On 8 Oct. 2021, the State Administration for Market Regulation (SAMR) announced an administrative penalty decision on the grounds that Meituan had abused its dominant market position within the Chinese online food delivery service market, in violation of the Anti-monopoly Law of the People’s Republic of China(中華人民共和國反壟斷法)(Anti-monopoly Law).
The SAMR ordered Meituan to stop its unlawful acts and fully refund the exclusive cooperation deposits of CNY 1.289 billion. In addition, it was imposed a fine of CNY 3.442 billion (approx. USD 530 million), representing 3% of its revenue generated within China in 2020.
At the same time, the SAMR issued an Administrative Guidance Letter (“the Letter”), instructing the company to rectify its commission charging mechanism and algorithm rules as well as to protect the lawful rights and interests of small and medium-sized catering businesses and delivery riders in the platform. The Letter also requires the company to submit a self-assessment and compliance report to the SAMR for three consecutive years.
According to the SAMR’s investigation, Meituan has abused its dominant market position within the Chinese online food delivery service market since 2018. The company forced its merchants into exclusive cooperation agreements by charging differential rates and slowing down their approvals to list on the app.
Meituan also required its merchants to “pick-one-from-two” among Meituan and other rival platforms by charging exclusive cooperation deposits, adopting algorithms, data, and other technical means as well as various punitive measures.
All of the above acts constitute an abuse of a dominant market position under Article 17 of the Anti-monopoly Law, as they have forced, “without justifiable reasons”, their trading counterparts to make transactions exclusively with themselves”. As a matter of fact, these acts have eliminated and restricted competition in the relevant market, hindered the free circulation of market resources, weakened the platform’s motivation to innovate and develop, and harmed the lawful rights and interests of merchants and consumers in the platform.
Cover Photo by Bangyu Wang on Unsplash
Contributors: CJO Staff Contributors Team
