China launches antitrust investigation into food delivery giant Meituan

Meituan home delivery antitrust
Motor bike with Meituan food delivery case. Image by Freer Law | Bigstockphoto

BEIJING (Reuters) -China launched an antitrust investigation into food delivery giant Meituan, the market regulator said on Monday, the latest target in a crackdown on the country’s sprawling internet platform economy.

The State Administration for Market Regulation (SAMR) said in a statement that its investigation was focused on the practice whereby a company forces vendors to use their platform exclusively, known as “choose one from two”.

Tencent-backed Meituan, which this month raised $10 billion in a stock and convertible bonds sale, said in a statement it would cooperate with the investigation and that its business was operating normally.

This month, SAMR imposed a record $2.75 billion fine on e-commerce giant Alibaba over the same practice and summoned 34 internet firms including Meituan to tell them to learn from Alibaba’s penalty and not use banned practices.

Meituan, which competes with Alibaba-backed among others, had an estimated 68.2% 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.

China has in recent months taken measures to rein in its once loosely-regulated internet economy in a clampdown backed by President Xi Jinping that has rattled the industry.

Zheng Wei, a 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.

He told Reuters that “regulators aim to prevent internet platforms from using their dominant position to exert influence over governance, including legislative and judicial process.”

Reuters reported in April that SAMR was adding staff and other resources as China revamps its competition law with proposed amendments including a sharp increase in fines and expanded criteria for judging a company’s control of a market.

In March, Meituan was among five backers or owners of community group-buying platforms fined by SAMR over “improper pricing behaviour” related to subsidies.

(Reporting by Tony Munroe and Yingzhi Yang; Editing by Louise Heavens and Edmund Blair)

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