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Chinese Court Clarifies Definition of Relevant Market in Anti-monopoly Cases of Tendering and Bidding

Mon, 05 Jul 2021
Categories: China Legal Trends

On 31 Dec. 2019, Beijing Intellectual Property Court made a judgment in the case of Hytera Communications Corporation Limited v. Motorola Solutions, Inc. on abuse of dominant market position (海能达通信股份有限公司与摩托罗拉系统(中国)有限公司等滥用市场支配地位纠纷案) ((2017) Jing 73 Min Chu No. 1671) ((2017)京73民初1671号), holding that although the defendant Motorola Solutions, Inc. (hereinafter referred to as “Motorola”) had a dominant market position in the relevant market, it did not commit any abuse of dominant market position. All claims of the plaintiff should be overruled. This case provides a clear standard for defining a relevant market in cases of abuse of the dominant market position through tender and bidding transactions.

The Terrestrial Trunked Radio (TETRA) equipment involved in this case was mainly used for communications over private network communication for urban rail transit, which was usually purchased by tender. The plaintiff Hytera Communications Corporation Limited (hereinafter referred to as "Hytera"), claimed that Motorola was the main or even the only supplier of communications equipment and services for the private metro network in Beijing, Shanghai, and other cities, indicating that Motorola had a dominant market position. When the two parties participated in the tender for the private network communications equipment for Chengdu metro lines, Motorola required the Chengdu metro tenderee to only deal with it and refused to open the API for the interconnection to Hytera. The plaintiff believed such acts had constituted an abuse of its dominant market position to restrict transactions and refuse to deal, which violated the Anti-Monopoly Law. The above acts caused damages to Hytera. Therefore, the plaintiff requested the court to order the defendant to stop abusing its dominant market position and compensate for economic losses and reasonable expenses totaling more than CNY 50 million.

Beijing Intellectual Property Court held that, for the purpose of the Anti-monopoly Law, the term “dominant market position” refers to a market position where an undertaking can control the prices or volume of commodities or other trading conditions in a relevant market, or can obstruct or affect other undertakings' capability to enter into a relevant market. As a result, a "relevant market" serves to delimit the scope of competition assessment, within which competitors are restrained by effective competition. If you want to determine whether a defendant has a dominant market position, you must first determine a relevant market.

What involved in this case was a bidding market, where the requirements of the bidding documents determine the scope of undertakings participating in the competition. Since each bidding event will have its bidding requirements, each bidding event constitutes an individual relevant market.

In this case, in the bidding documents for Lines 2, 3, and 4 of Chengdu Metro, the new lines have to be interconnected with the existing lines through the switch, and the switch interconnection is only applicable to the equipment of the same manufacturer. With the existing lines provided by Motorola, there was no doubt that Motorola was the only one to win the bid in the bidding event of Lines 2, 3, and 4, with the dominant market position in this bidding event. However, in this case, Motorola did not require Chengdu Metro tenderee to only deal with it. Moreover, its refusal to open the API would not affect the competitive capacity of the plaintiff, which had no effect of eliminating or restricting competition. Therefore, the defendant’s acts do not constitute the abuse of its dominant market position.

 

 

Cover Photo by Toby Yang (https://unsplash.com/@tobyyang) on Unsplash

 

Contributors: CJO Staff Contributors Team

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