Was fined 87.6 million yuan, HowNet released 15 rectification measures

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On December 26, the State Administration for Market Regulation issued a document imposing administrative penalties on CNKI for abusing its dominant market position.

After investigation, HowNet has a dominant position in the Chinese academic literature online database service market in China. Since 2014, HowNet has abused its dominant position to carry out monopolistic behaviors: through continuous and substantial increases in service prices, dismantling databases to raise prices in disguise, etc., it has implemented acts of selling its database services at unfairly high prices; by signing exclusive cooperation agreements, etc. The method restricts academic journal publishers and universities from authorizing academic journals, doctoral and master’s dissertations and other academic literature data to any third party, and adopts various reward and punishment measures to ensure exclusive cooperation implementation.

According to relevant regulations, on December 26, 2022, the State Administration for Market Regulation made an administrative penalty decision in accordance with the law, ordering HowNet to stop illegal activities, and imposed a fine of 5% of its domestic sales of 1.752 billion yuan in China in 2021, totaling 87.6 million yuan. At the same time, adhere to equal emphasis on legal regulation and promotion of development, supervise HowNet to fully implement rectification measures and eliminate the consequences of illegal behaviors, and require HowNet to carry out comprehensive rectification around the termination of exclusive cooperation, reduce user burdens, and strengthen internal compliance management, etc., to promote the healthy and standardized industry Innovation and development.

Regarding the punishment decision, HowNet stated, “We sincerely accept and resolutely obey.” In accordance with the decision on administrative penalties and in combination with opinions and suggestions from all aspects of the society, HowNet has formulated 15 rectification measures including thorough rectification of exclusive cooperation, substantial reduction of service prices, protection of legitimate rights and interests of authors, continuous optimization of related services, and comprehensive strengthening of compliance.

Among them, in terms of completely rectifying the exclusive cooperation with journals and universities, HowNet will promote the non-exclusive cooperation model in the industry, and at the same time cancel the exclusive cooperation agreement.

HowNet stated that it will stop signing and renewing exclusive cooperation agreements, and actively negotiate with journals and universities to terminate existing exclusive cooperation agreements as soon as possible.

In terms of significantly reducing the price of database services, HowNet will reduce sales prices, improve pricing mechanisms, correct unreasonable sales models, establish price communication mechanisms, and expand free service items.

According to CNKI, the actual transaction price of the user’s academic literature database service has been reduced by more than 30% within three years, and the price reduction will not reduce the service quality.

As a well-known Chinese database in China, CNKI has been at the forefront of the database selection of major domestic university libraries since its establishment in 1999. In recent years, due to the high subscription fees of HowNet, many universities and academic research institutions have been overwhelmed, and its price increases year after year and its suspected monopoly behavior have attracted more and more attention.

According to Tianyan Check , the operating company of HowNet is Tongfang HowNet (Beijing) Technology Co., Ltd., which was established in November 2004 and is 100% owned by Tongfang, a listed A-share company.

In April this year, Tongfang Co., Ltd. announced its 2021 financial report. The financial report shows that Tongfang Zhiwang’s annual revenue is 1.289 billion yuan, a year-on-year increase of 9%; the net profit attributable to the parent is 194 million yuan, a year-on-year increase of 0.3%; the gross profit rate is 53.35%, and the total assets are 2.755 billion yuan.

On May 13 this year, the website of the State Administration for Market Regulation released a message that the State Administration for Market Regulation, based on the preliminary verification, filed a case for investigation into CNKI’s suspected monopolistic behavior in accordance with the law.

Subsequently, Tongfang Knowledge Network (Beijing) Technology Co., Ltd. issued an announcement stating that the company firmly supports and fully cooperates. The company will take this investigation as an opportunity to conduct in-depth self-examination, comprehensive self-inspection, thorough rectification, lawful and compliant operation, innovative development model, assume the social responsibility of China’s knowledge infrastructure, and strive to build HowNet into a world-class company with Chinese characteristics. The academic resource information platform promotes academic dissemination and exchange, promotes national scientific and technological innovation, and provides better services for authors and readers.

The following is the full text of CNKI’s response:

Since the State Administration for Market Regulation filed an investigation into CNKI’s suspected monopoly on May 13, we have fully cooperated, deeply reflected, and conducted a comprehensive self-examination. Today, we received the “Decision on Administrative Punishment from the State Administration for Market Regulation”. We sincerely accept and resolutely obey this punishment.

We conscientiously study and implement the spirit of the 20th National Congress of the Communist Party of China, follow the spirit of General Secretary Xi Jinping’s important speech on the academic resource information platform, and on the basis of extensive consultation, formulate a comprehensive rectification of exclusive cooperation, a substantial reduction in service prices, and protection of authors. 15 rectification measures, including legitimate rights and interests, continuous optimization of related services, and comprehensive strengthening of compliance construction. It is now announced and accepted social supervision.

As a platform company, we will firmly adhere to the development orientation of “serving technological innovation, promoting academic dissemination, and assuming social responsibility”, adhere to the “user-centered” business philosophy, consciously maintain a fair competition order, and strive to build HowNet into a A world-class academic resource information platform.

Tongfang Knowledge Network (Beijing) Technology Co., Ltd.

Tongfang Knowledge Network Digital Publishing Technology Co., Ltd.

“China Academic Journal (CD Version)” Electronic Magazine Co., Ltd.

December 26, 2022

CNKI rectification plan

Today, the State Administration for Market Regulation made an administrative penalty decision on the CNKI monopoly case according to law. HowNet sincerely accepts and resolutely obeys the punishment decision. In accordance with the decision on administrative penalties and in combination with opinions and suggestions from all aspects of the society, HowNet has formulated a total of 15 rectification measures in the following five aspects, which are now open to the public and accept the supervision of all parties.

1. Thoroughly rectify the exclusive cooperation with journals and universities

1. Promote the industry’s non-exclusive cooperation model. Actively advocate and actively promote the industry to give up exclusive authorization rights, and explore non-exclusive cooperation models of equal cooperation and win-win development.

2. Cancel the exclusive cooperation agreement. Stop newly signing and renewing exclusive cooperation agreements, and actively negotiate with journals and universities to terminate existing exclusive cooperation agreements as soon as possible.

2. Significantly reduce the price of database services

3. Reduce the selling price. The actual transaction price of the user’s academic literature database service will be reduced by more than 30% within three years, and the price reduction will not reduce the service quality.

4. Improve the pricing mechanism. Based on the principles of fairness, reasonableness, and non-discrimination, establish a scientific, open, and transparent service pricing mechanism. Cancel the “number of concurrent users” pricing method, and set a reasonable service price based on cost.

5. Correct the unreasonable sales model. All kinds of “individual periodicals” and “single periodicals” will be completely cancelled, and the mode of splitting up databases and selling them separately will be stopped.

6. Establish a price communication mechanism. With the user as the center, set up a user committee, and establish a user communication mechanism for database service price adjustment.

7. Expand free service items. Further expand the scope of free past periodicals, and open the “off-campus access system for college users” for free.

8. Strengthen the public welfare attributes of the platform. Adhere to putting social benefits first, establish the development orientation of “serving technological innovation, promoting academic communication, and assuming social responsibility”, and balance the commercial and public welfare of the platform.

3. Protecting the legitimate rights and interests of authors

9. Obtain authorization from the copyright owner according to law. Focus on solving the problem of incomplete and irregular authorization chains between CNKI and copyright owners, as well as periodicals, universities and other subjects, and obtain authorization from copyright owners in accordance with laws and regulations.

10. Improve the method of payment of remuneration. Work with upstream periodicals to improve the payment methods for authors’ remuneration, and provide authors with online and offline, convenient and fast remuneration application, settlement and distribution channels; negotiate with industry associations and copyright collective management organizations to formulate copyright protection implementation plans and implement them strictly.

11. Improve the author service mechanism. Establish an author service center, develop an author service platform, and effectively protect the legitimate rights and interests of authors.

4. Continue to optimize related services

12. Open the plagiarism checking service for personal papers. Responding to the reasonable needs of teachers, students and scientific researchers, the plagiarism checking service is open to individuals, and the price is not higher than the mainstream products in the market.

13. Improve the technical level of academic misconduct detection. Improve the technical means, rule algorithms, data sources, copyright protection, etc. of the academic misconduct detection system to effectively improve the quality of academic misconduct detection for users.

5. Comprehensively strengthen compliance construction

14. Improve the compliance management system. Establish and improve the company’s comprehensive and full-process compliance management system, and strengthen the effective management and control of business behavior.

15. Strengthen compliance risk management. Set up a compliance management department to carry out anti-monopoly and copyright compliance risk screening, improve compliance consulting, review, training and assessment mechanisms, and ensure compliance with laws and regulations.

Tongfang Knowledge Network (Beijing) Technology Co., Ltd.

Tongfang Knowledge Network Digital Publishing Technology Co., Ltd.

“China Academic Journal (CD Version)” Electronic Magazine Co., Ltd.

December 26, 2022

The following is the relevant full text of the State Administration for Market Regulation:

The State Administration for Market Regulation imposed administrative penalties on HowNet’s abuse of market dominance in accordance with the law and ordered it to make comprehensive rectifications

In May 2022, the State Administration for Market Regulation filed a case for investigation into CNKI’s suspected monopoly conduct in accordance with the Anti-Monopoly Law. During the investigation, the State Administration for Market Regulation set up a special case team to advance the investigation and handling of the case in a solid, efficient, steady and orderly manner in accordance with the law. Conduct in-depth inspections and big data analysis; organize experts to repeatedly carry out in-depth research and demonstration; listen to the opinions of CNKI many times to protect their legal rights.

After investigation, HowNet has a dominant position in the Chinese academic literature online database service market in China. Since 2014, HowNet has abused this dominant position to implement monopolistic behavior:

Implemented the behavior of selling its database services at unfairly high prices by continuously and substantially increasing service prices, splitting databases and raising prices in disguise;

Through the signing of exclusive cooperation agreements and other methods, academic journal publishers and universities are not allowed to authorize any third party to use academic literature data such as academic journals, doctoral and master’s dissertations, and various reward and punishment measures are adopted to ensure the implementation of exclusive cooperation.

The investigation shows that CNKI implements unfairly high prices, restricts transactions, excludes, and restricts competition in the Chinese academic literature network database service market, infringes on the legitimate rights and interests of users, and affects the innovation and development of relevant markets and academic exchanges and dissemination. Article 22 Abuse of market dominance prohibited by items (1) and (4) of paragraph 1 of Article 22, such as “selling goods at unfairly high prices” and “restricting counterparties to transactions with them without justifiable reasons” Behavior.

According to the provisions of Articles 57 and 59 of the “Anti-Monopoly Law”, comprehensively considering factors such as the nature, degree, duration, and elimination of the consequences of illegal acts of HowNet, on December 26, 2022, the market The General Administration of Supervision made an administrative penalty decision in accordance with the law, ordered HowNet to stop illegal activities, and imposed a fine of 5% of its domestic sales of 1.752 billion yuan in China in 2021, totaling 87.6 million yuan. At the same time, adhere to equal emphasis on legal regulation and promotion of development, supervise HowNet to fully implement rectification measures and eliminate the consequences of illegal behaviors, and require HowNet to carry out comprehensive rectification around the termination of exclusive cooperation, reduce user burdens, and strengthen internal compliance management, etc., to promote the healthy and standardized industry Innovation and development.

This article is from the WeChat public account “Direct IPO” (ID: zhitongIPO) , author: Wang Fei, 36 Krypton is authorized to publish.

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