Competition Law in Cruise Shore Excursion Contracts — China

Cruise shore-excursion contracts can raise significant competition-law issues in China where a cruise operator, port operator, destination-management company, or tour operator uses exclusive dealing, tying, preferential access, resale-price restrictions, or discriminatory access arrangements to restrict competing excursion providers.

The principal statute is the Anti-Monopoly Law of the People's Republic of China (AML), as amended in 2022. The AML covers monopoly agreements, abuse of dominant market position, and anticompetitive concentrations, and can also apply to conduct outside China where it eliminates or restricts competition in the Chinese market.

Important qualification: There is no well-known Chinese reported decision specifically deciding the legality of a cruise shore-excursion contract. The cases below therefore combine the closest Chinese antitrust precedents with a particularly relevant comparative cruise/tourism case.

1. Nature of Cruise Shore-Excursion Contracts

A cruise line may contract with local excursion providers for:

• city tours;
• historical-site visits;
• diving and water sports;
• transport from port to tourist attractions;
• cultural excursions;
• shopping tours;
• restaurant packages;
• adventure activities;
• shore-transfer services.

The contract may provide that the cruise line:

1. sells the excursion exclusively to its passengers;
2. prevents the excursion provider from selling directly to passengers;
3. requires the provider to use the cruise line's booking platform;
4. gives the cruise line preferential access to scarce port or attraction capacity;
5. prohibits competing cruise lines from using the provider;
6. imposes minimum or fixed resale prices;
7. bundles transportation with admission or excursion services; or
8. conditions access to passengers upon purchasing other services.

These arrangements are not automatically unlawful. The competition-law question is whether they eliminate or restrict competition and whether the undertaking has sufficient market power for the particular conduct to fall within the AML.

2. Relevant Chinese Legal Framework

A. Article 15 — Relevant Market

The AML defines the relevant market by reference to the goods/services for which undertakings compete and the geographic area in which they compete during a particular period.

Possible markets include:

• cruise shore excursions at a particular Chinese port;
• excursion-management services supplied to cruise lines;
• port-to-attraction transportation;
• specific attraction-access services;
• cruise passenger excursion booking platforms;
• particular categories such as diving or cultural tours.

The market should not automatically be defined as the entire Chinese tourism market.

For example, a provider of a specialized excursion at a geographically constrained port may face substantially different competitive conditions from a general tourism operator.

3. Exclusive-Dealing Clauses

A common clause is:

"The excursion operator shall provide the relevant excursion exclusively to Cruise Line A's passengers and shall not supply competing cruise lines."

Exclusive dealing becomes particularly important where the cruise line has substantial control over passenger demand.

Under Article 22(4), a dominant undertaking may not, without justifiable reasons, require trading counterparts to deal exclusively with itself or with designated undertakings.

The analysis therefore requires consideration of:

• market share;
• passenger volume;
• port access;
• availability of alternative cruise lines;
• duration of exclusivity;
• number of excursion providers excluded;
• switching possibilities;
• barriers to entry;
• importance of the excursion provider;
• effect on competing cruise lines and tour operators.

4. Tying and Bundling

A cruise line might require:

Cruise ticket + mandatory shore-excursion package

or:

Port transfer + designated excursion provider

or:

Attraction ticket + cruise-operated excursion

Article 22(5) prohibits a dominant undertaking, without justifiable reasons, from imposing tied sales or other unreasonable trading conditions.

The central question is whether the cruise operator is using dominance in one market to leverage power into another.

For example:

Dominance in cruise passenger access

↓

Passengers cannot practically reach the attraction independently

↓

Cruise line requires passengers to purchase its designated excursion

↓

Independent excursion operators lose access

This creates a potential leveraging theory.

5. Refusal to Deal

A cruise line may refuse to list an independent excursion provider on its booking platform.

Ordinarily, refusal to deal is not automatically unlawful.

But Article 22(3) addresses unjustified refusal to transact by a dominant undertaking.

The relevant questions include:

• Is the cruise line dominant?
• Is access to its passenger base commercially indispensable?
• Are alternative distribution channels realistically available?
• Is the refusal based upon objective safety or quality criteria?
• Does the refusal exclude an important competitor?
• Is the cruise line competing with the excluded excursion provider?

A refusal based on genuine passenger-safety, insurance, licensing, or quality concerns is materially different from exclusion designed to eliminate a rival.

6. Differential Treatment

A cruise operator might give:

• lower commission rates to its affiliated excursion provider;
• better passenger access to selected operators;
• preferential booking positions;
• superior embarkation/disembarkation times;
• better port facilities;
• higher passenger quotas.

Article 22(6) addresses discriminatory treatment of trading counterparts with equal conditions where there is no justifiable reason.

Thus, a preferential contract is not necessarily unlawful merely because one operator receives better terms. The economic and competitive effects must be examined.

7. Resale-Price Restrictions

Suppose a cruise line requires an excursion operator to sell:

"The excursion must be offered to passengers at exactly RMB 1,000."

This can raise Article 18 issues concerning resale-price restrictions.

The amended AML expressly addresses agreements between undertakings and trading counterparts concerning fixing or restricting resale prices, while allowing specified statutory conditions and proof concerning competitive effects.

The issue becomes more complicated where the cruise line argues that uniform pricing is necessary to:

• maintain service quality;
• prevent passenger discrimination;
• coordinate port logistics; or
• protect the excursion's reputation.

Those justifications must be examined against the actual competitive effects.

8. Most Important Case Laws

1. Fisherman's Wharf Bay Cruise Corp. v. Superior Court (2003) — United States

This is the most directly relevant comparative authority.

The case concerned competing San Francisco Bay cruise operators. Blue & Gold Fleet allegedly used its control over the lucrative Alcatraz concession to induce tour operators to purchase bay-cruise tickets exclusively from it.

The California Court of Appeal held that evidence concerning exclusive dealing could not simply be dismissed where the arrangements potentially foreclosed a substantial portion of the relevant market.

The court emphasized:

• market power;
• exclusive dealing;
• tying;
• foreclosure;
• access to an important concession; and
• the cumulative effect of several exclusionary practices.

The case is especially useful for cruise-excursion analysis because it demonstrates how control over a strategically important tourism attraction can be leveraged into a related cruise market.

For a Chinese case, the factual pattern could translate into:

exclusive control over a major attraction/port excursion

→ preferential treatment for one cruise operator

→ competing excursion/cruise operators lose access

→ substantial foreclosure.

2. Qihoo 360 v. Tencent (2014), Supreme People's Court

This is one of China's leading abuse-of-dominance decisions.

The Supreme People's Court emphasized that relevant-market definition is an analytical tool for evaluating market power and competitive effects rather than an end in itself. It also stressed that market share should not automatically determine dominance.

Relevance to shore excursions

A cruise operator's passenger numbers alone should not automatically establish dominance.

The analysis should consider:

• alternative cruise operators;
• alternative ports;
• independent excursion channels;
• direct booking;
• online travel agencies;
• local tour operators;
• passenger switching;
• entry barriers.

Thus, a cruise line with a large passenger base may still face substantial competitive constraints.

3. Shenzhen Weiyuanma Software Development Co. v. Tencent

The Chinese courts examined the relevant product market in a platform environment and distinguished between different services supplied through the same platform. The court also recognized that platform operators can impose legitimate operational rules without automatically committing abuse of dominance.

Relevance

This principle is useful where a cruise line operates its own excursion-booking platform.

For example:

"Only excursions satisfying our insurance, safety and licensing requirements may appear on our platform."

Such a rule is not automatically anticompetitive.

The distinction is between:

legitimate platform quality control

and

exclusionary platform control designed to suppress competitors.

4. Qihoo 360 v. Tencent — Tying/Bundle Analysis

The same Supreme People's Court litigation also involved allegations that Tencent bundled different software products.

The court examined both market power and competitive effects rather than assuming that the mere existence of a bundle established an infringement.

Application

A cruise company could similarly bundle:

• cruise transportation;
• port transfer;
• attraction admission;
• guided tour;
• restaurant reservation.

The existence of a package is not itself unlawful.

The competition concern becomes stronger where a dominant cruise operator makes the package effectively mandatory and thereby prevents independent excursion providers from competing.

5. Qihoo and QGOA v. Tencent — Unfair Competition

In another Tencent-related decision, the Supreme People's Court distinguished legitimate competitive innovation from conduct that improperly interferes with another operator's legitimate commercial opportunities.

Relevance

A cruise line may legitimately develop:

• its own excursion application;
• dynamic pricing;
• passenger recommendation algorithms;
• safety verification;
• integrated excursion booking.

But technological innovation cannot automatically justify exclusionary conduct.

For example, a cruise platform could face competition concerns if its algorithm systematically suppresses independent excursion providers solely because they compete with the cruise line's own excursion business.

6. Redwood Theatres, Inc. v. Festival Enterprises, Inc. (1988) — Comparative Authority

Although this was a film-distribution case rather than a cruise case, it is relevant to exclusive dealing.

The court recognized that foreclosure cannot necessarily be assessed by looking only at the percentage of contracts covered. The strategic importance of the inputs or distribution opportunities controlled by the defendant may matter.

Application to cruise excursions

Suppose a cruise operator controls only 20% of all Chinese tourism bookings but controls:

• 70% of passengers arriving at a particular port; or
• virtually all passengers visiting a particular attraction during cruise calls.

The competitive importance of that access may be much greater than its overall tourism-market share suggests.

7. Tampa Electric Co. v. Nashville Coal Co. (1961) — Comparative Authority

The U.S. Supreme Court established an important framework for assessing exclusive-dealing arrangements by examining the line of commerce and area affected, and the extent to which competition is foreclosed.

Application

For Chinese cruise-excursion contracts, the analysis should examine:

• the actual excursion market;
• the geographic port market;
• duration of exclusivity;
• percentage of excursion demand tied up;
• availability of competing ports;
• alternative excursion channels.

A five-year exclusive contract at one small port is not economically equivalent to a five-year agreement covering most cruise passengers at a major Chinese cruise gateway.

8. Microsoft Corp. v. United States (2001) — Comparative Authority

Microsoft is relevant to the broader principle that exclusionary contractual arrangements can become problematic where a powerful platform uses contractual restrictions to prevent competitors from obtaining distribution or access.

Application

A cruise company that controls the principal distribution channel to cruise passengers could potentially create similar concerns if it systematically prevents competing excursion operators from reaching passengers.

The analysis should nevertheless remain focused on the specific Chinese AML requirements rather than mechanically importing U.S. doctrine.

9. Market Definition in China

For a cruise shore-excursion dispute, several alternative relevant markets might be investigated.

Product-market possibilities

A. Cruise excursion services

All excursions sold to cruise passengers.

B. Port-specific excursion services

For example, excursions available to passengers arriving at one particular port.

C. Particular attraction excursions

For example, organized access to a particular historical or cultural site.

D. Excursion distribution

The market for platforms or channels through which cruise passengers purchase excursions.

E. Passenger transportation

Where transportation itself is the contested service.

The appropriate definition depends upon substitution patterns and competitive constraints.

10. Geographic Market

The geographic market can be particularly important.

A cruise excursion market may be:

• a single port;
• a metropolitan area;
• a tourist destination;
• a coastal region;
• several competing Chinese ports.

For example, if a cruise passenger cannot practically substitute an excursion from Shanghai for an excursion from a port several hundred kilometres away, the relevant market may be substantially narrower than the national tourism market.

This is consistent with the Supreme People's Court's approach that market definition must reflect the actual competitive conditions of the particular case.

11. Cruise Line + Excursion Operator Vertical Relationship

The relationship normally looks like:

Cruise line

↓

Excursion wholesaler / destination-management company

↓

Local tour operator

↓

Attraction / transport / activity provider

Competition problems may occur at any level.

Examples

Cruise line → excursion operator

Exclusive supply.

Excursion operator → local guide

Territorial exclusivity.

Cruise line → passenger

Mandatory excursion purchase.

Cruise line → booking platform

Preferential ranking.

Port → cruise operator

Exclusive passenger-access arrangement.

12. Port Access and Essential-Facility-Type Issues

Ports can create particularly difficult competition questions because physical capacity may be limited.

Suppose a port operator gives one cruise company:

• exclusive excursion buses;
• exclusive passenger-terminal space;
• exclusive ticketing counters;
• exclusive access to particular attractions;
• preferential docking schedules.

If competitors cannot reasonably replicate the arrangement, the port operator's conduct may warrant examination under the AML's rules concerning dominant-position abuse or administrative restrictions on competition, depending on the institutional structure.

Article 10 of the AML prohibits administrative organs and organizations exercising public-administration functions from abusing administrative power to eliminate or restrict competition.

13. Self-Preferencing

A modern cruise company may operate both:

1. its own excursion business; and
2. a platform listing independent excursions.

It could theoretically manipulate the platform so that:

Cruise Line's own excursions appear first
Independent operators appear lower.

The legal assessment would consider:

• dominance;
• platform dependence;
• transparency;
• objective ranking criteria;
• foreclosure;
• consumer effects;
• availability of alternative distribution channels.

The 2022 AML expressly recognizes that dominant-position abuse can occur through the use of data, algorithms, technologies and platform rules.

14. Loyalty Rebates and Passenger Exclusivity

A cruise company might offer:

"Passengers who purchase our excursion receive a discount on their next cruise."

Or to excursion operators:

"Operators supplying exclusively to us receive a larger passenger allocation."

Such arrangements require examination of:

• duration;
• conditionality;
• exclusivity;
• market coverage;
• foreclosure;
• incremental efficiency;
• effect on competing providers.

The stronger the cruise line's market position and the larger the foreclosure, the greater the competition concern.

15. Safety and Quality Justifications

Cruise operators have legitimate reasons for controlling excursions.

They may require:

• minimum insurance;
• licensed guides;
• safety certification;
• emergency-response capacity;
• passenger tracking;
• guaranteed return-to-ship arrangements;
• transportation standards.

These requirements can generate efficiencies and protect passengers.

Therefore, competition law should distinguish:

objective safety requirement

from

artificial exclusionary requirement.

A rule such as "all operators must carry specified insurance" is materially different from:

"Only our subsidiary may provide excursions."

16. Contract Duration

Duration is especially important.

Short-term exclusivity

May allow:

• investment recovery;
• coordination;
• quality assurance.

Long-term exclusivity

May make entry difficult by locking up:

• passenger demand;
• port capacity;
• transportation providers;
• attractions;
• local tour operators.

A long-term contract combined with high market power can produce significant foreclosure.

17. Exclusive Port-Attaction Arrangements

Consider:

Cruise Company A obtains exclusive access to a famous tourist attraction for its cruise passengers.

If competing cruise operators cannot obtain comparable access, several competition issues arise:

1. foreclosure of competing cruise operators;
2. foreclosure of independent excursion operators;
3. tying;
4. preferential access;
5. possible abuse of dominance;
6. possible administrative restrictions if government authorities granted the exclusivity.

The Fisherman's Wharf case provides an especially useful analogy because control over an important tourism concession was allegedly used to obtain exclusive business in a related cruise market.

18. Joint Arrangements Between Cruise Lines

Two cruise lines might jointly negotiate excursion services.

This can generate efficiencies through:

• bulk purchasing;
• standardized safety requirements;
• common transportation;
• capacity planning.

But competitors exchanging information about:

• excursion prices;
• commissions;
• passenger volumes;
• future capacity;
• supplier allocation

could create risks under the AML's monopoly-agreement provisions.

Article 16 defines monopoly agreements broadly as agreements, decisions, or concerted practices that eliminate or restrict competition.

19. Information Exchange

A particularly sensitive arrangement would be:

Cruise Lines A, B and C jointly exchange their intended excursion prices and agree on commission rates.

This is fundamentally different from merely sharing objective safety standards.

Potentially sensitive information includes:

• future prices;
• commissions;
• discounts;
• supplier costs;
• passenger allocation;
• planned capacity;
• future bidding intentions.

The competition risk increases when information exchange facilitates coordinated pricing or market allocation.

20. Merger and Acquisition Issues

Suppose a major cruise company acquires:

• a destination-management company;
• a large excursion booking platform;
• a port transfer company;
• an attraction-ticketing business.

The acquisition may constitute a concentration if it involves control as defined under the AML.

The 2022 AML expressly covers concentrations that may eliminate or restrict competition.

A particularly important theory would be:

Cruise line + dominant excursion platform

↓

control over passenger distribution

↓

preferential treatment of affiliated excursions

↓

foreclosure of independent operators.

21. Administrative Monopoly Risk

Cruise tourism frequently involves government-controlled or regulated infrastructure.

Potential actors include:

• port authorities;
• municipal tourism authorities;
• state-owned tourism companies;
• public attraction operators;
• transportation authorities.

If an administrative authority uses regulatory power to require cruise lines or tour operators to use a particular excursion provider, Article 10 and the AML's provisions concerning administrative monopolies may become relevant.

22. Compliance Checklist for Cruise Companies

A cruise operator entering into a Chinese shore-excursion agreement should examine:

23. Hypothetical Example

Assume CruiseCo handles 65% of cruise passengers arriving at Port X.

It enters into a five-year agreement with the largest local excursion operator.

The agreement provides:

1. CruiseCo receives all excursion capacity;
2. the operator cannot sell directly to other cruise lines;
3. CruiseCo receives preferential attraction-entry times;
4. competing operators cannot advertise to CruiseCo passengers;
5. CruiseCo's own excursion packages are promoted first;
6. passengers purchasing independent excursions cannot use certain CruiseCo transfer services.

Competition issues

Relevant market:
Possibly cruise shore excursions at Port X.

Market power:
CruiseCo's passenger share is relevant but not conclusive.

Exclusive dealing:
Potential Article 22(4) issue if CruiseCo is dominant and exclusivity lacks justification.

Tying:
Potential Article 22(5) issue if transfer services are conditioned on excursion purchases.

Discrimination:
Potential Article 22(6) issue if comparable excursion operators receive materially different terms without objective justification.

Platform conduct:
Data, algorithms and platform rules may become relevant under the amended AML.

Efficiency defence:
CruiseCo could argue that exclusivity ensures safety, guaranteed return-to-ship arrangements, capacity reservation and quality control.

The ultimate assessment would depend on evidence concerning market definition, dominance, foreclosure and competitive effects.

24. Key Principles From the Case Law

The combined authorities produce several useful principles:

1. Market share alone is insufficient

Qihoo v Tencent demonstrates the importance of examining competitive constraints and market characteristics rather than mechanically equating market share with dominance.

2. Distribution access can be competitively significant

Fisherman's Wharf demonstrates the importance of access to an important tourism distribution channel and the potential significance of exclusive arrangements.

3. Foreclosure matters

Exclusive dealing becomes particularly significant when competitors lose access to a substantial or strategically important part of demand.

4. Bundling requires competitive analysis

The Tencent litigation shows that the presence of a bundle does not automatically establish unlawful abuse.

5. Platform rules can be legitimate

Weiyuanma v Tencent indicates that a platform operator may impose legitimate operational rules; the competition question is whether the rules constitute unjustified exclusionary conduct.

6. Technology does not immunize exclusion

The Qihoo-related unfair-competition jurisprudence recognizes that technological innovation cannot itself justify improper interference with competitors' legitimate business opportunities.

25. Conclusion

Cruise shore-excursion contracts in China are not inherently anticompetitive. Their legality depends principally on the structure of the relevant market, the parties' market power, the contractual restriction, its duration and coverage, and its actual or likely effects on competition.

The most significant risks arise where a powerful cruise line or port-related undertaking combines exclusive dealing + control of passenger access + scarce attraction/port capacity + tying + preferential platform treatment.

For an examination or legal memorandum, the strongest analytical sequence is:

Relevant Market → Market Power → Contractual Restriction → Foreclosure/Competitive Effects → Justification/Efficiencies → Consumer Effects → AML Liability

The principal Chinese authorities to remember are Qihoo 360 v Tencent and Shenzhen Weiyuanma v Tencent, while Fisherman's Wharf Bay Cruise Corp. v Superior Court is an unusually close comparative authority because it directly concerns cruise/tourism competition, exclusive arrangements and control over a tourism concession. The current AML expressly addresses exclusive dealing, tying, discriminatory terms, monopoly agreements, platform technologies and administrative restrictions on competition.

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