Mandatory Course Provider Concentration — China

1. Introduction

Mandatory Course Provider Concentration refers to a situation in which a school, university, professional regulator, employer, industry association, platform, government body, or dominant training organization requires learners or regulated persons to obtain compulsory training from one provider or a restricted group of providers.

The competition concern becomes significant where the mandatory provider is selected through an exclusive arrangement, where competing course providers are excluded, or where the organization imposing the requirement has substantial market power.

In China, the issue can arise under several branches of the Anti-Monopoly Law (AML):

1. Abuse of dominant market position;
2. Exclusive dealing / designated-provider requirements;
3. Tying or bundled services;
4. Unreasonable trading conditions;
5. Horizontal monopoly agreements between competing training providers; and
6. Administrative monopoly, where a government or public-administration body designates a particular training provider.

The 2022 AML expressly prohibits a dominant undertaking from requiring trading counterparties to deal exclusively with itself or with designated undertakings without legitimate reasons, and also prohibits tying and other unreasonable trading conditions.

2. Meaning of Mandatory Course Provider Concentration

A typical arrangement may look like:

“All dealers must complete the certification course offered by Provider A.”

or:

“All employees seeking renewal of their professional certification must attend the training conducted by Provider B.”

or:

“Students must purchase the compulsory examination-preparation course from the institution designated by the association.”

The legal issue is not simply that one provider has a large market share.

The important questions are:

• Who imposed the mandatory requirement?
• What is the relevant training market?
• Is the provider dominant?
• Are alternative providers capable of supplying equivalent training?
• Is the requirement genuinely necessary?
• Is the provider objectively qualified?
• Are competing providers excluded?
• Are consumers forced to purchase additional services?
• Does the arrangement raise entry barriers?
• Does it increase the cost of switching?
• Does it foreclose competing providers?

3. Relevant Market

The first step is normally to identify the relevant market.

Depending upon the facts, the relevant market could be:

A. General professional training

For example:

• accounting courses;
• legal compliance courses;
• safety training;
• management training.

B. Specialized certification training

For example:

• aviation certification;
• medical-device training;
• industrial-safety certification;
• technical machinery certification.

C. Mandatory regulatory training

This may be narrower because participants may have no practical substitute if completion of the course is legally required.

D. Platform-specific training

For example:

A manufacturer requires every authorized dealer to obtain software certification from its own training academy.

The relevant market could potentially be training for that particular software or technical system, rather than the much broader education market.

The Chinese courts have emphasized that market definition must reflect actual substitutability. In the driver-training litigation discussed below, the Supreme People's Court treated automobile-driver training as a distinct relevant service market because of its specialized nature and the regulatory requirements surrounding the service.

4. When Does Concentration Become a Competition Problem?

Mandatory provider concentration is particularly problematic where the following elements coexist:

1. High market power

The provider or organization controlling access to the course has substantial market power.

2. Compulsion

Learners or businesses cannot reasonably choose another provider.

3. Lack of objective justification

There is no convincing reason why only one provider can supply the training.

4. Foreclosure

Alternative providers lose access to a significant portion of demand.

5. Artificial entry barrier

Potential competitors cannot obtain accreditation, access to course materials, examination facilities, certification or customers.

6. Economic exploitation

The mandatory provider charges excessive prices or imposes additional conditions because customers cannot switch.

5. Dominant-Position Analysis

Article 22 of the 2022 AML prohibits a dominant undertaking from:

• requiring counterparties to deal exclusively with itself or designated undertakings without justifiable reasons;
• conducting tying without justifiable reasons;
• imposing other unreasonable trading conditions; and
• using data, algorithms, technology or platform rules to engage in prohibited abuse. 

Therefore, a dominant training organization that says:

“You may only satisfy the compulsory training requirement through our affiliated provider”

could potentially raise a designated-provider / exclusive-dealing issue.

The analysis would ordinarily consider:

• market share;
• financial and technical strength;
• customer dependence;
• barriers to entry;
• availability of alternative training providers;
• accreditation requirements;
• switching costs; and
• duration and coverage of the exclusivity.

6. Administrative Monopoly Dimension

This is particularly important in China.

Suppose a local government, public institution, industry regulator, or administrative organization states:

“All enterprises must obtain mandatory training from Provider X.”

If the authority has no lawful basis for selecting Provider X exclusively, the issue may fall under abuse of administrative power to eliminate or restrict competition.

Article 39 of the 2022 AML prohibits an administrative organ or other organization exercising public-administration functions from requiring entities or individuals to purchase or use only goods supplied by designated undertakings.

The problem can therefore arise even where the designated training provider itself does not possess a dominant position.

7. Horizontal Competition Between Course Providers

There is another possible scenario.

Suppose ten competing training institutions agree:

“We will jointly operate the mandatory certification program and all charge the same compulsory course fee.”

That may constitute a horizontal monopoly agreement.

The relevant concern is no longer simply dominance by one provider. It becomes coordination among competitors concerning:

• prices;
• allocation of customers;
• market sharing;
• output;
• admissions;
• geographic territories; or
• standardized exclusionary conditions.

8. Six Important Case Laws

Case 1 — Taizhou Road-Driving Training Operators Case

SPC, (2021) Zui Gao Fa Zhi Min Zhong No. 1722

This is one of the most directly relevant Chinese cases for mandatory-course-provider issues.

Fifteen driving-training operators entered into a joint-operation agreement and self-regulatory convention. They established a joint entity that centralized various services, including:

• registration;
• medical examination;
• card processing;
• theoretical training; and
• simulator training.

The arrangement also involved standardized pricing and restrictions on movement of instructors and training vehicles.

The Supreme People's Court held that several provisions constituted horizontal monopoly arrangements, including fixed pricing, restrictions on output and market allocation.

Importantly, the Court distinguished the centralized auxiliary services from the broader price-fixing arrangement. It recognized that some centralized services could produce efficiencies, but the broader restriction could not automatically be justified merely by claiming improved efficiency.

Relevance

This case demonstrates that:

Mandatory or centralized training arrangements cannot be justified merely because centralization makes administration easier.

An efficiency justification requires evidence that:

1. the efficiency actually exists;
2. the restriction is necessary to achieve it;
3. competition is not seriously restricted; and
4. consumers receive the resulting benefits.

Case 2 — Xiushan Driver-Training Schools Monopoly Agreement Case

In 2024, the Chongqing market-regulation authority penalized an association that organized nine driving schools into an arrangement involving:

• unified price increases;
• centralized collection of registration fees; and
• allocation of revenue among the schools.

The authority treated the conduct as a monopoly agreement involving competing driving-training providers.

Relevance

The case is significant where a mandatory course or certification system creates a common administrative structure.

A training association cannot simply use the existence of a compulsory course to coordinate the commercial behavior of competing providers.

The distinction is:

legitimate standardization → potentially permissible

versus

commercial coordination among competitors → potentially anticompetitive.

Case 3 — Wu Xiaoqin v. Shaanxi Broadcasting & TV Network Intermediary

This Supreme People's Court case concerned bundled digital-TV services.

The operator had a dominant position in the relevant cable-TV market and combined the basic digital-TV maintenance service with paid digital-TV programming.

The Court found that the services were separate and that the operator had not established adequate justification for forcing the combined transaction. The arrangement disadvantaged alternative service providers and affected consumer choice.

Relevance

The case provides an important analogy for mandatory courses.

Suppose a dominant certification provider says:

“You cannot purchase the compulsory certification examination unless you also purchase our training course.”

The training and certification services may be separate products.

The competition-law question would then become whether the dominant undertaking is unlawfully tying the two services.

Case 4 — Qihoo 360 v. Tencent

The Qihoo-Tencent litigation involved Tencent's bundling and incompatibility practices involving QQ and related software.

The Supreme People's Court ultimately found that Qihoo had not established Tencent's dominance in the relevant market and therefore the abuse-of-dominance claim failed. The Court nevertheless examined the alleged tying and restrictive conduct.

Relevance

This case illustrates a critical principle:

Evidence of exclusionary conduct alone does not eliminate the requirement to establish the relevant dominant position where an abuse-of-dominance theory is being used.

For mandatory course provider concentration, therefore, a claimant should establish:

• the relevant training market;
• the provider's market position;
• customer dependence;
• entry barriers; and
• the competitive effects of compulsory sourcing.

Case 5 — Agricultural Wholesale Market “Two-Choice” Case, 2026

The Supreme People's Court's 2026 antitrust model cases included a case concerning a dominant agricultural-market operator that required a merchant effectively to choose between operating in its market or a competing market.

The operator increased the merchant's transaction-service charge to three times the previous level after the merchant operated in a competing market. The case was characterized by the SPC as a 限定交易 / restricted-dealing case.

Relevance

Although this is not an education case, its principle is highly relevant.

A course provider with substantial market power could potentially engage in similar conduct by saying:

“If your institution uses a competing training provider, you cannot obtain our certification, accreditation or access.”

The competitive concern would be stronger where certification controlled by the dominant undertaking is indispensable for participation in the downstream market.

Case 6 — Government Designation of Training Providers in the Education Sector

China's 2022 antitrust enforcement report identified education-sector administrative-monopoly cases involving designated training institutions.

The report specifically noted that education-related enforcement included cases involving:

• designated campus security providers;
• designated student-uniform suppliers; and
• designated centralized training institutions.

These cases were treated as examples of administrative conduct restricting competition.

Relevance

This is particularly close to the subject matter.

Where an education authority effectively tells schools or participants:

“All compulsory training must be obtained from Provider X,”

the issue may be analyzed under the administrative-monopoly provisions rather than requiring proof that Provider X independently possesses dominance.

9. Additional Relevant Principle — Designated Supplier Cases

Chinese enforcement has repeatedly treated government designation of a single supplier as a competition concern.

For example, in the Pingluo County government insurance case, the authority had required public institutions to obtain a particular insurance company's product. The market regulator concluded that designation of the supplier excluded other qualified providers and restricted competition.

Although the case concerned insurance rather than training, the legal mechanism is closely analogous.

Application to mandatory courses

If a public authority says:

“All regulated entities must obtain training exclusively from Provider X,”

the key issue is whether the administrative designation unjustifiably excludes other qualified training providers.

10. Concentration Through Accreditation

A particularly subtle form of provider concentration occurs through accreditation.

For example:

Provider A controls the accreditation system for a professional course and also supplies the course itself.

This creates a potential conflict because Provider A may simultaneously act as:

1. regulator/accreditor;
2. standard setter;
3. examination administrator; and
4. competing training provider.

The competition concern is stronger if Provider A:

• refuses accreditation to competitors;
• gives its own courses preferential accreditation;
• requires use of its materials;
• imposes excessive accreditation fees;
• delays competitor accreditation;
• refuses access to examination infrastructure; or
• makes accreditation conditional on purchasing its own course.

11. Tying and Bundling

Mandatory course provider concentration can also involve tying.

Example:

“You must buy the compulsory safety course from us, and you must also purchase our examination package.”

Potentially separate products could include:

• training;
• examination;
• certification;
• study materials;
• simulation software;
• continuing professional education;
• accreditation.

A dominant provider may face Article 22 concerns if it makes access to one product conditional upon purchasing another without legitimate justification.

The Wu Xiaoqin case is particularly useful here because the SPC emphasized the competitive significance of combining separate services where consumers lose meaningful choice.

12. Foreclosure Effect

The central economic concern is often foreclosure.

Suppose a market contains:

If a regulator or dominant purchaser suddenly requires all participants to use Provider A, Providers B-D could lose most of their effective demand.

The consequences may include:

• exit of competitors;
• reduced innovation;
• higher prices;
• lower quality;
• reduced course variety;
• reduced investment;
• increased entry barriers.

Therefore, the analysis should examine not merely the formal wording of the mandatory requirement but its actual competitive effect.

13. Legitimate Justifications

Mandatory provider concentration is not automatically unlawful.

There may be legitimate reasons for requiring a particular provider where:

A. Safety is involved

For example, training involving dangerous industrial equipment may require specially certified instructors.

B. Uniform standards are necessary

A regulator may reasonably require a standardized curriculum.

C. Examination integrity requires separation

A certification authority may restrict training-provider access to preserve examination security.

D. Specialized infrastructure is necessary

The course may require unique laboratories, simulators or equipment.

E. National security or sensitive information is involved

Certain technical training may legitimately require restricted access.

But the critical question remains:

Why must only this particular provider supply the course?

A legitimate training standard does not necessarily justify an exclusive commercial provider.

14. Less Restrictive Alternatives

A useful competition-law test is whether the objective could be achieved through a less restrictive mechanism.

For example:

Restrictive model

“Only Provider A may conduct the course.”

Less restrictive model

“Any provider meeting the regulator's objective accreditation standards may conduct the course.”

The second model generally preserves:

• provider competition;
• price competition;
• quality competition;
• innovation;
• geographic availability.

Therefore, competition concerns become stronger where a regulator can achieve the same safety or quality objective through open accreditation rather than exclusive designation.

15. Evidence Relevant to Enforcement

A complainant should ideally collect:

Market evidence

• number of course providers;
• market shares;
• customer numbers;
• entry barriers;
• accreditation requirements.

Contractual evidence

• exclusivity clauses;
• designated-provider clauses;
• procurement agreements;
• accreditation contracts;
• certification conditions.

Pricing evidence

• compulsory course fees;
• competitor prices;
• historical prices;
• bundled charges.

Foreclosure evidence

• competitors losing customers;
• inability to access certification candidates;
• refusal to accredit competing providers;
• reduced market entry.

Internal documents

Particularly significant evidence may include communications showing an intention to:

• exclude competitors;
• preserve monopoly revenue;
• prevent switching;
• restrict accreditation;
• allocate customers.

16. Relationship Between Different AML Theories

17. Key Legal Test

A useful examination framework is:

Mandatory Course Requirement
↓
Identify Relevant Training Market
↓
Who imposes the mandate?
↓
Private undertaking → dominance/monopoly analysis
Government/public body → administrative-monopoly analysis
↓
Is there exclusivity or designated-provider treatment?
↓
Are alternative providers genuinely available?
↓
Is there objective justification?
↓
Is the restriction necessary and proportionate?
↓
Does it foreclose competitors?
↓
Does it harm price, quality, innovation or consumer choice?
↓
Possible AML liability

18. Important Distinction: Concentration vs. Legitimate Standardization

This distinction is crucial.

Legitimate standardization

“Any provider satisfying these safety and qualification standards may provide the course.”

This normally preserves competition between providers.

Potentially problematic concentration

“Only Provider A is permitted to provide the course.”

The second arrangement requires a much stronger justification because it eliminates provider-level competition.

The driver-training cases demonstrate that genuine efficiency benefits can sometimes justify limited cooperation, but generalized claims of efficiency are insufficient; the parties must demonstrate concrete benefits, necessity, limited restriction and consumer benefit.

19. Remedies

Potential remedies may include:

1. termination of exclusivity;
2. opening accreditation to qualified providers;
3. prohibition of discriminatory accreditation;
4. separation of training and certification;
5. removal of tying requirements;
6. access to necessary examination infrastructure;
7. modification of procurement rules;
8. administrative correction of designated-provider policies;
9. cessation of monopoly agreements;
10. monetary penalties where statutory requirements are satisfied.

20. Conclusion

Mandatory Course Provider Concentration becomes a significant competition-law issue when compulsory training demand is channelled to a single provider or restricted group without sufficient objective justification.

The most important Chinese principles are:

• a dominant undertaking cannot unjustifiably force counterparties to use itself or a designated provider;
• tying compulsory training to separate services can create abuse-of-dominance concerns;
• competing training providers cannot use a compulsory-course system as a vehicle for price fixing or market allocation;
• trade associations cannot organize competitors into prohibited monopoly arrangements; and
• administrative bodies cannot arbitrarily designate a particular provider and thereby exclude qualified competitors.

The Taizhou driver-training cases are especially useful because they demonstrate how centralized training-related services can simultaneously produce legitimate efficiencies and potentially unlawful restrictions. The Wu Xiaoqin case is important for tying/bundling, while the Chinese administrative-monopoly cases involving designated training institutions show how government-imposed provider concentration can be scrutinized separately from ordinary private dominance.

Core proposition: A compulsory training standard may be legitimate; compulsory use of one commercial training provider requires substantially stronger justification where it excludes otherwise qualified competitors.