SAMR Initiated Investigation into Suspected Monopolistic Practices by CNKI
ISSUING AUTHORITY:
State Administration for Market Regulation
DATE OF ISSUANCE:
May 13, 2022
On May 13, 2022, the State Administration for Market Regulation (SAMR) issued a notice entitled "Investigation by SAMR on Suspected Monopolistic Practices by CNKI". The content is as follows: recently, SAMR, based on the preliminary verification, initiated an investigation into the suspected monopolistic practices of the National Knowledge Infrastructure (“CNKI”) in accordance with the law.
The main business of CNKI is CNKI’s database and academic misconduct literature detection system, in which CNKI database provides literature retrieval, reading and download services. The profit model is primarily based on buying exclusive access to a large number of academic journals and literature, and then selling academic database supply services to universities and research institutions.
In recent years, CNKI has been repeatedly accused of infringing the information network transmission right of works and suspected monopolistic practices. The most typical of these is the lawsuit by Dexin Zhao, a retired professor of Zhongnan University of Economics and Law. At the end of 2021, Dexin Zhao won a lawsuit against CNKI for CNKI’s abuse of more than 100 of his papers without authorization. In April, the Chinese Academy of Sciences (CAS) accused CNKI of charging too much for renewal and demanding tough conditions, which aroused wide public concern.
Monopolistic activities stipulated in Article 3 of the Anti-Monopoly Law include: (1) monopolistic agreements between undertakings; (2) abusing dominant market position by undertakings; and etc.
According to Article 13 of the Anti-Monopoly Law, the following monopolistic agreements between competing undertakings shall be prohibited: (1) fixing or altering prices of commodities; (2) restricting the production quantity or sale quantity of commodities; (3) dividing sale market or procurement market of raw materials; (4) restricting the procurement of new technologies and new equipment or restricting the development of new technologies and new products; (5) jointly boycott transactions; and,(6) any other monopolistic agreements as defined by the anti-monopoly enforcement agency of the State Council.
Monopolistic agreements referred to in the Anti-Monopoly Law shall mean the agreements or decisions to eliminate or restrict competition or other collaborative practices.
According to Article 14 of the Anti-Monopoly Law, the following monopolistic agreements between undertakings and trading counterparts shall be prohibited: (1) fixing the price of commodities for resale to third party; (2) fixing the lowest price for resale of commodities to third party; and, (3) any other monopolistic agreements as defined by the anti-monopoly enforcement agency of the State Council.
On the same day, May 13, Tongfang Knowledge Network Technology Co., Ltd. (Beijing) and its parent company Tongfang Co., Ltd. (listed company) responded to SAMR that they will firmly support and fully cooperate with the anti-monopoly investigation.
Given recent cases, the investigation period of cases for violation of anti-trust law is about six months. If SAMR ultimately finds that CNKI has violated the Anti-Monopoly Law, penalties include: ordering the undertaking to cease the illegal act, the confiscation of the illegal income, and a fine of 1% to 10% of the sales amount of the preceding year. See chapter 7 of the Anti-Monopoly Law, the Legal liability.
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