China’s antitrust regulator fined local services platform Meituan 3.44 billion RMB ($534 million) on Friday. In the meantime, the company is also ordered to return another 1.29 billion RMB ($200 million) of deposits acquired through “abusive market practices” and to “comprehensively rectify” its operations.
Meituan’s penalty follows up a month-long anti-monopoly investigation launched in April. It concluded that this delivery giant compelled restaurants to sell exclusively on its platform, violating the country’s Anti-Monopoly Law. This violation is then further explained as using multiple illegitimate means, including varying fee levels and slowing down the approval process, as well as taking advantage of consumer data and platform algorithms, to force restaurant owners to sign for exclusivity arrangements.
As a piece of background information, in China, businesses that are found guilty of abusive market practices will face two punitive measures – to confiscate the illegal gains and also being fined 1% to 10% of its overall revenue from last year. The 3.44 billion RMB (($534 million) faced by Meituan makes up 3% of its domestic revenue in 2020, which is in line with the antitrust rules.
Apart from the financial penalty, Meituan is required to report to the authorities over the next three years – how well it is doing to rectify operations so that the legitimate rights of the restaurants’ owners and its delivery workers are protected.
Meituan’s case marks another big move in the antitrust crackdown in China, following Alibaba’s record fine of 18.23 billion RMB ($2.83 billion) in April. Media in China interprets this administrative penalty as proof of a long-run tightening monopolies regulation in the internet industry.