Regulator opens probe into Meituan over antitrust rules

China’s top market watchdog said Monday that it has started an investigation into food-delivery giant Meituan, continuing the country’s crackdown on the platform economy.  

Why it matters: Beijing has stepped up antitrust regulations in recent months, prompting tech majors including Tencent, Didi Chuxing, and Alibaba’s grocery unit to pledge compliance with anti-monopoly practices and fair competition rules. 

• The investigation into Meituan follows a record-breaking fine of RMB 18.2 billion ($2.8 billion) levied on Alibaba on April 10 for antitrust violations. Alibaba said in response that it would end the practice of forced exclusivity and spend billions to lower merchant costs. 
• Beijing had issued on March 12 smaller fines of RMB 500,000 ($76,095) on 12 Chinese companies over 10 investment deals in violation of the country’s Anti-Monopoly Law. These include Alibaba, Tencent, Didi Chuxing, Baidu, JD.com, ByteDance, Meituan, and Suning. 

Details: The State Administration for Market Regulation (SAMR), China’s top market watchdog, said in a one-line statement on Monday that it is investigating the Tencent-backed platform for antitrust violations—namely, forced exclusivity. 

• Meituan said in a statement on Weibo that the company would cooperate with the investigation and that business is currently operating normally.
• The Weibo statement reiterated Meituan’s pledge to comply with SAMR rules—along with 33 peers from April 14 to 16—in which it emphasized “protecting consumer rights” and “improving compliance management.”
• Forced exclusivity, or “choose one out of two,” is a practice in which platforms force merchants to use only one company’s platform or services. 

Context: Food delivery platform Meituan has emerged as one of the frontrunners in China’s red hot community group-buy market after launching Meituan Youxuan on July 7. 

• SAMR’s increased regulation of the tech sector includes closer scrutiny of community group buy businesses. The regulator levied fines of RMB 1.5 billion on five companies, including Meituan Youxuan, on March 3. Beijing also summoned Meituan alongside other tech giants including Alibaba, JD.com, Tencent, Pinduoduo, and Didi, for a meeting in December to discuss oversight of the group-buy industry. 
• Community group buying is a platform-based grocery service that employs a network of organizers who coordinate selling products to their neighbors. By combining individual orders into bulk shipments, group-buy companies can offer lower prices to customers.