Trip.com Group Photo: VCG

Following China's State Administration for Market Regulation (SAMR)'s penalty and rectification requirements on leading online travel platform Trip.com Group for abusing its dominant market position in violation of the country's Anti-Monopoly Law, the company announced on Saturday 19 rectification measures spanning five areas, including ending exclusive cooperation arrangements and the unreasonable "lowest price" requirements, while strengthening compliance building.

The company will remove both the "special-tier" and "gold-tier" commissioned-distribution cooperation models, eliminate forced exclusivity and lowest-price requirements, terminate the original agreements and establish a new tiered cooperation model with merchants. It will also remove unreasonable traffic-allocation mechanisms and set up a new traffic-allocation mechanism, according to the company's statement.

Trip.com will remove its price adjustment tools and no longer use technical means to illegally adjust prices, while business personnel will be barred from adjusting prices without merchants' explicit consent. In accordance with the SAMR's requirements, the company will refund in full about 122.78 million yuan ($18.13 million) in order reserve deposits to the hotels concerned.

The company pledged to safeguard the lawful rights and interests of hotels, keep listening to merchants' opinions and demands, and continuously improve the business environment - including establishing a fair new commission model, streamlining promotions and fostering sound competition.

The statement further mentioned strengthening consumer rights protection and continuously improving service quality, as well as enhancing compliance building and improving long-term mechanisms by establishing anti-monopoly mechanisms. 

The SAMR on Saturday fined online travel agency Trip.com Group 3.521 billion yuan and confiscated 1.658 billion yuan in illegal gains from its monopolistic practices by abusing its dominant market position, while also ordering it to refund 122 million yuan in deposits deducted from hotels.

The investigation and punishment in the Trip.com monopoly case is another major landmark case in the normalized anti-monopoly regulation of the platform economy, with breakthrough significance in many fields, according to a report by the People's Daily on Saturday.

Notably, the fine was set at a ratio of 7.5 percent - the highest percentage-based fine ever imposed in China's platform-economy anti-monopoly enforcement, exceeding the earlier penalties on Alibaba's 4 percent and Meituan's 3 percent. The confiscation of illegal gains is also a penalty measure not seen in the Alibaba and Meituan cases, Economic Daily reported.

Unlike the compulsory "choose one of two" exclusivity requirements seen in the Alibaba and Meituan cases, Trip.com built a covert control system centered on traffic allocation, the report noted. Hotel operators generally hope to run their business across multiple platforms to gain more transaction opportunities, but Trip.com's control over traffic allocation coerced merchants into abandoning cross-platform operations, squeezing out the survival space of rival platforms, it said.

Trip.com also used technical tools to strip merchants of their pricing power. Its "Price Adjustment Assistant" tool scanned rivals' prices and forced cuts without consent: a hotel in Northwest China's Shaanxi Province was repriced more than 10 times in a single day, while a merchant in East China's Jiangsu Province had the tool forcibly activated nine times, its 480-yuan holiday rate was slashed to 130 yuan, the hotel was then docked points and fined for rejecting orders. "Guapaitong," another tool from Trip.com, deducted money outright when a hotel's price was not at least 5 percent below rivals'. A homestay owner said hidden promotion fees pushed commission rate to as much as 50 percent: "a 200-yuan order leaves us with only about 80 yuan," said the report.

Yang Dong, dean of the Law School at Renmin University of China, said the case marks a key step forward in China's anti-monopoly enforcement against traffic-based monopolistic conduct by platforms. Relying on big data and AI technologies, platform companies have intensively manipulated the transmission and distribution of traffic through various platform rules, treating access to traffic as the price merchants must pay to accept unfavorable trading terms, Yang said, noting that such practices have now been explicitly deemed illegal and will be subject to legal constraints, according to the report. 

Global Times