Application of the law in online unfair competition cases

During “Double 11” (November 11) last year, Taobao’s Tmall sales turnover exceeded RMB91.2 billion (US$14 billion), showing that the huge business opportunities encompassed in the online economy are real. Competition among Internet enterprises is intensifying by the day. The initial industry situation – where each had its own specialty, e.g. Baidu focusing on search, 360 on virus protection, Tencent mainly on instant messaging and Taobao on e-commerce – has transformed into one in which each of the giants utilizes the users they have accumulated from their main business to extend their feelers into browsers, search, video, music, input methods, security software, Internet finance, and other sectors.

As a result, the odds of friction between the giants have greatly multiplied and the number of unfair competition cases relating to networks has increased. The Law Against Unfair Competition was implemented in 1993, whereas China’s Internet industry only sprang up after the turn of the millennium. All the network-related new technology, new applications and new business models could not have been foreseen by legislators of the Competition Law at the time. And the conflict between the “new” of the online world and the “old” of the Competition Law is becoming more acute.

The Competition Law

Articles 5 to 15 of chapter 2 of the Competition Law detail 11 types of unfair competition. Article 5 mentions the traditional counterfeiting of goods, article 9 false publicity, article 10 infringement of trade secrets, and article 14 harming the goodwill of others.