Regulator probes Meituan over claims of monopoly

China’s top market regulator on Monday announced that it has started investigation on Internet giant Meituan for alleged monopoly conduct.

The State Administration for Market Regulation 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.”

The investigation is based on a tip-off, the regulator said.

Tencent-backed Meituan said it will actively cooperate with authorities to improve compliance and protect consumers’ rights. The company’s various businesses were “operating normally.”

Meituan, which competes with Alibaba-backed Ele.me among others, had an estimated 68.2 percent 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.

The investigation comes amid China’s increased supervision of Internet companies suspected of anti-competitive practices.

This month, SAMR imposed a record US$2.75 billion fine on e-commerce giant Alibaba over the same practice and ordered 34 Internet companies, including games giant Tencent and e-commerce firm Pinduoduo, to rectify any anti-competitive practices within a month.

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

Internet giants like Alibaba and Tencent have become hugely profitable on the back of growing Chinese digital lifestyles. But as the platforms amassed hundreds of millions of regular users, concern has risen over their influence in China, where they are used for a huge array of daily tasks.

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 government released anti-monopoly guidelines in February aimed at ending practices such as exclusivity contracts and the heavy use of subsidies to gain market share and squeeze out competitors.