On 27 July 2011, the Ministry of Industry and Information Technology ("MIIT") issued for public comments draft rules entitled Provisions on Administration of Internet Information Services (Draft for Comments) ("Draft Rules").
The Draft Rules are based on an earlier draft entitled Interim Rules for Supervision and Management of Internet Information Service Market ("Interim Rules") released by MIIT on 12 January 2011.1 The Draft Rules mainly set out the code of conducts for an internet information service provider ("IISP") vis-a-vis its competitors and consumers.
Pursuant to Article 6 of the Draft Rules, IISPs are prohibited from carrying out the following conducts that may infringe other IISPs' lawful rights:
- spreading false information, or intentionally spreading false facts to infringe the lawful rights of other IISPs, or disparaging the services or related products of other IISPs;
- maliciously causing incompatibility against services or related products provided by other IISPs;
- when providing services or related products that are incompatible with services or related products of other IISPs for valid reasons, failing to honestly remind subscribers of such incompatibility, or deceiving, misleading or forcing subscribers not to use services or related products of other IISPs;
- interfering with or affecting the operation of other IISPs' services or related products on subscriber's computers, or changing the parameters of other IISPs' services or related products;
- deceiving, misleading or forcing subscribers to uninstall or shut down other IISPs' services or related products, or in any other way restricting subscribers' access to other IISPs' services or related products.
Pursuant to Article 8 of the Draft Rules, IISPs are prohibited from carrying out the following conducts that may infringe the consumers' lawful rights:
- unilaterally delaying, terminating or refusing to provide services to subscribers without valid reason;
- requesting subscribers to use designated services;
- offering internet information services to subscribers by deceptive, misleading or coercive means;
- providing services that fall below the advertised or promised quality standards;
- unilaterally changing the service agreement or operation standard, or lowering the quality of services or increasing the subscribers' responsibilities.
The Draft Rules also set out the requirements for IISPs in relation to pop-up advertisement, collection and use of subscribers' personal information, etc.
Since the past few years, the burgeoning internet industry in China has become a battleground for industry players. One of the most notable disputes is the QQ/360 spats which broke out towards the end of last year and caused quite a stir in the press.2
The Draft Rules have been viewed by many observers as being driven, at least partly, by the QQ/360 disputes. Although the Anti-unfair Competition Law ("AUCL") and the Telecommunications Regulations could both be applied to regulate unfair competition in the internet industry, many specific forms of unfair competition conducts that are particular to the internet industry are missing in both the AUCL and the Telecommunications Regulations.
The Draft Rules (as well as its predecessor, the Interim Rules) demonstrate MIIT's efforts in filling this gap. Many of the unfair competition conducts that Tencent (operator of QQ, one of the most popular instant-messaging tools in China) and Qihoo (provider of 360, a widely used antivirus software product in China) accused each other of doing, such as causing incompatibility against competitors' services or products, could have been caught by the Draft Rules had the Draft Rules been in place back then.
Noticeably, in contrast to the Interim Rules, the Draft Rules do not make any reference to the AUCL, under which the State Administration for Industry and Commerce ("SAIC") is the major authority responsible for overseeing unfair competition conducts. It will be interesting to see whether and how SAIC and MIIT will cooperate in tackling unfair competition in the internet industry.
1For more information about the draft Interim Rules, please refer to our article entitled " MIIT releases New Draft Rules which govern antitrust issues".
2For more information about the QQ/360 disputes, please refer to our article entitled " The QQ / 360 Disputes - Who, What, Where, When and Preliminary Antitrust Analysis".
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