Chinese regulator launches antitrust probe into Meituan, as crackdown on monopolies widens
Published: Apr 26, 2021 07:21 PM
A Meituan food delivery driver is seen in Beijing in February. Photo: cnsphoto

A Meituan food delivery driver is seen in Beijing in February. Photo: cnsphoto

China's largest online food delivery platform Meituan is under investigation for suspected monopolistic practices, the country's top market regulator said on Monday - making the company the next internet giant after Alibaba to face such a probe as China further steps up its crackdown on monopolies.

In a notice, the State Administration for Market Regulation (SAMR) said that it launched an investigation of Meituan for suspected monopolistic practices including forced exclusivity arrangements, known as "choose one of two."

The SAMR did not provide further information regarding the probe. 

"Regardless of the outcome of the investigation, the crackdown is a necessary step in fostering platforms' development in a sound, rapid and sustainable way," Zhang Yi, CEO of iiMedia Research Institute, told the Global Times on Monday.

"The absence of order in the sector's expansion in recent years has created disorder in the market and heightened risks, and this sort of a food-delivery market is unhelpful to the development of the catering industry and consumer experience," Zhang said.

In response to the investigation, Meituan said on Monday that it would actively cooperate with the SAMR and further improve its management in terms of compliance to safeguard users' and other entities' interests. The business operations remain normal, it said.

"The company could face the same kind of penalty as was imposed on Alibaba a few weeks ago, depending on whether the investigation finds the company accountable, and the extent of its violations," Zhang said.

The regulator imposed a record $2.8 billion fine, or 4 percent of its domestic sales revenue in 2019, on Alibaba on April 10 for monopolistic conducts, including abusing its dominant market position and forcing merchants to choose one of two platforms.

However, unlike Alibaba, Meituan's business offers jobs to people with low skill sets and runs on a thin margin, and regulators may factor in those situations, according to Zhang.

Chinese market regulators began to step up their crackdowns on monopolistic behavior and unfair competition in 2020. The probe of Meitian is another step in the SAMR's crackdown on monopolies in the platform economy. 

The SAMR on April 13 told 34 platforms including Tencent, Alibaba, Baidu and Meituan to stand in awe of the rules and undertake comprehensive rectification of their monopolistic acts, and tax-related irregularities or violations, within one month. 

Liu Weijin, head of the SAMR's certification and supervision department, said on April 15 that the SAMR will enhance its efforts on antitrust investigations to meet merchants' desire for a fair market environment and protect consumers' interests.

The SAMR will further increase its ability in the area of anti-monopoly regulation and improve its anti-monopoly governance system, Liu said.