3Q case and the role of market share in determining dominance

On 16 October 2014, the Supreme People’s Court Intellectual Property Tribunal publicly issued its judgment in the 3Q case, which is a market dominance abuse suit by Beijing Qihoo Technology against Tencent Technology (Shenzhen) and Shenzhen Tencent Computer System. The court dismissed all the claims of Qihoo and upheld the initial judgment that Tencent did not abuse market dominance.

In terms of judicial practice, this is the first anti-monopoly case heard by the Supreme People’s Court. In the 70,000-word judgment of the court – which explains the applicability of various rules in the Anti-Monopoly Law (AML) – the interpretation of the role of market share in judging a company’s market dominance is noteworthy.

Dominant market position

Article 17 in the AML provides that dominant market position means a market position held by undertakings that are capable of controlling the prices and quantities of commodities or other transaction terms in a relevant market, or preventing or exerting an influence on the access of other undertakings to the market.

Article 18 in the AML provides that the dominant market position of an undertaking shall be determined on the basis of the following factors: (1) its share of a relevant market and the competitiveness of the market; (2) its ability to control the sales market and the purchasing market of raw and semi-finished materials; (3) its financial strength and technical conditions; (4) the extent to which other business undertakings depend on it in transactions; (5) the difficulty that other undertakings find in entering a relevant market.