SAMR Fines Meituan for RMB3.44bn over Monopolistic Behavior

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SAMR Fines Meituan for RMB3.44bn over Monopolistic Behavior


China’s State Administration for Market Regulation (SAMR) fined food delivery giant Meituan [3690:HK] RMB3.44bn (USD533m) for its monopolistic tactic after a six-month investigation, as reported by Caixin on October 8. The fine accounts for 3% of Meituan’s 2020 domestic revenues, which was RMB114.7bn (USD17.8bn). The investigation found that the company engaged in the “pick-one-of-two” practice, which forces merchants on its platforms to form partnerships and distribute products exclusively. Besides, Meituan also punished those partnering with its competitors by measures such as limiting the merchant’s competitiveness on the platform through its algorithm. On top of the fine, SAMR asked Meituan to return the exclusive partnership guarantee fees to merchants totaling RMB1.3bn (USD200m). In addition, Meituan should report all rectification actions it has taken to SAMR within 15 days and file compliance reports for the next three years.

Meituan is the second major tech company in China recently fined for monopolistic business practices. In December 2020, SAMR launched an investigation in major tech retail platform Alibaba [BABA:US] for engaging in the “pick-one-of-two” practice. Alibaba received a record fine of RMB18bn (USD2.8bn), equivalent of 4% of its 2019 revenues, which was RMB386.8bn (USD56bn). Meanwhile, Meituan still faces ongoing investigations from SAMR in its bike-sharing and mobile charger-sharing businesses. The string of investigations on tech companies is a result of China’s recent campaign to tighten oversight on the country’s tech sector with focus on issues such as adherence to antitrust laws, user protection, and data security. Since November 2020, the campaign has led to major reforms in sectors including e-commerce, fintech, online gaming, and for-profit education. The country’s central bank governor Yi Gang expressed on October 7 that China will continue to curb anticompetitive behaviors in the platform economy.