Baidu has been accused of abusing its dominant position online to "punish" a company that cut back spending on advertising with the Internet search engine.

Tangshan Renren Information Service Company (TRISC) yesterday said Baidu had "monopolized the Chinese search engine market", demanding more than 1.1 million yuan ($160,000) in compensation after one of its subsidiary websites was blacklisted.

It is believed to be the first case to deal with an alleged breach of the Anti-Monopoly Law, which came into effect this month. The suit opened at Beijing No. 1 Intermediate People's Court yesterday but a verdict was still pending.