Fair competition is the key to Internet companies improving services, and the judicial and administrative bodies have an important role to play in ensuring a level playing field, a leading web entrepreneur said.

If two Internet companies are in conflict over a certain issue, the courts are the best place to decide the outcome, said Zhang Chaoyang, better known as Charles Zhang, the founder and chairman of Sohu, one of China's biggest Internet portal owners and video site operators.

"A fair verdict will push them to develop and set an example for the industry", he said.

In Zhang's eyes, fair competition is the foundation stone for development in the industry and litigation is the best route for Internet enterprises to resolve disputes.

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"What we need is not blind appeals or compromise solutions, since these options will not reveal what is the root of the problem. Instead, we need courts to point out whose rights must be supported and who should pay compensation, and this will benefit the industry," he said on Thursday during a two-day seminar, organized by the State Internet Information Office.

He praised copyright protection for online videos, saying that it can inspire video makers to produce better quality work.

"There are many problems in the industry that are difficult to resolve, at least initially. For example, a product on a personal computer may block the use of a particular software. Is this unfair competition? If we don't go to court, we won't know."

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But a lawsuit can be costly, both in terms of money and time "so it may be more practical to establish a special committee or institution to examine the case".

"After all, arbitration or mediation through a special committee will get a result more quickly than a lawsuit," he added.

In late August, Yang Yuanqing, chairman and CEO of Lenovo, called on Internet companies to enhance their self-discipline. "Otherwise, the industry will break down," he said.

Such self-discipline is essential to ensure fair competition, Yang said.

Ma Huateng, founder of Tencent Holdings, said that the country has made progress on Internet regulations in recent years, adding that the legal route is often the best way to solve disputes.

Regulations should be updated in accordance with the industry's development, he added.

Zhang Chaoyang suggested that the State Internet Information Office, the sector's watchdog, should also come up with rules and guidelines regarding ways to tackle disputes.