With the rapid development and widespread popularity of the Internet, platforms have emerged as a new business model and corporate organizational structure, triggering profound changes and major transformations in the economy and society. With their powerful network effects, they have penetrated into many areas of the national economy. Establish a large-scale "ecosystem" that radiates multiple industries, multiple regions, and multiple chains.
Under the trend of platform enterprises' dominance, market failures with obvious digital characteristics such as "algorithmic collusion", "choosing one of two", and "stifling mergers and acquisitions" have emerged in the Internet field.
With the requirements of “strengthening anti-monopoly and preventing the disorderly expansion of capital” put forward by the Politburo meeting of the CPC Central Committee and the Central Economic Work Conference, the issue of Internet platform competition has become the focus of social attention.
"Competition is the most effective means to achieve and ensure prosperity." The prosperity of competition depends on the two-wheel drive of an effective market and a successful government.
The parties declared that on January 4, 2021, the State Administration for Market Regulation filed and reviewed the Huya and Douyu merger case in accordance with the law. The investigation has now been concluded and the parties have made a review decision prohibiting the concentration of business operators.
This case is my country’s first case of prohibiting the concentration of operators in the field of platform economy. Coca-Cola was prohibited from acquiring Huiyuan Juice in 2009, and Maersk, Mediterranean Shipping and CMA CGM were prohibited from establishing network centers in 2014. After the administrative penalty was imposed on Alibaba Group on April 12, 2021 for "choosing one of the two", another major and typical anti-monopoly case in the field of platform economy.
The case marked the central government’s “strengthening anti-monopoly and preventing the disorderly expansion of capital” in the field of concentration of platform business operators, releasing a clear and clear regulatory signal, that is, while encouraging and promoting platform innovation and development, the state actively prevents and stops possible causes. Eliminate and restrict monopolistic behaviors with competitive effects, and ensure the orderly, innovative and healthy development of the platform economy.
This case has far-reaching influence and demonstration effect on platform economy anti-monopoly.
1. A regulatory concept that places equal emphasis on development and regulation
The ninth meeting of the Central Finance and Economics Committee put forward “adhere to the equal emphasis on development and regulation, grasp the law of platform economic development, and establish and improve the platform economic governance system”. The conference centered on the two cores of "development" and "regulation" to "open the pulse" for platform economic governance: on the one hand, it fully affirmed the development results of my country's platform economy and its impact on my country's economic development, people's livelihood, and international competitiveness. An important contribution; on the other hand, as the platform economy penetrates all links of the national economic cycle, all-round follow-up and strengthening of supervision are inevitable in history. The effective market is based on the effective government, and the effective government is based on the effective market. As an indispensable and important link in the market supervision system, anti-monopoly provides institutional follow-up and action guidance for the government to govern the platform economy. Initiating anti-monopoly law enforcement in a timely manner can not only effectively prevent and stop monopolistic behaviors, regulate platform enterprise competition and market competition order, safeguard consumer interests and social public interests, but also play a disciplinary and exemplary role through investigating cases to optimize market business environment. Activate the potential for economic development of the platform. Use anti-monopoly to connect the link between "development" and "regulation", and promote the innovative development of the platform economy in an effective market under effective government regulations.
The purpose of the anti-monopoly review of the concentration of undertakings is to prevent and control the possibility of forming or strengthening potential market power in advance, and to maintain a reasonable market structure and prevent excessive concentration of market power.
Since the implementation of the Anti-Monopoly Law in 2008, a total of 3770 cases of concentration of undertakings have been concluded, including 50 restrictive conditions and 3 prohibitions.
The State Administration for Market Supervision and Administration made a decision to prohibit the concentration of operators on the purchase of Douyu by Huya. The procedure was strictly in accordance with the provisions of the "Anti-Monopoly Law" and went through declarations, supplementary materials, filing, review, and additional restrictions submitted by the parties. The conditional commitment plan is evaluated and a decision is made.
Examine the norms on the entity, and focus on competition analysis after defining relevant products and geographic markets.
In this case, the concentration of operators not only has the effect of eliminating and restricting competition in the Chinese game live broadcast market, but also amplifies the monopoly risk in the upstream Chinese online game operation service market and the downstream game live broadcast market. After the concentration of the enterprises involved, they will be able to implement a two-way vertical blockade of upstream and downstream. , And there are "motivations" to implement a two-way vertical blockade, causing serious competition concerns.
Anti-monopoly is not limited to preventing improper exercise of market dominance, but also to prevent improper acquisition of market dominance.
Especially based on the ecological characteristics of the platform industry, compared with traditional industries, once a monopoly is formed, it will have a huge impact on related and neighboring industries. The law enforcement agencies will decisively light up the “red light” on the operators to effectively protect the relevant market. The interests of other operators and consumers will help maintain the open, inclusive, and shared competitive environment of the platform economy.
Given that the operator’s centralized control system is a precautionary measure, a modest and prudent approach to law enforcement is conducive to the implementation of the regulatory concept of simultaneous development and regulation. It not only reflects the government’s support for platform enterprises to grow bigger and stronger in accordance with laws and regulations, but also shows that the government strengthens countermeasures in the platform field. A firm determination to monopolize supervision.
2. Supervision policy that takes into account both review efficiency and review effect
All operators that meet the standards for the declaration of concentration of operators must declare in accordance with the law. During the review period, operators bear the commercial risk of fleeting market opportunities. Therefore, the vast majority of applicants look forward to efficient and fast review procedures to reduce the number of audits. The costs and risks involved.
For law enforcement agencies, the balance between "examination efficiency" and "examination effect" is particularly important. Among them, "examination efficiency" requires the examination agency to complete the examination work in the shortest possible time, that is, to meet the parties' "certainty" demands; The "examination effect" requires the examination agency to accurately identify and control the concentration of business operators that may have the effect of eliminating or restricting competition.
With the rapid development of the Internet in recent years, there has been frequent concentration of operators in the field of platform economy, and law enforcement agencies are facing unprecedented trials and challenges.
This case took 187 days from acceptance to decision (2021.1.4-2021.7.10).
On the one hand, in response to the objective needs of dynamic competition in the platform economy, it reduces the intervention of law enforcement agencies in the rapidly changing Internet market. On the other hand, it shows that law enforcement agencies actively respond to the Party Central Committee’s policy of "strengthening anti-monopoly" and concentrate resources on the Internet sector. Conduct supervision.
To balance the efficiency of the review with the effectiveness of the review, scientific, effective, and appropriate analysis methods are particularly important.
During the review process of this case, law enforcement agencies prudently enforced the law, solicited opinions from relevant government departments, industry associations, etc. in a short time, collected information and organized experts to carry out case analysis and demonstration, conducted adequate research on the appeals of all parties, and finally entered the relevant market Make a deep and accurate analysis and demonstration in the definition and analysis of the competitive effect.
This case has set a good example for the efficiency and effectiveness of the anti-monopoly review of the concentration of operators in the platform economy field.
For platform companies, concentration of operators is a means to rapidly expand scale and increase market power, as well as an effective way to reorganize resources, helping to improve production efficiency, achieve economies of scale, and promote economic and technological progress.
However, due to the reduction of competition subjects due to concentration, unilateral effects or synergistic effects may be induced to damage market competition, that is, the possibility of inefficiency due to market failure, at this time law enforcement agencies need to limit operational autonomy out of consideration of public interest.
If Huya and Douyu are centralized, the original joint control of Douyu will become Tencent's separate control of the merged entity. From the perspective of multiple core indicators such as turnover, number of active users, and anchor resources, the total share is extremely substantial. , The effect of eliminating and restricting competition can be foreseen.
From the perspective of administrative law, the review of concentration of business operators is an administrative license and an administrative management tool of the anti-monopoly law enforcement agency.
The review of concentration of undertakings is based on whether “has or may have the effect of eliminating or restricting competition”. The measures taken by law enforcement agencies are based on the principles of minimal intervention, lowest social cost, and proportionality. Only when additional restrictive conditions are not sufficient to be effective Concentration is prohibited when the adverse impact on the relevant market is reduced.
What needs to be pointed out in particular is that the prohibitive administrative decision only expresses that it does not support the rapid expansion of the enterprise through centralized means to increase its market power, but it does not mean a negative evaluation of the parties’ existing business models and operating conditions.
Huya and Douyu can still operate independently.
Third, the supervision method of parallel supervision before and after supervision
The closed-loop feedback structure of the platform economy integrating users, data, and algorithms, as well as strong network effects and lock-in effects, determines the high market concentration of platform companies' "winner takes all".
From a global perspective, the current antitrust enforcement mechanism for large platforms focuses on ex-post supervision. For example, due to Google’s abuse of market dominance, the European Union has imposed three penalties totaling more than 8.2 billion euros; the US Federal Trade Commission, the judiciary The Ministry and dozens of states have launched multiple antitrust lawsuits against Facebook and Google.
However, the time difference between the dynamic nature of the platform economy and the lagging nature of the regulatory mechanism may cause the post-event supervision to fail to respond in a timely and effective manner to the requirements of the era of maintaining free and fair competition and promoting technological innovation.
Looking back today at Facebook’s acquisition of the start-up platform Instagram in 2012 and the mobile instant messaging app WhatsApp in 2014, this “stifling acquisition” blocked effective competition in the market, thereby inhibiting innovation and ultimately harming consumer welfare.
Recently, Europe and the United States have successively introduced anti-monopoly regulatory measures for large platforms, including the "no-threshold acquisition declaration" measure, that is, changing the existing globally applicable declaration threshold system and imposing strong supervision on the acquisition of eligible platforms.
As a pre-regulatory measure under the anti-monopoly law, the centralized control system of operators has its unique preventive function and its value is highlighted in the economic governance of the platform. It can prevent platform companies from adopting mergers and acquisitions or strategic actions through pre-regulation. Regarding the structural monopoly of relevant markets, monopoly agreements and abuse of market dominance systems prohibit platform companies from reaching or implementing monopolistic behaviors through ex-post supervision. The three pillars form a system that works together to build the entire chain of platform economy supervision before and after ex post.
Since December 2020, the State Administration for Market Regulation has issued 44 administrative penalties for Internet platforms failing to declare the concentration of operators in accordance with the law, and through penalties for illegal activities, they have forced platform companies to make prior declarations of concentration of operators in accordance with the law.
The ban on the merger of Huya and Douyu is to directly maintain a competitive market structure by means of an ex-ante ban, and encourage platform companies to rely on technological innovation and improve consumer welfare to obtain a high market share through fair competition.
The competitive effect analysis ideas shown in the case also help platform companies prevent, identify and evaluate their business behaviors.
This enforcement signifies that my country will intensify the pre-examination of the concentration of operators in the platform economy, enrich the anti-monopoly supervision methods in the platform economy, and lay a good start for the full spread of the three pillars of anti-monopoly in the platform economy in my country.
As an important carrier of the "four new" economy and a strategic emerging industry, the platform economy is becoming a new driving force for the transformation of industrial structure and high-quality economic growth. Behind its rapid development, it cannot do without the escort of the government.
The anti-monopoly law is known as the "economic constitution". It is the best connection point and bridge between market autonomy and government governance, and it carries the goal and institutional arrangement of the government's governance platform economy.
After an inclusive and prudent regulatory transition period, the anti-monopoly, the "Sword of Damocles" hanging over the Internet platform, has gradually declined in my country and even in the global jurisdictions. Strengthening anti-monopoly has become a global development trend and promotes the platform. The economy has moved from a state of disorderly and disorderly "barbaric growth" to a stage of "orderly development" under the rule of law.
Zhang Chenying is the director of the Competition Law Research Center of Tsinghua University Law School and a member of the Expert Advisory Group of the Anti-Monopoly Committee of the State Council.