SOURCE / COMPANIES
China’s top market watchdog launches an investigation into Tencent-invested online discount retailer vip.com over alleged unfair competition
Published: Jan 14, 2021 11:09 AM

Vipshop Photo: VCG





China's top market watchdog has launched an investigation against online discount platform vip.com over alleged unfair market competition, a move which analysts said sends a clear signal that Beijing will resolutely double down anti-monopoly effort on the internet industry irrespective of the size of the platform. 

The State Administration for Market Regulation (SAMR)'s move was based on tip-offs, the Xinhua News Agency reported. Vip.com was founded in 2008, specializing in selling discounted handbags, cosmetics products, and baby products. It was listed in the New York Stock Exchange in 2012. Chinese internet giant Tencent is also an investor in vip.com.

In response, Vip.com said it will actively cooperate with the regulator's investigation.

The move follows a slew of  anti-monopolistic investigations against a number of Chinese internet platforms including Alibaba, Tencent-backed online literature platform China Literature and express locker solutions provider Shenzhen Hive Box Co. In December, the three firms were fined 500,000 yuan ($76,465) each for breaching the country's Anti-monopoly Law.

China's top financial regulatory authorities also launched a high-profile antitrust probe into Alibaba's financial arm Ant Group, after the group's dual listing in Shanghai and Hong Kong was halted on November 3 amid regulatory changes.

According to a commentary published on one of Xinhua's WeChat accounts, the recent probe into various internet firms, ranging from digital giants which have business interests across various sectors to e-commerce platforms whose transaction volumes are relatively small, signals that all players follow the same market rules regardless of their size.

The recent probes will exert a profound effect on the industry and play a role in guiding enterprises to self-check if they have complied with regulations and whether their actions fall within legal scopes, according to the commentary. 

"Issues involving unfair competition have been rising, such as blocking ads online, harnessing big data to take advantage of platform members and cutting employee welfare," said the commentary. It noted that unfair practices, which lead to monopoly, will deprive its rivals of the ability to compete and erode the founding for a healthy market economy. 

While the cost of rectifying unfair competition may seem high, the "hidden cost" for the society as a whole could be immeasurable because the actions sacrifice competition order and public benefit, the commentary said.

During a tone-setting Central Economic Conference in December, top Chinese officials stressed that strengthening anti-monopoly and preventing disorderly expansion of capital will be the top priorities for 2021.


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