On December 29, 2023, the Beijing Higher People's Court made a first instance judgment on the case of JD v. Zhejiang Tmall Network Co., Ltd., Zhejiang Tmall Technology Co., Ltd., and Alibaba Group Holdings Co., Ltd., determining that their abuse of market dominance and implementation of a "two choice one" monopoly behavior were established, causing serious damage to JD, and ordered compensation of 1 billion yuan to JD.
BOE, facing a reporter from China Business Daily, stated that this judgment is not only a fair ruling by JD.com against the "two choice" monopoly behavior, but also a landmark moment in maintaining a fair competition order in the market through the rule of law. It will also be a significant contribution to China's anti monopoly legal process. Alibaba responded, "We have learned of this news and respect the court's ruling."
According to online reports, JD's 1 billion yuan compensation will be used for red envelopes at the New Year's Eve party. It is understood that this year's Hunan TV New Year's Eve Gala was exclusively named by JD.com, and millions of physical gifts and 1 billion yuan red envelopes were carefully prepared throughout the entire period. JD did not provide a positive response to the news about the 1 billion yuan compensation from Alibaba.
Case Review
The case of JD suing Alibaba for choosing between two can be traced back to 2013, 10 years ago.
In June 2013, a former executive of JD.com published an article titled "Choose One from Two, Are You Going on the Road to Slavery?", exposing the issue of merchants being asked by Alibaba to "choose one from two.".
On the eve of the "Double 11" event in 2015, brand name "Mulin Sen" officially wrote a letter to JD.com stating that due to pressure from a certain platform, the brand would withdraw the venue resources of JD's "Double 11" event. On the evening of November 3, JD Group released a statement against Chinese e-commerce giant Alibaba on its official WeChat official account, accusing it of coercing merchants to "choose one from the other" in the "Double 11" promotion, and said that it had reported Alibaba to the State Administration for Industry and Commerce in real name for disturbing the order of e-commerce market.
In 2017, JD.com officially filed a lawsuit against Alibaba with the Beijing Higher People's Court, claiming to have either party. But because Alibaba is listed in the United States as an overseas structured company, it has sparked a "jurisdictional objection", resulting in a very long trial process. Two years later, in July 2019, the Supreme People's Court made a final ruling rejecting Alibaba's request for "objection to jurisdiction" and determining that the Beijing Higher People's Court has jurisdiction over this case.
In November 2020, the Beijing Higher People's Court organized a non-public cross examination of JD v. Alibaba's "two choice one" monopoly case. In December 2020, the State Administration for Market Regulation filed an investigation into Alibaba's suspected monopolistic practices, such as "choosing one from two", in accordance with the law. On April 10, 2021, the State Administration for Market Regulation imposed administrative penalties on Alibaba Group's "two choice one" monopoly behavior in accordance with the law, ordering it to stop its illegal behavior and imposing a fine of 4% of its 2019 sales, totaling 18.228 billion yuan. On April 10th, Alibaba released a letter to customers and the public, expressing sincere acceptance and firm obedience to the punishment. Punishment is a warning and encouragement to it, a regulation and care for the development of the industry, and an important measure for the country to maintain a fair competition market environment and promote high-quality development of the platform economy.
In December 2023, the Beijing Higher People's Court made a first instance judgment on the case of JD v. Alibaba's "two choice one" monopoly, determining that Alibaba's abuse of market dominance and implementation of the "two choice one" monopoly behavior were established, causing serious damage to JD, and ordered compensation of 1 billion yuan to JD.
Significant for industry development
"The cause of this case is JD's accusation that Tmall requires merchants to 'choose between two', which means that cooperating merchants are not allowed to open stores or promote on other competitive platforms, thereby excluding competitors and consolidating their market position. This behavior is considered a violation of the Anti Monopoly Law of the People's Republic of China (hereinafter referred to as the 'Anti Monopoly Law')." Due to the relevant regulations, JD.com filed a lawsuit. After a series of trials and evidence collection, the court ultimately determined that Tmall had engaged in monopolistic behavior that abused its market dominance, causing serious damage to JD.com. Therefore, Tmall was ordered to compensate JD.com with 1 billion yuan Ouyang Kunpo, co-founder of Zhejiang Kenting Law Firm, told reporters that this ruling marks an important step forward in China's e-commerce industry's antitrust efforts and a powerful blow to the increasingly fierce "two choice" phenomenon in the Internet economy in recent years.
In June 2022, the Standing Committee of the National People's Congress revised the Anti Monopoly Law, which added a clause stating that "operators with market dominance shall not use data, algorithms, technology, platform rules, etc. to engage in the abuse of market dominance as stipulated in the preceding paragraph.". Zhu Wei, Deputy Director of the Communication Law Research Center of China University of Political Science and Law, told reporters, "The verdict of JD v. Alibaba's' one out of two 'should be based on the revised Anti Monopoly Law."
Why did JD.com file a lawsuit in 2017 and only now have a verdict?
"This may be related to the Chinese government's strengthening of anti-monopoly supervision in the internet industry in recent years. With the rapid development of the internet economy, some large platforms have used their own advantages to implement monopolistic behaviors such as' choosing one or two ', which has disrupted market competition order and harmed consumer interests. Therefore, the government has strengthened its crackdown on these behaviors, and the judgment in this case is also a reflection of this regulatory trend," said Ouyang Kunpo, For the industry, this penalty result will first serve as a warning to other e-commerce platforms, reminding them to comply with the Anti Monopoly Law Avoid adopting similar monopolistic behaviors. Secondly, for consumers, a fairer and more competitive market environment will help them obtain more choices and better services. In addition, the verdict will also encourage e-commerce platforms to pay more attention to their compliance operations, thereby promoting the healthy development of the entire industry
Zhu Wei believes that the most obvious indicator for the market in this case's judgment is fair competition. If there is no free and fair competition, enterprises with market dominance will have a very unfavorable long-term impact on the market through the abuse of technology, capital, and other means.
JD.com also stated that fair competition is the core of a market economy, and monopolistic behaviors such as "one out of two" not only restrict market competition, damage the legitimate rights and interests of brands, businesses, and consumers, but also weaken the innovation and vitality of market development.
But Zhu Wei also pointed out to reporters that the Anti Monopoly Law is a serious law and should be used with caution. On the one hand, the Anti Monopoly Law will create a benchmark for the market; On the other hand, the severity of the penalties imposed by the Anti Monopoly Law and its impact on corporate competition are significant and far-reaching. Some of the problems that arise in the process of market competition still need to be regulated more through market means. The case of JD.com suing Alibaba for the "two to one" option took six or seven years to reach the first trial result, but it does not mean that this matter has come to an end. For example, regarding the determination of the "two to one" option, I believe it is a special phenomenon in the development stage. Many platforms have engaged in similar behavior. Is it considered as abuse of market dominance? Should the Anti Monopoly Law be applied or the Anti Unfair Competition Law be applied ? Or apply other laws? There is still controversy in itself. "