision. “I don’t view this case as a relevant private antitrust litigation against abuse of dominant position. It didn’t involve any typical issues or matters concerning the AML. This case is significant because it’s the first case adjudicated by a court under the new AML regime, but it hardly has any precedent value for pending and future antitrust litigation,” Zhang added.
Nevertheless, Zhang also added that ensuring his company’s compliance with the AML has become an integral part of the in-house legal department’s work, but because it is such a new area, there are very few experienced lawyers in private practise to whom companies can turn.
China Mobile Case
In another case before the Chinese courts, China Mobile recently agreed to pay RMB1,000 to settle a lawsuit filed by a customer who alleged that China Mobile had abused its monopoly position to extract unfair revenue from subscribers.
More Cases to Follow Soon
As stated earlier, Shanda and China Mobile were in the first group of companies facing legal action for alleged monopolistic practises. Cases involving China Netcom, Baidu and Sinopec are still pending.
These decisions will likely continue to provide guidance on how the courts will interpret the boundaries of the AML.
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