Competition Law in Excavation Equipment Leasing Dominance in China

1. Introduction

Excavation equipment leasing—particularly the leasing of excavators, hydraulic excavators, mining excavators, drilling equipment, loaders and related heavy construction machinery—can raise significant competition-law issues in China where one manufacturer, equipment owner, leasing platform, dealer network, or vertically integrated financing company acquires substantial market power.

The principal concern is not simply that a company has a large fleet or market share. Under China's Anti-Monopoly Law (AML), liability generally requires:

a properly defined relevant market;

the undertaking having a dominant market position; and

an abuse of that position.

Article 22 of the AML prohibits, among other things, unjustified refusal to deal, exclusive dealing, tying or unreasonable contractual conditions, discriminatory treatment, and unfair high or low pricing. (Gongbao)

Importantly, there does not appear to be a leading published Chinese judgment specifically deciding dominance in the excavation-equipment leasing market. Therefore, the best legal analysis is constructed from Chinese dominance jurisprudence involving leasing-like services, infrastructure-dependent services, exclusive dealing, discriminatory conditions, pricing and equipment-related markets.

2. Relevant Market

The first question is whether the market should be defined as:

all construction-equipment leasing;

heavy construction-equipment leasing;

excavator leasing;

hydraulic-excavator leasing;

mining-excavator leasing;

short-term versus long-term equipment leasing;

equipment leasing plus maintenance;

manufacturer-owned leasing services; or

a geographically narrower provincial or municipal market.

A. Product market

A dominant excavator manufacturer cannot automatically be treated as dominant in the excavator-leasing market.

The relevant market could potentially be:

Leasing services for excavators and comparable earthmoving machinery.

The authority/court would examine:

substitutability between excavators and loaders;

substitutability between owning and leasing;

short-term rental versus long-term lease;

new versus used equipment;

availability of independent rental companies;

equipment specifications and capacity;

geographical mobility of machinery;

financing alternatives;

switching costs;

maintenance and spare-parts availability.

The Supreme People's Court has emphasized that market definition is a tool for evaluating market power and competitive effects rather than an end in itself. (Supreme People's Court)

B. Geographic market

The geographical market could be:

national China;

a province;

a metropolitan area;

a mining region;

a construction corridor; or

another area determined by actual customer substitution.

For ordinary construction excavators, transport costs, dealer networks and availability of local service technicians may make the market more regional than national.

For large mining excavators, however, customers may source equipment from a much broader territory.

3. Establishing Dominant Position

Article 23 of the amended AML requires consideration of factors such as:

market share;

competitive conditions;

ability to control sales or purchasing markets;

financial and technological strength;

dependence of other businesses;

barriers to entry; and

other relevant factors.

The traditional Chinese framework similarly emphasizes market share, control of distribution channels, financial and technological capability, trading dependence and entry barriers. (SAMR)

Particularly important factors for excavation-equipment leasing

A leasing company could possess substantial market power if it controls:

a very large fleet of excavators;

specialized mining excavators;

access to manufacturer-authorized equipment;

essential spare parts;

maintenance technicians;

proprietary telematics or machine-management software;

financing facilities;

long-term construction-project contracts;

dealer networks; or

equipment required by particular mines or infrastructure projects.

Thus, fleet size alone is insufficient. The question is whether customers can realistically switch to competing suppliers.

4. Network and Switching Effects

Modern excavator leasing increasingly involves more than physical machinery.

A leasing provider may supply:

machine-control systems;

GPS;

telematics;

predictive maintenance;

remote diagnostics;

fuel monitoring;

operator-management software;

proprietary spare parts;

financing;

insurance; and

technical support.

If these services are technologically integrated, the lessor may create significant switching costs.

For example, a construction company leasing 300 excavators might become dependent upon a lessor's:

equipment + software + maintenance + spare parts + financing ecosystem.

The competition-law question would then be whether the lessor is using dominance in one component to foreclose competing leasing providers.

5. Possible Abuses of Dominance

A. Exclusive leasing arrangements

A dominant leasing company might require construction companies to lease all excavators exclusively from it.

For example:

"During the three-year contract, the lessee shall not rent, purchase or otherwise obtain excavators from any competing supplier."

This may constitute exclusive dealing if the dominant undertaking lacks legitimate justification and the arrangement substantially forecloses competitors.

Chinese law specifically prohibits a dominant undertaking from unjustifiably restricting a counterparty to transactions with itself or its designated operators. (Gongbao)

The economic assessment should consider:

contract duration;

percentage of customer demand locked up;

market coverage;

availability of alternative lessors;

termination rights;

penalties;

switching costs;

foreclosure of rival lessors.

6. Equipment + Maintenance Tying

Suppose a dominant excavator lessor tells customers:

"You may lease our excavators only if all maintenance is purchased from our affiliated service company."

This raises a tying issue.

Similarly:

excavator lease + compulsory proprietary GPS subscription

or

excavator lease + compulsory spare-parts package

could raise Article 22 concerns where the products are commercially separable and the additional condition lacks justification.

The critical question is whether the additional service is genuinely necessary for safe operation or is being used to exclude independent maintenance providers.

7. Refusal to Deal

A dominant lessor may refuse to supply equipment to an independent contractor that also leases machinery from a competing company.

For example:

Company A leases 50 excavators from Competitor B. Dominant Lessor X subsequently refuses to supply Company A any equipment.

The refusal is not automatically unlawful.

Chinese law requires examination of:

whether the undertaking is dominant;

whether the equipment is effectively indispensable;

whether alternatives exist;

whether supplying the customer is commercially feasible;

whether refusal forecloses competition; and

whether legitimate business justification exists.

Chinese rules expressly identify reductions, interruptions, refusal of new transactions and unreasonable restrictions as possible forms of refusal to deal. (SAMR)

8. Discriminatory Leasing Terms

A dominant lessor could charge two similarly situated construction companies different:

rental rates;

deposits;

maintenance fees;

insurance charges;

contract periods;

repair response times;

spare-parts prices;

financing costs; or

termination fees.

Article 22 prohibits unjustified discriminatory treatment of trading counterparties in equivalent circumstances. (Gongbao)

The important issue is whether the customers are genuinely similarly situated.

Differences in:

creditworthiness;

fleet size;

utilization;

geographic location;

transportation cost;

equipment type;

maintenance risk; or

payment history

may legitimately justify different terms.

9. Predatory Pricing

A dominant equipment-leasing undertaking might temporarily offer excavators at extremely low rental rates with the purpose of driving independent leasing companies out of the market.

Example:

Market rental rate: RMB 50,000/month
Dominant lessor's rate: RMB 20,000/month
Competitors cannot match the price without operating below relevant cost.

The authority would need evidence concerning:

relevant cost;

duration;

financial capacity of the dominant undertaking;

exclusionary intent/effect;

competitor exit;

recoupment possibilities; and

efficiencies.

A temporary promotional discount is not automatically predatory.

10. Excessive or Unfair Pricing

The reverse problem is also possible.

A dominant lessor might impose:

excessive rental charges;

unreasonable deposits;

disproportionate late fees;

inflated spare-parts charges;

excessive maintenance fees.

But Chinese courts have recently emphasized that a single or short-term price increase should not automatically be classified as unfair high pricing.

In a 2026 Supreme People's Court case concerning pipeline steam, the Court held that unfair-high-price analysis normally concerns sustained and systematic exploitation of market power rather than every short-term price increase. (Supreme People's Court)

This is highly relevant to equipment leasing.

A temporary increase in excavator rental prices caused by:

equipment shortages;

fuel costs;

transportation costs;

construction booms;

supply-chain disruption

would not necessarily establish abuse.

11. Spare Parts as a Leveraging Market

This is potentially one of the most important competition-law problems.

Assume a manufacturer dominates a market for specialized excavators and also controls the supply of proprietary spare parts.

It could tell independent lessors:

"Only authorized leasing companies may obtain genuine spare parts."

Or it could charge independent repairers substantially more than its own affiliated leasing company.

This could create a vertical foreclosure strategy:

Excavator dominance → spare-parts control → maintenance restriction → leasing foreclosure

The Chinese dominance framework expressly considers an undertaking's control over necessary equipment, components and distribution channels when assessing market power. (SAMR)

12. Software Lock-In

Modern excavators may contain proprietary:

operating software;

diagnostic software;

telematics;

electronic-control systems;

machine-control systems.

If a dominant equipment manufacturer refuses API access or diagnostic access to independent maintenance providers, it may make independent leasing and servicing difficult.

This raises questions similar to the Chinese courts' treatment of refusal to provide technological interoperability.

13. Six Important Chinese Case Laws

Because there is no well-established reported Chinese case specifically deciding excavation-equipment leasing dominance, the following cases provide the most useful doctrinal analogies.

Case 1 — Qihoo 360 v. Tencent

Supreme People's Court, (2013) Min San Zhong Zi No. 4

This is China's leading dominance case concerning market definition.

Qihoo alleged that Tencent abused dominance in instant-messaging services through conduct including forcing users to choose between Tencent QQ and Qihoo's software.

The Supreme People's Court rejected the claim because the evidence did not sufficiently establish Tencent's dominance.

The Court emphasized:

market definition;

market share;

competitive constraints;

switching;

entry;

consumer behaviour; and

actual competitive effects.

The case is particularly important for excavation-equipment leasing because high market share does not automatically equal dominance. (Supreme People's Court)

Application

An excavator lessor with 50% market share would still need to be examined in the context of:

competing lessors;

equipment manufacturers;

used-equipment markets;

alternative construction machinery;

customer switching.

Case 2 — Huawei v. InterDigital

Guangdong High People's Court, (2013) Yue Gao Fa Min San Zhong No. 306

This case involved standard-essential patents and alleged excessive licensing conditions.

The court recognized dominance associated with essential patents and addressed:

excessive pricing;

discriminatory licensing;

unreasonable conditions;

tying; and

refusal-related conduct.

The case demonstrates that control over an essential input can materially strengthen a finding of dominance. The Supreme People's Court's compilation of major Chinese antitrust cases identifies this dispute as an important dominance case. (Supreme People's Court)

Application

An excavation-equipment manufacturer controlling indispensable:

diagnostic software;

proprietary components;

spare parts; or

technical interfaces

could potentially acquire comparable leverage if independent lessors genuinely cannot compete without access.

Case 3 — Eastman

Shanghai Administration for Market Regulation — Abuse of Dominance

Eastman involved contractual arrangements including minimum-purchase and take-or-pay provisions.

The enforcement authority treated the arrangements as capable of producing an exclusive-dealing/locking effect, particularly where customers' demand was substantially tied up.

The case is highly relevant to leasing.

A dominant excavator lessor could similarly use:

minimum rental commitments;

take-or-pay clauses;

fleet-wide exclusivity;

large termination penalties; or

minimum utilization requirements.

The concern is not merely the contractual wording but whether the arrangement locks up substantial customer demand and forecloses rivals. (China Law Insight)

Case 4 — Tetra Pak

Chinese antitrust enforcement case concerning abuse of dominance and exclusive dealing

Tetra Pak is an important Chinese dominance precedent because of its treatment of vertical/exclusive arrangements by a powerful supplier.

Chinese competition-law commentary identifies Tetra Pak and Eastman as particularly significant dominance/exclusive-dealing precedents outside the traditional public-utility and pharmaceutical sectors. (PYMNTS.com)

Application

The analogy to excavation equipment is strong where:

dominant equipment manufacturer → dealer network → leasing company → construction customer

creates a closed distribution or leasing ecosystem.

If the dominant manufacturer prevents dealers from supplying rival leasing companies, competition may be impaired at several levels.

Case 5 — Hytera v. Motorola Solutions

Beijing Intellectual Property Court, (2017) Jing 73 Min Chu No. 1671

The dispute concerned communications equipment for metro systems.

Hytera alleged that Motorola:

possessed dominance;

restricted transactions;

refused interoperability/API access; and

prevented effective competition.

The Beijing IP Court ultimately found that although Motorola had a dominant position, the evidence did not establish abuse.

The case is especially useful because the dispute concerned specialized equipment, technical interoperability and procurement/tender markets. (China Justice Observer)

Application

The analogy to excavation equipment is significant.

For example, if a dominant excavator manufacturer refuses:

diagnostic access;

API access;

telematics interoperability;

spare-parts compatibility

to competing leasing companies, the issue should be assessed under the refusal-to-deal and interoperability principles.

But Hytera also demonstrates that dominance alone does not establish abuse.

Case 6 — Tan v. Agricultural Products Company

Supreme People's Court, (2025) Zui Gao Fa Zhi Min Zhong No. 777; published as a 2026 typical case

This is one of the most useful recent cases for equipment leasing because it directly concerns leasing of commercial space and exclusionary conditions.

The agricultural-market operator had a long-term rental arrangement with a trader that restricted the trader from operating in a competing market. When the trader also operated in the competing market, the operator increased the trader's service fee to three times the normal amount and demanded that the trader choose between the two markets.

The Supreme People's Court held that the conduct constituted:

discriminatory treatment; and

restricted/exclusive dealing.

The Court also carefully defined the relevant market as a particular rental-service market rather than treating all agricultural-market services as interchangeable. (Supreme People's Court)

Application to excavation equipment

This is particularly instructive.

If a dominant excavation-equipment lessor says:

"You may lease our excavators only if you do not lease excavators from Competitor B."

and imposes a penalty rental rate when the customer uses another lessor, the arrangement could resemble the conduct condemned in this case.

14. Additional Important 2026 Case — Industrial Wastewater

The Supreme People's Court's 2026 case involving an industrial-park wastewater-treatment operator is also highly relevant.

The operator was the only approved provider of electroplating wastewater treatment in the industrial park. It charged different prices to similarly situated enterprises based principally on shareholder identity.

The Court found dominance because:

the provider was effectively the sole approved supplier;

customers depended on the service;

technical and financial barriers existed; and

entry was difficult.

The Court concluded that unjustified discriminatory pricing violated competition law. (Supreme People's Court)

Excavation-equipment analogy

Suppose an industrial project requires a particular class of specialized excavator and:

only one leasing company has sufficient equipment;

alternative equipment is unavailable;

the equipment is required by project specifications;

switching is practically impossible.

The lessor's control may resemble the wastewater provider's localized dominance.

15. Hypothetical Example

Assume China Excavation Leasing Co. controls 68% of the relevant market for specialized 80–100-ton mining excavator leasing in Province X.

It enters three-year contracts with mining companies providing:

excavator leasing;

maintenance;

spare parts;

telematics; and

operator training.

The contracts state:

"The customer shall not lease or purchase excavators from competing suppliers during the contract period."

Customers terminating early must pay:

100% of remaining rental payments.

The company also refuses to sell proprietary spare parts to independent maintenance providers.

Competition-law analysis

Step 1 — Relevant market

Potentially:

specialized large-scale mining-excavator leasing in Province X.

Step 2 — Dominance

68% market share + specialized equipment + limited competitors + high entry costs + customer dependence could strongly support dominance.

Step 3 — Exclusive dealing

The three-year exclusivity clauses potentially foreclose competing lessors.

Step 4 — Switching costs

100% remaining rent creates substantial customer lock-in.

Step 5 — Spare parts

Refusal to supply independent maintenance firms may reinforce foreclosure.

Step 6 — Objective justification

The lessor could argue:

equipment safety;

maintenance quality;

residual-value protection;

financing risk;

fleet management;

technical compatibility.

Those justifications would need to be credible and proportionate.

16. Defences Available to the Equipment Lessor

Dominance does not prohibit vigorous competition.

The lessor could justify exclusive or restrictive arrangements by showing:

A. Fleet-financing requirements

The equipment may be financed by loans requiring minimum utilization.

B. Residual-value protection

Long-term leasing may require restrictions on competing use to preserve machine value.

C. Safety

Heavy excavation equipment may require authorized maintenance.

D. Technical compatibility

Proprietary software may be necessary to guarantee machine safety.

E. Efficiency

Integrated leasing + maintenance can reduce:

downtime;

repair costs;

accident risks;

fuel consumption.

F. Capacity planning

Minimum-purchase or minimum-rental commitments can be legitimate where they enable efficient fleet deployment.

The question is whether the restriction is reasonably necessary and proportionate, rather than simply whether the undertaking can identify a business justification.

17. Administrative Monopoly Issues

Excavation equipment can also become subject to administrative monopolization.

For example, a local authority might require:

"All excavators used for municipal construction projects must be leased from Company X."

Or tender documents might require:

"Only equipment supplied by a particular local company may be used."

This could raise China's separate rules concerning abuse of administrative power to eliminate or restrict competition.

This issue is increasingly important because Chinese competition enforcement is focusing on local protectionism and restrictions that prevent equal market access. SAMR's 2026 enforcement campaign specifically identified administrative requirements that restrict businesses to particular local suppliers or exclusive arrangements as competition concerns. (SAMR)

18. Penalties and Remedies

Where abuse of dominance is established, Chinese authorities may impose:

orders to cease the unlawful conduct;

confiscation of unlawful gains;

monetary penalties;

corrective measures;

contractual modifications; and

other legally available remedies.

Private parties may also bring civil claims for damages where the statutory requirements are satisfied.

The 2026 Supreme People's Court cases demonstrate that Chinese courts are increasingly scrutinizing:

exclusionary effects;

discrimination;

causation;

loss calculation;

market definition; and

the proportionality of claimed damages. (Supreme People's Court)

19. Competition-Law Risk Matrix

20. Key Legal Principles from the Six Cases

The Chinese jurisprudence can be condensed into six principles:

1. Market share is not enough

Qihoo 360 v. Tencent demonstrates that market power requires analysis of competitive constraints and actual market conditions. (Supreme People's Court)

2. Essential inputs can create substantial market power

Huawei v. InterDigital demonstrates the significance of control over essential technological inputs.

3. Long-term contractual lock-in matters

Eastman demonstrates how minimum-purchase and take-or-pay mechanisms can contribute to exclusive-dealing effects. (China Law Insight)

4. Dominance does not automatically mean abuse

Hytera v. Motorola demonstrates that even a dominant undertaking may prevail where the alleged refusal/interoperability conduct is not shown to constitute unlawful abuse. (China Justice Observer)

5. Discriminatory conditions can constitute abuse

The 2026 industrial-wastewater case demonstrates that a dominant infrastructure/service provider cannot arbitrarily impose different conditions on similarly situated customers. (Supreme People's Court)

6. "Choose-one" leasing restrictions are particularly dangerous

Tan v. Agricultural Products Company provides a powerful modern analogy for contractual restrictions forcing customers to choose between competing suppliers or markets. (Supreme People's Court)

21. Conclusion

Competition law in China's excavation-equipment leasing sector is principally concerned with whether a powerful manufacturer, leasing company, dealer network or integrated equipment-service provider can use control over machinery, financing, software, spare parts or maintenance to foreclose competing leasing providers.

The highest-risk practices are:

exclusive leasing + long contract duration + punitive termination charges + spare-parts restrictions + proprietary software lock-in.

A dominant excavator lessor does not violate the AML merely because it is large or charges higher prices. The decisive issue is whether its conduct uses substantial market power to exclude competitors, exploit dependent customers, or distort competitive conditions without adequate objective justification.

The most useful Chinese precedents are Qihoo 360 v. Tencent, Huawei v. InterDigital, Eastman, Tetra Pak, Hytera v. Motorola, and the Supreme People's Court's 2026 Tan agricultural-market leasing case. Together they provide a strong doctrinal framework for analysing dominance in excavation-equipment leasing even though a reported Chinese Supreme People's Court case specifically involving excavator leasing has not yet become a leading precedent. (Supreme People's Court)