Chinese Court Rules State-Controlled Company Abused Dominance in Local Broadcasting Services Market

The Xi’an Intermediate Court in western China’s Shaanxi province recently ruled that Shaanxi Broadcast and TV Network Intermediary Group (“Shaanxi TV”) abused its dominance in the provincial cable TV transmission service market. The court found that Shaanxi TV is the only legitimate cable TV transmission service operator in the province and maintains 100 percent control of the market in the province. The court held that Shaanxi TV did not offer users the opportunity to choose the services they wished to receive, but instead imposed bundled trading of basic and paid services by charging the fees for basic services and paid services together. Because of its dominant position, users were forced to accept its services. The court ruled that Shaanxi’s tie-in charge was not valid and ordered that it should refund RMB 15 (approximately $2.40) to the plaintiff.

Although the penalty is very small, this case is significant. In an essay published in the People’s Court Daily, the presiding judge of the Intellectual Property Rights Tribunal at the Xi’an Intermediate Court made reference to the Supreme People’s Court Judicial Guidance on Civil Antitrust Lawsuits issued in May 2012 (“the Judicial Interpretation”). He stated that the main reason the court accepted the civil antitrust case was because the Judicial Interpretation stipulates that when business operators’ monopolistic behavior causes loss to others, or their contract or industry associations’ regulations violate the Anti-Monopoly Law (AML), the business operators shall bear civil liability and such disputes shall be within the jurisdiction of the courts. The judge also referred to Article 8 of the Judicial Interpretation, which states that in dominance cases, the defendant should present evidence to justify its conduct according to the AML. In this case, the defendant did not present any evidence to justify the tie-in sales and simply claimed that it had the right to charge the extra fees.