In late August 2010, it was reported in the press that at least 10 antitrust private actions have been heard in the courts in China (see Two years on, ten private antitrust action

This article describes one of the cases, Zhou Ze v. China Mobile Beijing (the Zhou Ze case), in detail. This was an alleged abuse of dominance case – which was later settled.

Facts

Zhou Ze was a user of mobile phone services supplied by China Mobile Beijing. Zhou Ze was on a certain mobile subscription plan which required him to pay RMB50 in fees every month, regardless of usage. There are other mobile subscription plans being offered by China Mobile Beijing which do not require users to pay monthly subscription fees. Zhou Ze alleged that the collection of monthly fees under the particular subscription plan he was on amounted to an abuse of dominance on the part of China Mobile Beijing. Specifically, Zhou Ze alleged that China Mobile Beijing had abused their dominance in the mobile services market, by implementing differential treatment to users by charging some users a monthly fee (pursuant to certain subscription plans) and by exempting others from this monthly fee (pursuant to other subscription plans); and that this was in breach of Article 17(6) of the Anti-Monopoly Law (AML).

In Zhou Ze's application, he:

  • sought to injunct China Mobile Beijing from collecting monthly fees (pursuant to the subscription plan Zhou Ze was on);
  • claimed that China Mobile Beijing should return a total of RMB1200 to him – as this is how much he paid out in monthly fees over the past 2 years; and
  • claimed that China Mobile Beijing should also cover legal fees in respect of this matter.

China Mobile Beijing responded that it had the right to determine terms of its mobile services subscription plans, so long as these plans were compliant with the various rules and regulations governing mobile phone services.1

Court Process

On 30 March 2009, the Beijing Dongcheng District People's Court accepted the Zhou Ze case. The case was then transferred to the Beijing Second Intermediate People's Court. On 23 October, the court announced that Zhou Ze and China Mobile Beijing had settled the case out of court.

According to media reports, China Mobile Beijing agreed to pay Zhou Ze RMB1000 as compensation or to "thank" him for his input on their pricing matters. In return, Zhou withdrew his complaint.

Comments

This case drew some attention in the press as China Mobile is a state-owned enterprise. There was some discussion in the press whether state owned enterprises would be automatically exempt or are automatically "carved out" from the application of the AML. While the first paragraph of Article 7 of the AML shields state owned enterprises "in industries that implicate national economic vitality and national security" to some extent, the second paragraph of Article 7 makes it clear that state owned enterprises are not to use their dominant positions or monopolies to "harm the interests of consumers".2

It remains to be seen whether and how Article 7 of the AML will be interpreted and enforced.

1. Such as the following rules and regulations: the Notice of the Ministry of Posts and Telecommunications regarding Management of Mobile Phones and Adjustment of Mobile Service Fee Standards; State Development Planning Commission and Ministry of Information Industry – Procedures for Examination, Approval and Filing of Telecommunications Charges Provisions (Trial Implementation); and The Notice Regarding Adjustment of Charge Standards for SIM card service of Prepayment Mobile Phone by the Ministry of Information Industry.

2. Article 7 of the AML reads: "in industries that implicate national economic vitality and national security, which are controlled by state-owned enterprises, and in industries in which there are legal monopolies, the State shall protect the lawful business activities of those enterprises, supervise and control their conduct and prices for the products and services pursuant to the AML, protect the interests of consumers and promote technological progress. Business operators in the industries stipulated in the preceding paragraph shall conduct their businesses pursuant to the law, act honestly and trustworthily, exercise strict self-discipline, accept public supervision and shall not use their controlling position or legal monopolies to harm the interests of consumers."

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