Chinese food delivery platform Meituan was fined CNY3.44 billion, or 3% of its 2020 domestic revenue, for monopolist practices by China's top market regulator, the State Administration for Market Regulation (SAMR). The company was also ordered to immediately stop illegal activities and refund CNY1.29 billion of deposits for exclusive cooperation to contracted vendors. An administrative instruction urged the platform to rectify its commission charges, and ensure that the legal rights of small- and medium-sized vendors and food delivery personnel are protected. The company was required to submit compliance reports to the SAMR for three consecutive years.
China's market watchdog in April began an antitrust probe into Tencent-backed Meituan based on the country's anti-monopoly law. The investigation found it had abused its dominant market position since 2018, forcing vendors to sign exclusive cooperation agreements by implementing discriminatory rates and postponing the opening of online stores. Meituan also charged exclusive cooperation deposits and punished vendors who did not use its payment services. Such moves eliminated and restricted market competition, hindered the free flow of market resources and hurt the legal rights of vendors and consumers, the SAMR said. Meituan said it would stop forcing vendors to use its platform exclusively, a practice which is known as “choosing one from two.”
The penalty on Meituan marks the second-biggest fine in the Chinese platform economy since Alibaba was fined a record USD2.8 billion antitrust fine in April by regulators for exclusionary practices. The amount was about 4% of the company's domestic sales in 2019. Under China's anti-monopoly law, Chinese regulators could fine companies between 1% and 10% of their revenue in the previous year if they engage in monopolistic practices. Market observers said that the 3% fine is “relatively mild,” showing that the Chinese regulator is not resorting to a “one-size-fits-all” approach.” Chinese companies were slapped with an average 3.67% fine on their revenue in the previous year in anti-monopoly probes between April 2012 and June 2020.
In April, the SAMR summoned 34 internet firms, including Alibaba, Tencent, Baidu, JD.com, Meituan and Pinduodo, urging them to rectify the practice of “choosing one from two.” Fang Xingdong, Founder of Beijing-based technology think tank ChinaLabs, told the Global Times that Meituan's case had less social impact and therefore the fine was lower than the one imposed on Alibaba. “The case of Meituan also carries a special weight as it shows the Chinese government's concern for workers and delivery riders. Technologies are supposed to improve their livelihood, rather than to take advantage of and exploit them,” Wang added.
