Food delivery company Meituan investigated for monopoly conduct
May 4, 2021 Category China News Round-up, Weekly
The State Administration for Market Regulation (SAMR) has started an investigation on food delivery company Meituan for alleged monopoly conduct. It is focussing on the practice whereby a company forces vendors to use their platform exclusively, known as “choose one from two.” The investigation is based on a tip-off, the regulator said. Tencent-backed Meituan said it will actively cooperate with authorities to improve compliance and protect consumers’ rights. The company’s various businesses were “operating normally.” Meituan, which competes with Alibaba-backed Ele.me among others, had an estimated 68.2% share of China’s food delivery market in the second quarter of 2020, according to Trustdata. Meituan’s businesses also include bike sharing, community group buying and restaurant reviews. The investigation comes amid China’s increased supervision of internet companies suspected of anti-competitive practices.
In April, SAMR imposed a record USD2.75 billion fine on e-commerce giant Alibaba over the same practice and ordered 34 internet companies, including Tencent and Pinduoduo, to rectify any anti-competitive practices within a month. In March, Meituan was among five backers or owners of community group-buying platforms fined by SAMR over “improper pricing behavior” related to subsidies. Internet giants like Alibaba and Tencent have become hugely profitable on the back of growing Chinese digital lifestyles. But as the platforms amassed hundreds of millions of regular users, concern has risen over their influence in China, where they are used for a huge number of daily tasks.
Zheng Wei, Partner with Beijing-based law firm Anli Partners, said regulators aimed to reduce the impact of dominant internet players on consumers, employees and smaller firms. The government released anti-monopoly guidelines in February aimed at ending practices such as exclusivity contracts and the heavy use of subsidies to gain market share and squeeze out competitors, the Shanghai Daily reports.
China’s financial regulators also held talks with representatives of 112 other internet firms which have fintech businesses, including Tencent, Du Xiaoman Finance, JD Finance, ByteDance and Didi Finance, on strengthening anti-monopoly supervision and preventing disorderly expansion of capital. Other internet platforms who participated in the meeting include Lu.com, Air Star, 360 Digital Tech, Sina Finance, Suning Finance, Gome Finance and Ctrip Finance.
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