Failing to define the relevant market

On March 28 2013, the Guangdong Higher People's Court issued its judgment in Qihoo v Tencent, one of the first antimonopoly cases in China between two major market competitors. The decision is part of a long-running dispute between Qihoo, a company known for its antivirus software and Tencent, which provides diverse services including QQ, a multi-functional instant messaging (IM) programme. In this case, Qihoo claimed that Tencent had abused its dominant position in the Chinese integrated IM software and services market by bundling its highly popular QQ software with other offerings which compete with Qihoo's products and services, and threatening QQ users that Tencent would terminate QQ services if users install certain Qihoo software on their computers (see figure 1 for case highlights).

In its decision, the Guangdong Court rejected the relevant market proposed by Qihoo and instead drew up a relevant market with much broader scope by relying on the Hypothetical Monopolist Test (also known as Small but Significant and Non-transitory Increase in Price Test or SSNIP Test). The SSNIP Test was devised in 1982 by the United States Department of Justice in its Merger Guidelines as a method intended to identify the smallest relevant market within which a hypothetical monopolist could profit by imposing a small but significant and non-transitory price increase (such as 5%). If this price increase is profitable despite the lost sales resulting from the buyers switching to alternative products, the alternative products are not part of the relevant market for antimonopoly analysis. The Guidelines on the Definition of Relevant Market (关于相关市场界定的指南) published by the Anti-monopoly Committee of the State Council also adopts the SSNIP Test as a method for defining the relevant market.