China expands tech anti-trust crackdown with Meituan probe

A file photo of Meituan deliverymen in Beijing. The firm - which competes with Alibaba's Ele.me in food delivery - was found guilty of unfair competition in at least two legal cases earlier this year and ordered to pay compensation, the local media h
A file photo of Meituan deliverymen in Beijing. The firm - which competes with Alibaba's Ele.me in food delivery - was found guilty of unfair competition in at least two legal cases earlier this year and ordered to pay compensation, the local media has reported.PHOTO: AGENCE FRANCE-PRESSE
A file photo of Meituan deliverymen in Beijing. The firm - which competes with Alibaba's Ele.me in food delivery - was found guilty of unfair competition in at least two legal cases earlier this year and ordered to pay compensation, the local media h
Wang Xing

BEIJING • China's government has expanded its anti-trust crackdown beyond billionaire Jack Ma's technology empire, launching an investigation into suspected monopolistic practices by food delivery behemoth Meituan.

The State Administration for Market Regulation (SAMR) is looking into alleged abuses, including forced exclusivity arrangements known as "pick one of two", employing the same language in a probe into Mr Ma's Alibaba Group Holding that ended with a US$2.8 billion (S$3.71 billion) fine.

Meituan recouped early losses yesterday to rise as much as 3.1 per cent after Nomura estimated China's third-largest Internet company may have to fork out over just 4.6 billion yuan (S$940.6 million), based on Alibaba's punishment.

The investigation into Meituan extends Beijing's crackdown beyond Mr Ma's Alibaba and Ant Group, and threatens to chill the ambitions of billionaire founder Wang Xing, one of China's most aggressive entrepreneurs.

The government has become increasingly concerned over the growing influence of tech titans such as Alibaba, Tencent Holdings and Meituan over every aspect of Chinese life, as well as the vast amounts of data they have amassed through providing services like online shopping, chatting and ride-hailing.

The anti-trust campaign has gathered pace in recent weeks, as regulators slapped a record fine on Alibaba, instructed its affiliate Ant to overhaul its business, and ordered 34 of its largest tech companies - including Meituan - to rectify any anti-competitive business practices within one month.

Following the meeting with SAMR, the Beijing-based firm issued a pledge to abide by anti-trust laws, saying it will maintain market order and will not force merchants to "pick one of two" - forcing them to select between Meituan or a rival - through unreasonable methods.

Meituan said in a statement on Monday that it will actively cooperate with the probe and step up efforts to comply with regulations.

It remains uncertain whether regulators will target other aspects of the Chinese company.

The firm, founded by 42-year-old Mr Wang, has long been criticised by rivals and merchants for alleged excesses like forced exclusive arrangements.

Meituan - which competes with Alibaba's Ele.me in food delivery - was found guilty of unfair competition in at least two legal cases earlier this year and ordered to pay compensation, according to local media reports.

The firm had also rejected allegations that it charged onerous commissions to restaurants during the Covid-19 outbreak last year. Alongside Ele.me, Meituan faced an online backlash after several delivery riders were killed or injured while trying to meet strict deadlines.

It was among a handful of operators fined by the anti-trust watchdog last month for giving improper subsidies to expand in the red-hot arena of community e-commerce.

Before the probe, Meituan had said it would raise US$10 billion in a record new share sale by a Hong Kong-listed firm and through an offering of convertible bonds.

The firm had said it will use the funds to boost investments in new technologies like autonomous delivery, as well as for general corporate purposes.

Meituan could join Alibaba and Tencent as the third member of a Chinese Internet triumvirate in five to 10 years, due to the value it creates in food, travel and other services. Mr Wang has described in an online post how he would funnel capital raised towards research that analysts expect to fuel Meituan's foray into the community commerce arena, where buyers in a local neighbourhood enjoy bulk discounts.

The company's shares nearly tripled last year, making it one of the best-performing Chinese technology stocks.

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A version of this article appeared in the print edition of The Straits Times on April 28, 2021, with the headline 'China expands tech anti-trust crackdown with Meituan probe'. Subscribe