Legal And Economic Research On Internet Companies' Abuse Of Market Dominance

With the Chinese economy into the new and normal level, economic growth has begun to rely on consumption as well as strategic and emerging industries. A number of Chinese Internet companies including BAT which have wide-ranging influence have become the focus of social concern. On the one hand, market dominating Internet companies with technical and cost advantages provide convenient trading environment for users, reducing both commodity prices and lower transaction costs, but also hatching out new business models. Characteristics of this business model are the "network effects" and " bilateral market effect." On the other hand, certain acts of Internet companies dominating market position had caused substantial damage to the economic and social development. For example, in "3Q war" event, Tencent makes use of its leading position in the instant messaging market, forcing users to install itself computer manager software but uninstall Qihoo 360 anti-virus software. QQ users who continue to use 360 anti-virus software won't have technical support. The "alternative" behavior that Tencent had taken caused harmful effect on consumers' freedom of choice, competition order and social welfare.Taking into account the abuses of dominance of Internet companies have a strong hidden, but also have certain legitimacy. Therefore, Internet companies will use the scale effects, network effects and bilateral market effect as defensing reasons for abusing the market dominance behaviors. In addition, coupled States antitrust laws have no clear statements about Internet-related market definition, market dominance and abuse of dominant position, and lack of specific quantitative criteria, and therefore Internet companies abusing dominant positions are easy to escape Antimonopoly Regulation. Based on theories of law and economics, the Internet enterprises which have obtained market dominance, if not subject to the effective regulation of anti-trust law, will take monopolistic behaviors like eliminating or restricting competitions to seek excessive profits. Thus, when we notice the Internet enterprises improve economic efficiency, improve people's livelihood, we can't ignore the substantial damage that Internet companies' abuse of market dominance has caused or will cause.Legal and economic research on Internet Companies' abuse of market dominance, will define the relevant market and identify a dominant market position from the point of view of an empirical analysis, but also identify the abuse of market dominance behavior and find the implementation of anti-monopoly regulation of ways and means from the point of view of a normative analysis. At the same time, it needs to analyze the dangers of abuse from the view of economics and to analyze the illegality from the view of laws. With words, the Internet company's market dominance behaviors if contrary to the theory of perfect competition and the Coase theorem, cause substantial damage to fair market competition, efficiency of resource allocation, product and technological innovation, social welfare, it will become the antitrust context the abuse of dominance behavior, then it should be subject to strict regulation by the antitrust laws. On the contrary, the behaviors of a dominant market position to implementing by Internet companies meet the requirements of economic and social development, antitrust investigated institutions should have cautious or tolerant attitude towards they. Based on this study logic,inherent differences between Internet companies and traditional enterprises, the concept of the Internet companies' abuse of market dominance and harm, the anti-monopoly regulation principles of the legal profession commonly used, will be clarified as a few basic questions in this paper. Next, the paper will describe the law-economic methods such as the perfect competition theory, transaction cost theory and the antitrust theory of Chicago school for the analysis of Internet companies abuse a dominant market position. Then, the article from the provisions of the antitrust laws reaches the factors and calculation methods about the relevant market and a dominant market position, and probes the Internet companies' abuse behaviors having substantial impact on market competition, transaction cost, resource economics from the perspective of law-economic theory, and propose appropriate antitrust regulation options. Finally this paper proposes legal reform proposals to effectively regulate Internet companies abusing a dominant market position.The full text is about 140,000 words. In addition to the introduction, the body part includes the following seven chapters:The first chapter studies several basic problems of Internet companies' abuse of market dominance. The several basic problems which this chapter examines are connotation of Internet and Internet companies, fast-changing innovation of Internet companies, and the principles of adapting to Internet companies regulation. After some researches, this chapter refers to the Internet companies as follows: an asset-light business, by means of the Internet business platform, provides electronic products and service for the main business, also whose main income is from the Internet. Internet companies innovate mainly in product, services and business models. At this stage, the main principle of the regulation applies to the principle of reasonable behavior.The second chapter explores the law-economic theories of Internet companies' abuse of market dominance. The ultimate goal of regulating Internet companies is to promote market competition, improve economic efficiency, enhance social welfares and improve people's livelihood. The reason why emerging Internet businesses grow rapidly is mainly because it can reduce information asymmetry, reduce transaction costs and promote technological innovations. The intersection of the two are perfect competition theory, transaction cost theory and antitrust theory. These three theories complement each other to a largely extent, if the Internet companies' behavior to meet the inherent requirements of perfect competition theory, which can reduce the transaction costs, in accordance with the requirements of antitrust law, and vice versa.Chapter three is about defining the relevant market of Internet companies' abuse of market dominance. Defining the relevant market includes related product market definition, the relevant geographic market definition. In intitrust study, the key is defining the relevant market. The chapter chooses "3Q war" case as an example, focuses on the alternative analysis and hypothetical monopolist testing method, and concludes that the alternative analysis is more applicable in the Internet business marketing model with zero prices. The study finds that defining the relevant market of Internet companies has great controversies. There are significant differences among a range of different courts in terms of scope identifications. This chapter mainly discusses the affecting factors of defining the dominant market position, reasonable selection ways and the rationality of the identified methods. In term of the Internet market share often dramaticly changes, market share analysis has some limitations, but its basic role should not be denied. It is always the case.The forth chapter is about Legal and Economic analysis on Internet companies' abuse of price. This chapter firstly propobe the legal recognition of monopoly pricing, price discrimination and predatory pricing, from the anti-trust law dimension, and whether those behaviors produce substantial damage to market competition, technological innovation, economic efficiency and social welfare. After then, from legal and economic perspective, this chapter examines the impact that price-abusing behaviors have on resources allocation efficiency, competition order and transaction costs. On this basis, it will determine whether Internet companies should be regulated by antitrust law. After the research, this chapter finds that there exist some controversies on antitrust regulation of monopoly pricing, predatory pricing, however, there remain more consistent attitude on price discrimination regulation.The fifth chapter is about Legal and Economic analysis on Internet companies' abuse of non-price. This chapter firstly propobe the legal recognition of tie-saling, refusal to deal as well as limited transactions, from the anti-trust law dimension, and whether those behaviors produce substantial damage to market competition, technological innovation, economic efficiency and social welfare. After then, from legal and economic perspective, this chapter examines the impact that non-price abusing behaviors have on resources allocation efficiency, competition order and transaction costs. On this basis, it will determine whether Internet companies should be regulated by antitrust law. After the study, the chapter finds that there also exist considerable controversies on tied sale regulation, adversely, there remain a more unified attitude about antitrust regulations on transactions refusal and limitations.The sixth chapter is about to provide reformed suggestions on the effective regulation concerning the Internet companies' abuse of market dominant position. This chapter focuses on two aspects of the relevant market access conditions and the abuse of anti-monopoly regulation, detailing the effective regulation measures on Internet companies which have the behavior of the market dominant position. In order to fundamentally prevent and suppress Internet companies abusing the market dominance position, we need to drastically increase the number of similar operators, implementing relevant product market and relevant geographic market access through negative list system. In order to effectively promote the anti-monopoly law enforcement, we should establish anti-monopoly regulation of case guidance system, as well as amending the rules and regulations issued by the three major antitrust agencies and improving the legal rules and regulations related to "anti-monopoly law".