Study On The Application Of Merger Remedies In Internet Industry

In recent years, Internet Industry mergers and acquisition developed quickly. For example, In 2015, there is an obvious competition in Internet Area, that is leading companies have merged, such as strategice merger of Didi dache and Kuaidi dache, acquisition of Market Nets by 58 Wide-City, merger of Ctrip and Qunar, etc. With the fast development of merger in Internet Industry, antitrust issues of the Internet industry is bound to be one of the new hotspot. On the one hand, merger in Internet industry is in favor of economies of scale effect, it can improve the competitiveness of operators, but it also could undermine the effective and competitive market structure, bring the risk of eliminate or restrict competition, harm the interests of consumers and the public interest. This dual role means we couldn’t simply to approve or prohibit merger in Internet industry, we should draw on advantages and avoid disadvantages, merger remedies make a good balance between the dual effect of merger. This article starts with the specific Internet industry and analysis on the application of merger remedies, studies the application of merger remedies in Internet industry in China.As the Internet industry is different from the traditional industries, merger remedies in Internet industry show the specificity in evaluation, application and implement. It means big challenges to the merger remedies in Internet industry. Firstly, the evaluation of merger remedies in Internet industry has below 3 features: 1. Since the Internet is different from the traditional industries, it has some features like the network effect, decreasing cost and increasing return, etc. This makes Internet industry easy to form and develop monopoly. However, due to the dynamic competition and high innovation, it also makes the monopoly of the Internet industry to be a competitive monopoly, it will help improve the welfare of consumers, also is good for technological innovation, but the enterprise who is in a monopoly position couldn’t make monopoly price. Competitive monopoly characteristics of the Internet industry requires antitrust enforcement agencies to treat in different way, give consideration to two sides, one is anti-competitive concerns, the other is Internet monopoly, we should treat traditional index like market share and market concentration rationally.(2) Internet industry has the typical bilateral market, during the definition of the relevant market, we should analysis both "free service" and "service charge",which makes traditional qualitative and quantitative analysis of the alternatives in the defined Predicament.(3) The new characteristics of Internet industry also add new difficulties to antitrust effect analysis. In the circumstance of Internet companies’ transverse merger, in the competitive analysis of unilateral effects, “Departure from the enterprise” and potential entrants analysis becomes important, synergy effect analysis becomes more complex. While the non-transverse merger of Internet companies benefit the acquisition and protection of enterprises’ core information technology, it may result in the consequences that block or hinder entrants, which brings disadvantageous to technological innovation and the development of Internet industry. Secondly, on the choice of merger remedies, in the traditional antitrust theories and practices, structural remedies are highly preferred by antitrust review agencies due to they can eliminate competition concerns more thoroughly and are easy to implement and supervise. In recent years, however, the special advantages of conduct remedies gain more and more recognition and attention. Especially in the Internet industry that is highly competitive and innovation intensive, the monopolies have the characteristics of transient and dynamic, conduct remedies make the competition problems in this kind of industry properly solved based on its flexibility and variability. Accordingly, conduct remedies are priority applied in Internet industry. Finally, the enforcement stage of merger remedies in Internet industry has also reflected the different characteristics from the traditional industries, it uses more of the open commitment method, meanwhile, the supervision problem is particularly prominent, which brings challenges to antimonopoly law enforcement agencies.The merger remedies legislation of Internet industry in our country still remains to be further improved. In the first place, in the field of merger remedies, China’s Anti-monopoly Law has provided for the merger remedies system. Meanwhile, Ministry of Commerce has issued Merger Review Approach, which contains detailed provisions on merger remedies measures. On December 4, 2014, Ministry of Commerce issued Provisions on the Restrictive Conditions of Merger( for Trial Implementation), which mainly covers the classification of merger remedies measures, the specific content of divest of remedies measures, but the provisions on conduct remedies are too principled. Secondly, China’s legislation on merger remedies in Internet industry is almost a blank, we can only perceive the considerations on Internet’s specific factors in the antitrust review from a few number of provisions. Therefore, as a whole, China’s regulations on merger remedies in Internet industry remains few, thus bring inconvenience on the practice and application of merger in Internet industry. In addition, since the implementation of the Anti-monopoly Law in 2008, the Ministry of Commerce has taken the conduct remedies in 16 cases among the 26 approved by restrictive conditions merger cases, this proportion is relatively high. While in the 3 vertical merger cases involving the Internet industry, the conduct remedies are all applied. In general, the enforcement of merger remedies in Internet industry has made some progress, but there are still some deficiencies in technical problems, supervision mechanism, changing mechanism and information disclosure aspects.Research on the merger remedies in Internet industry has important significance, especially in the circumstances that China’s Internet industry develops rapidly, Internet companies merger frequently, lack of merger remedies legislation and the enforcement needs to be further tested, it is particularly necessary to analyze and research on the merger remedies in Internet industry. Currently, there are only a small number of essays that focus on the research of merger remedies in Internet industry, the only relevant essays have put the topic under the framework of merger remedies, which lacks pertinency, systematicness and deepness. In this context, this paper raises the question by specific cases, put the characteristics of Internet industry as an entry point, researches specifically on the merger remedies in Internet industry, explores the particularity of applying the merger remedies in Internet industry as well as how to better assess, select and implement the function of merger remedies, in order to provide useful references and suggestions on the legislation and enforcement of merger remedies in China’s Internet industry.Based on the above research purposes, this paper uses the method of literature research, comparative analysis, empirical analysis and crossover study to carry on the thorough analysis on the merger remedies system in Internet industry. Chapter I firstly introduces the point of the characteristics of Internet industry, and then analyze the current status of legislation and enforcement of merger remedies in Chinese Internet industry. Starting from Google’s acquisition of Motorola mobile, chapter II reflects on the implied antitrust law questions as well as the following topic. Chapter III focuses on the particularity of merger remedies in Internet industry during the assessment, selection and implementation periods. Chapter IV puts forwards further suggestions lastly.