1. Introduction

Industrial interoperability restrictions arise when a manufacturer or platform operator prevents, limits, or makes excessively difficult the ability of independently supplied products, equipment, software, components, or services to communicate and function with its own system or with competing systems.

The issue is particularly important in industrial ecosystems involving machinery, industrial software, automation systems, telecommunications, energy infrastructure, medical equipment, transport systems, and digital platforms.

Competition law generally does not require a company to make every proprietary technology interoperable with competitors. The concern arises where interoperability is strategically restricted in circumstances where the restriction can foreclose competitors, increase switching costs, protect an entrenched position, or eliminate competition in complementary markets.

In China, such conduct may principally be examined under the Anti-Monopoly Law (AML), particularly rules concerning abuse of dominance, refusal to deal, discriminatory treatment, tying, and other exclusionary conduct.

2. Meaning of Industrial Interoperability

Interoperability means the ability of two or more independently developed systems to:

• exchange information;
• understand and process exchanged information;
• communicate through compatible technical protocols;
• use common interfaces or APIs;
• connect hardware with third-party components;
• permit software from different suppliers to operate together;
• allow customers to integrate competing products into an industrial system.

Example

Suppose Company A supplies an industrial automation controller and also controls the software interface required to connect sensors.

If A technically prevents third-party sensors from connecting to the controller, while its own sensors work seamlessly, the restriction may create an interoperability barrier.

The competition question is not simply:

“Is A's technology proprietary?”

It is:

“Is A using control over an essential or strategically important interface to restrict competition in an adjacent market?”

3. Forms of Industrial Interoperability Restrictions

A. API Restrictions

A dominant manufacturer may:

• withhold API documentation;
• limit API access;
• impose unreasonable technical conditions;
• provide APIs only to affiliated companies;
• change APIs in ways that disadvantage rivals.

This can be particularly significant in industrial software, cloud systems, IoT platforms and automation systems.

B. Proprietary Interface Lock-In

A company may design an interface that permits its own products to communicate with the core system while excluding competing products.

For example:

Industrial Controller → Proprietary Interface → Manufacturer's Sensors

while:

Industrial Controller → X → Competitor's Sensors

The additional technical barrier may make customers reluctant to switch suppliers.

C. Protocol Restrictions

A manufacturer may control a proprietary communications protocol and refuse access to competing manufacturers.

Examples include:

• industrial communication protocols;
• machine-to-machine protocols;
• smart-grid communication standards;
• vehicle charging protocols;
• robotics interfaces.

D. Firmware Restrictions

Firmware can be used to prevent third-party components from functioning properly.

Examples include:

• authentication restrictions;
• digital certificates;
• firmware whitelisting;
• disabling third-party modules;
• blocking non-approved replacement components.

E. Software Compatibility Restrictions

Industrial software may be deliberately designed so that:

• third-party applications cannot integrate;
• competing modules cannot access relevant data;
• customers cannot migrate their databases;
• competing maintenance software cannot communicate with equipment.

F. Data-Access Restrictions

Interoperability frequently depends upon access to operational data.

A dominant manufacturer may restrict access to:

• machine-generated data;
• diagnostic information;
• performance information;
• maintenance data;
• telemetry;
• customer-generated data.

The competition issue becomes stronger where withholding such information makes effective competition in aftermarkets impossible.

4. Competition Concerns

4.1 Foreclosure of Competitors

The principal concern is foreclosure.

A dominant industrial technology supplier may prevent competitors from obtaining access to an interface necessary to compete.

This can protect the dominant firm's position in:

• aftermarket services;
• spare parts;
• maintenance;
• software;
• accessories;
• components;
• complementary industrial equipment.

4.2 Raising Rivals' Costs

Even where competitors are technically permitted to interoperate, unreasonable technical requirements can increase their costs.

For example:

Competitor receives API access but must undertake expensive certification costing several million yuan.

If the dominant company does not face equivalent costs, the requirement may disadvantage competitors.

4.3 Customer Lock-In

Interoperability restrictions can increase switching costs.

A customer that has installed hundreds of machines may discover that switching suppliers requires:

• replacement of equipment;
• rewriting software;
• retraining employees;
• migrating data;
• purchasing new interfaces;
• replacing compatible components.

This may create technological lock-in.

4.4 Aftermarket Foreclosure

Interoperability restrictions can be particularly problematic in aftermarkets.

A company might sell industrial equipment competitively but subsequently restrict access to diagnostic interfaces.

This can enable it to dominate:

• repair;
• maintenance;
• spare parts;
• software upgrades.

The competition analysis may therefore need to examine both the primary equipment market and the aftermarket.

5. Legal Framework in China

The principal legal framework is the Anti-Monopoly Law of the People's Republic of China, as amended in 2022.

Relevant concepts include:

Article 17 — Abuse of Dominant Market Position

A dominant undertaking may be prohibited from engaging in conduct such as:

• refusing to deal without legitimate reasons;
• applying discriminatory conditions;
• tying products without legitimate justification;
• imposing unreasonable trading conditions;
• other abusive conduct identified by the AML enforcement framework.

Interoperability restrictions can potentially fall within one or more of these categories depending on the circumstances.

6. Refusal to Deal and Interoperability

A particularly important analytical route is refusal to deal.

Suppose:

1. Company A is dominant in industrial-control software;
2. its interface is necessary for competing maintenance software;
3. competitors request access;
4. A refuses access;
5. competitors cannot realistically compete without the interface.

The conduct may raise a refusal-to-deal issue.

However, mere refusal to license proprietary technology is not automatically unlawful.

Authorities generally need to examine factors such as:

• dominance;
• necessity of the interface;
• availability of alternatives;
• technical feasibility;
• economic feasibility;
• effect on competition;
• legitimate business justification;
• impact on innovation.

7. Essential-Facility Dimension

Industrial interoperability cases can overlap with the essential-facilities doctrine.

The strongest case generally requires something approaching:

Control of indispensable infrastructure/interface

↓

No realistic alternative

↓

Access necessary for effective competition

↓

Refusal or discriminatory access

↓

Potential elimination or substantial restriction of competition

The doctrine should not be applied automatically merely because a technology is popular or commercially important.

8. Six Important Case Laws

Because China has relatively limited publicly reported decisions specifically labelled “industrial interoperability restrictions,” the following cases are important as doctrinal precedents concerning interoperability, refusal to deal, interfaces, technology access, data, tying and exclusionary conduct.

Case 1 — Microsoft v Commission

Microsoft Corp. v Commission of the European Communities, Case T-201/04, General Court, 2007.

Facts

Microsoft held a dominant position in PC operating systems.

The European Commission found that Microsoft had restricted access to interoperability information needed by competing work-group server operating systems.

Issue

Whether Microsoft could be required to disclose interoperability information to competitors.

Decision

The General Court substantially upheld the Commission's decision.

The Court accepted that interoperability information could be necessary for competitors to compete effectively in the neighbouring work-group server operating-system market.

Principle

The case is highly relevant to industrial interoperability because it demonstrates that:

Control over technical information necessary for interoperability can become a competition-law concern when used by a dominant undertaking to exclude competitors.

Industrial application

The reasoning can be relevant to:

• industrial operating systems;
• automation platforms;
• proprietary machine protocols;
• industrial cloud systems;
• robotics software.

Case 2 — IMS Health v NDC Health

IMS Health GmbH & Co. OHG v NDC Health GmbH & Co. KG, Joined Cases C-418/01, Court of Justice of the European Union, 2004.

Facts

IMS Health controlled a particular data structure used for pharmaceutical sales information.

Competitors sought access to the structure.

Issue

Whether refusal to license an intellectual-property right could constitute abusive conduct.

Decision

The CJEU established stringent conditions for treating refusal to license as an abuse.

Principle

The case established that refusal involving intellectual property becomes particularly significant where:

1. access is indispensable;
2. refusal prevents the emergence of a new product or service;
3. refusal lacks objective justification; and
4. the refusal reserves a market to the dominant undertaking.

Industrial significance

This provides an important framework where interoperability depends on access to:

• proprietary technical information;
• industrial databases;
• interfaces;
• technical standards;
• proprietary data structures.

Case 3 — Bronner v Mediaprint

Oscar Bronner GmbH & Co. KG v Mediaprint Zeitungs und Zeitschriftenverlag GmbH, Case C-7/97, CJEU, 1998.

Facts

A newspaper publisher sought access to another publisher's newspaper-delivery system.

Issue

Whether refusal to provide access to infrastructure constituted an abuse of dominance.

Decision

The CJEU applied a strict test for compulsory access.

Principle

An infrastructure is not automatically an essential facility simply because access would make competition easier.

The facility must generally be indispensable and difficult or impossible to duplicate.

Industrial significance

This principle is relevant to:

• industrial infrastructure;
• proprietary networks;
• machine interfaces;
• technical platforms;
• logistics systems.

It prevents competition law from becoming a general compulsory-sharing regime.

Case 4 — Slovak Telekom

Slovak Telekom a.s. v European Commission, Joined Cases C-165/19 P and C-166/19 P, CJEU, 2021.

Facts

Slovak Telekom, a telecommunications operator, had significant control over infrastructure used by competitors.

The European Commission found exclusionary conduct involving access to the network.

Principle

The case clarified the relationship between refusal-to-deal principles and infrastructure access.

Where a dominant undertaking has voluntarily created or developed infrastructure and subsequently restricts competitors' access, the precise legal test can depend on the nature of the conduct.

Industrial significance

The reasoning can inform disputes concerning:

• industrial networks;
• telecommunications infrastructure;
• energy networks;
• digital infrastructure;
• shared technical platforms.

Case 5 — Google Shopping

Google and Alphabet — Google Search (Shopping), European Commission Decision AT.39740, 2017; General Court, Case T-612/17, 2021.

Facts

Google operated a dominant general search service and gave preferential treatment to its comparison-shopping service.

Competition concern

The Commission considered that Google's conduct disadvantaged competing comparison-shopping services.

Principle

A dominant digital platform can use control over an important gateway to disadvantage competing complementary services.

Industrial relevance

Although not an industrial-manufacturing case, its broader logic is relevant where an industrial platform controls a gateway such as:

• an equipment marketplace;
• industrial cloud platform;
• machine-data ecosystem;
• IoT platform;
• industrial application store.

The key issue is whether control over the gateway can be used to distort competition in adjacent markets.

Case 6 — European Commission v Microsoft

Commission v Microsoft, Case C-344/98, CJEU, 2000.

The broader Microsoft litigation provides another important foundation for understanding technology-related competition law.

Principle

Competition law can scrutinize the manner in which a dominant technology undertaking controls access to technical functionality where that control has exclusionary effects.

The Microsoft jurisprudence is especially important because interoperability can be affected not merely by an express refusal but by:

• incomplete technical information;
• discriminatory technical specifications;
• restrictions on functionality;
• strategic compatibility limitations.

Industrial application

Similar issues may arise in:

• industrial automation;
• cloud-connected machinery;
• smart factories;
• robotics;
• industrial IoT.

9. Additional Relevant Case — Huawei v ZTE

Huawei Technologies Co. Ltd v ZTE Corp. and ZTE Deutschland GmbH, Case C-170/13, CJEU, 2015.

This case concerns standard-essential patents (SEPs) rather than industrial interoperability in the narrow sense.

It is nevertheless highly relevant where interoperability depends on technical standards.

Principle

The CJEU examined the circumstances under which enforcement of standard-essential patent rights can constitute an abuse of dominance.

Industrial significance

Modern industrial ecosystems increasingly depend upon standards.

Examples include:

• 5G-connected machinery;
• IoT;
• vehicle communications;
• smart-grid technology;
• industrial wireless systems.

Thus, interoperability restrictions may arise through IP rights and standards, not merely through APIs or software.

10. Analytical Test for Industrial Interoperability Restrictions

A competition authority should normally examine the following sequence.

Step 1 — Define the relevant market

Possible markets include:

• industrial control systems;
• industrial software;
• machine components;
• maintenance services;
• industrial data services;
• aftermarket services.

Step 2 — Establish dominance

Relevant indicators include:

• market share;
• network effects;
• switching costs;
• technical barriers;
• installed base;
• control over standards;
• access to proprietary data;
• customer dependence.

Step 3 — Identify the interoperability restriction

Examples:

• refusal to provide API access;
• refusal to provide interface specifications;
• discriminatory certification;
• firmware blocking;
• incompatible protocols;
• data-access restrictions;
• licensing restrictions.

Step 4 — Determine indispensability

Ask:

Can competitors realistically develop an alternative?

Factors include:

• cost;
• time;
• technical feasibility;
• availability of substitute interfaces;
• duplication possibilities.

Step 5 — Examine competitive effects

The authority should determine whether the restriction:

• excludes competitors;
• increases rivals' costs;
• raises switching costs;
• protects an aftermarket monopoly;
• prevents innovation;
• reduces consumer choice;
• increases prices.

Step 6 — Consider legitimate justification

Possible justifications include:

• cybersecurity;
• safety;
• intellectual-property protection;
• system integrity;
• reliability;
• privacy;
• protection against malicious software;
• technical incompatibility.

The undertaking should ideally demonstrate that the restriction is necessary and proportionate to the legitimate objective.

11. Interoperability vs Cybersecurity

One of the most difficult issues is distinguishing legitimate security restrictions from exclusionary restrictions.

For example:

Legitimate security measure

A manufacturer requires third-party software to satisfy objectively applicable cybersecurity standards before obtaining API access.

Potentially problematic measure

The manufacturer claims “security” but:

• allows its own affiliate unrestricted access;
• refuses competitors regardless of compliance;
• imposes requirements competitors cannot reasonably satisfy;
• provides no objective security assessment.

Therefore, competition authorities may examine whether security requirements are:

objective + transparent + proportionate + non-discriminatory.

12. Interoperability and Aftermarkets

Industrial equipment frequently creates long-term aftermarket relationships.

Example:

Industrial printer → proprietary cartridge

Industrial machine → proprietary spare parts

Medical device → proprietary software

Industrial robot → proprietary maintenance platform

If the equipment manufacturer subsequently prevents independent suppliers from accessing diagnostic or technical interfaces, it may potentially extend its primary-market position into an aftermarket.

The relevant economic questions include:

• Did customers know about the restrictions when purchasing the equipment?
• Could customers reasonably switch?
• Were aftermarket prices foreseeable?
• Are independent repairers technically capable of competing?
• Is the manufacturer using technical restrictions to exclude them?

13. Interoperability and Tying

Interoperability restrictions may also operate as tying.

Example:

A dominant industrial-control provider requires customers to purchase its own:

• sensors;
• maintenance software;
• cloud service;
• data-management system;

because competing products are technically prevented from interoperating.

The competition concern is stronger where interoperability is deliberately restricted to force customers into the dominant firm's complementary products.

14. Interoperability and Discrimination

Another important form is discriminatory interoperability.

Suppose:

This pattern may raise concerns about discriminatory treatment, particularly where the dominant undertaking cannot demonstrate legitimate technical reasons for the differences.

15. Remedies

Competition authorities may consider several remedies.

Structural/behavioural access remedies

• API access;
• technical documentation;
• interface disclosure;
• non-discriminatory access;
• interoperability obligations.

Data remedies

• data portability;
• machine-generated data access;
• standardized formats;
• real-time data access.

Contractual remedies

• removal of exclusivity;
• non-discrimination clauses;
• transparent certification;
• reasonable licensing terms.

Technical remedies

• open APIs;
• standardized protocols;
• compatibility requirements;
• independent certification mechanisms.

16. Key Case-Law Principles at a Glance

17. Practical Hypothetical

Assume IndustrialTech Ltd. supplies 70% of industrial robotic controllers in a market.

Its controllers use a proprietary interface.

Independent maintenance companies request access to the interface.

IndustrialTech:

1. refuses to disclose the technical specifications;
2. prevents independent diagnostic software from connecting;
3. permits its own subsidiary to access the interface;
4. requires independent firms to purchase an expensive licence;
5. simultaneously requires customers to use IndustrialTech's maintenance services.

Potential competition concerns

The conduct could potentially involve:

• refusal to deal;
• discriminatory access;
• exclusionary interoperability restrictions;
• aftermarket foreclosure;
• tying;
• raising rivals' costs.

But the analysis would still require evidence concerning:

• dominance;
• indispensability;
• alternatives;
• technical feasibility;
• actual foreclosure;
• objective justification;
• cybersecurity and safety considerations.

18. Conclusion

Industrial interoperability restrictions become a competition-law concern when control over a technical interface, protocol, data system, or infrastructure is used by a dominant undertaking to restrict effective competition in an adjacent or complementary market.

The most important analytical distinctions are:

Proprietary technology ≠ automatically unlawful restriction

and

Interoperability restriction + dominance + indispensability + exclusionary effect + absence of legitimate justification = potentially serious competition concern.

The Microsoft, IMS Health, Bronner, Slovak Telekom, Google Shopping and Huawei v ZTE lines of jurisprudence provide useful comparative principles for analysing such conduct, while China's AML supplies the domestic framework through which refusal to deal, discriminatory treatment, tying and other abuses of dominance may be examined.