Delay to interpretation of key Chinese competition law as top court grapples with new-economy issues

China's top court has become the latest body to find itself tested by the highly complex competition issues surrounding Internet-based and tech businesses, MLex has learned.

The Supreme People's Court consulted with Internet and tech industry companies, including smartphone makers, during the second half of last year as part of an effort to provide an interpretation of Article 12 of the Anti-Unfair Competition Law, following an amendment to the law that went into effect on Jan. 1, 2018.

The court had been expected by the close of last year to offer an interpretation of Article 12, which prevents companies from using technology to restrict other businesses' activities. However, it is understood that it requires more time to do so because the task is far more complex than anticipated, given the broad spectrum of entities and scenarios to which Article 12 is potentially applicable.

It remains to be seen when the court will issue an interpretation — or, indeed, whether it will do so at all. The court’s consideration of Article 12 has unfolded against a backdrop of hope that an interpretation will shed light on the judiciary’s thinking when it comes to the increasing number of disputes among Internet and tech companies. In China, judicial interpretations have the force of law and are binding on lower courts.

As MLex reported earlier, Chinese tech giants Baidu, Alibaba and Tencent, alongside top domestic cellphone makers such as Huawei and Xiaomi, are among the companies whose opinions on Article 12 were sought by the court.

At stake are issues such as whether handset makers should be permitted to access data associated with apps developed by Internet giants, and whether they should be allowed to say no to the installation of non-proprietary app-retailing services on their devices.

Tencent-owned instant-messaging platform WeChat was recently the target of allegations by Chinese app operators that it had abused its dominance by preventing them from sharing promotional links on the platform, and by blocking users' registration for other apps using their WeChat accounts.

Article 12 of the amended Anti-Unfair Competition Law stipulates: "Operators shall not use technological means to obstruct or damage the normal operation of network products or services lawfully provided by other operators by influencing the choice of users or by other means."

Article 24 of the law provides that any operator in violation of Article 12, apart from being ordered to stop its illegal conduct, may be subject to a fine of between 500,000 yuan ($72,000) and 3 million yuan if the violation is serious. For less serious breaches, fines range between 100,000 yuan and 500,000 yuan.

The new provisions were introduced by lawmakers in November 2017 as part of the law's first amendment since its implementation in 1993, in an attempt to address newly emerging competition issues, and to provide clarity by scrapping provisions that overlapped with or conflicted with other laws.