Relevant Market Definition and Market Dominance Identification

Huang Wei & Han Guizhen, March 20, 2016

The appellate dispute between Qihoo 360 Technology Co. Ltd. (“Qihoo”) and Tencent Holdings Limited (“Tencent”) regarding Tencent’s alleged abuse of market dominance was the first antitrust case ever tried by the China Supreme People’s Court (“CSPC”) and was also the longest-ever hearing held by CSPC so far, lasting for over 28 hours. CSPC issued a 113-page, 74,000-character, “textbook-like” ruling (“3Q War final ruling”). In this judgment, CSPC made a pithy exposition on relevant market definition, market dominance identification, and the relationship between the two. As the attorneys representing Tencent in the appeal and in the hearing, we would like to, incorporating both domestic and overseas relevant findings, provide an elaboration and necessary summarization of the following issues referred to in this ruling: the allocation of evidence adducing burden in relevant market definition, the role of “Hypothetical Monopolist Test” (“HMT”) in relevant market definition, the “Most and Important Rule” necessarily applied in Substitution Analysis, and the accurate view on the role of market share in finding market dominance from a dynamic competition perspective.

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