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Meituan turns into second Chinese language tech large to be hit with antitrust probe

China’s market regulator has opened its second-ever antitrust investigation right into a home tech large, focusing on Meituan, the takeaway supply and life-style companies platform, in an escalation of its crackdown on large web firms.

The investigation, introduced on Monday, comes two weeks after the identical physique fined Alibaba a report $2.8bn after concluding that the ecommerce group had abused its market dominance.

It additionally comes only one week after Meituan raised $10bn in an fairness and debt deal, one of many largest capital fundraisings for a Chinese language web group this 12 months.

Over the previous few months, Beijing’s State Administration for Market Regulation (SAMR) has been increasing its affect into the beforehand untouched home on-line sector by issuing new investigations, penalties and guidelines.

Earlier this month, Meituan and 33 different tech firms had been introduced in entrance of SAMR and different regulators, and given a deadline of Could 13 to rectify anti-competitive behaviours, or be “severely punished”.

“A proper investigation means an escalation. It’s extremely doubtless that authorities have some concrete proof that Meituan might have violated the regulation,” mentioned Charles Feng, a Beijing-based lawyer at East & Harmony Companions.

Meituan responded on its public WeChat account that it could “actively co-operate with the investigation . . . and sincerely perform our social tasks”, including that at current, operations had been persevering with as regular.

In a reversal of fortunes, Alibaba’s takeaway unit Ele.me stands to learn from the Meituan case because it occupies a a lot smaller portion of the meals supply market.

Meituan faces the identical introduced fees as Alibaba, with SAMR citing Meituan’s “‘decide certainly one of two’ and different suspected monopolistic practices” as the premise for its investigation. If discovered responsible, Meituan might be fined as much as 10 per cent of its home revenues, which totalled Rmb114.8bn ($17.7bn) in 2020.

“Decide certainly one of two”, or pressured exclusivity, was beforehand practised by Alibaba when it penalised some retailers for itemizing on rivals’ marketplaces in addition to itemizing by itself.

Distributors say that Meituan practises a much less extreme model of pressured exclusivity than Alibaba, through which it takes much less fee from distributors that checklist solely on its platform. One Shenzhen-based diner proprietor mentioned he paid 22 per cent fee on gross sales to Meituan as a result of he had signed a contract agreeing to exclusivity; in any other case, he would face fee of greater than 25 per cent.

An individual near the $10bn deal introduced final week mentioned that the danger of an antitrust crackdown on Meituan was extensively recognized and “no investor might declare they did not find out about it”.

Market buyers didn’t react strongly to the announcement, with Meituan’s shares dipping 0.46 per cent in Hong Kong.

Meituan had additionally been certainly one of a gaggle of meals supply companies criticised by market regulators in December for providing steep reductions on groceries, as a part of a increase in neighborhood group-buying.

In addition to eliminating pressured exclusivity, Meituan has beforehand been requested by SAMR to cease algorithmic worth discrimination and overly steep reductions.

Further reporting by Nian Liu in Beijing and Qianer Liu in Shenzhen

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