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China Fines Delivery Giant Meituan $527m For Monopolistic Abuses

Meituan “abused its dominant market position in China’s online food delivery platform market,” said the State Administration of Market Regulation.

Meituan delivery drivers are seen in this AFP file photo from May 2021.

 

China fined food delivery giant Meituan 3.4 billion yuan ($527 million) for monopolistic practices and ordered it to undertake a “comprehensive rectification,” the market watchdog said on Friday.

Authorities have launched a crackdown on a range of homegrown tech behemoths – including Meituan, ride-hailing giant Didi Chuxing and e-commerce titan Alibaba – for alleged monopolistic behaviour and aggressive harvesting of consumer data.

Meituan has been under fire since market regulators launched an investigation into the group in April, with particular scrutiny paid to the working conditions of its millions of delivery drivers, who are often employed as third-party contractors without legal protections or worker benefits.

On Friday the State Administration of Market Regulation (SAMR) said in an online statement that an investigation had concluded the group had “abused its dominant market position in China’s online food delivery platform market.”

It added that Meituan’s behaviour “eliminates and restricts market competition… weakens platform innovation power” and “damages consumers’ interests”.

The 3.4 billion RMB fine is equal to 3% of Meituan’s 2020 domestic sales, the watchdog said.

It is just the latest home-grown tech giant to come under Beijing’s scrutiny.

E-commerce behemoth Alibaba was hit with a record $2.78 billion fine by the market regulator in April, when a separate investigation said it had been abusing its dominant market position.

 

Labour Protections

Chinese authorities have since ordered online food delivery platforms to guarantee basic labour protections for delivery riders, such as a base income above minimum wage and access to insurance coverage.

Regulators in September ordered Meituan’s ride-hailing arm – along with 10 other car platforms – to stop “disorderly expansion” and “vicious competition” tactics.

Tech firms have been battered in recent months as Chinese regulators tighten the leash, citing data security and antitrust concerns.

Meituan shares plunged 14% in July after new rules were issued to protect hard-pressed drivers and ensure workers’ incomes are above minimum salary levels.

 

Online Payments Under Scrutiny

Meanwhile, China will strengthen supervision of the online payments industry and continue its anti-monopoly crackdown, the governor of the central bank said, indicating Beijing will press ahead with a regulatory crackdown on the country’s technology giants.

The drive is part of a wider policy by the government to tighten its grip on the world’s number two economy, including targeting private education, property and casinos.

“We will continue to cooperate with anti-monopoly authorities to curb monopolies and actively deal with algorithm discrimination and other new forms of anti-competition behaviours,” People’s Bank of China governor Yi Gang said on Thursday in a keynote speech at a Bank for International Settlements conference.

He added that the central bank will strengthen supervision of the payments industry and ask all financial services companies to be licensed.

“Top platform companies in China have acquired massive data from users,” said Yi, adding that their “winner-takes-all nature … could lead to market monopoly and compromise innovation efficiency”.

Chinese regulators in September ordered sweeping changes to the country’s biggest payment app Alipay, as the ruling Communist Party attempts to rein in the “unruly growth” of tech giants.

Alipay – with more than one billion users in China and other Asian nations – was told to spin off its profitable micro loan business, the Financial Times reported.

A record-breaking $37 billion IPO by its parent company, Ant Financial, was scrapped at the last minute by regulators in November 2020, after founder Jack Ma criticised officials for stifling innovation. Ant Financial is the fintech arm of Alibaba.

Ma’s business empire has been targeted in a wider crackdown on tech firms aimed at breaking monopolies and strengthening data security, which has wiped billions off companies’ valuations.

 

• AFP with additional editing by Jim Pollard

 

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Beijing out to kill abuses by its tech giants

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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