China Targets Food Delivery Subsidies and Price Wars
- tech360.tv
- 5 minutes ago
- 2 min read
Chinese authorities have introduced draft regulations to curb the misuse of subsidies by food-delivery platforms, aiming to address intense competition within the sector. The State Administration for Market Regulation (SAMR) identified several banned practices in a recent statement.
The proposed rules prohibit platforms from using subsidies to disrupt the market or selling goods at a loss. They also ban "long-term, large-scale" subsidies that hamper market competition or disrupt market order.
Platforms will be barred from forcing merchants to participate in subsidy activities or making them bear associated costs. Engaging in monopolistic or unfair competition, and pricing goods below cost, are also prohibited under the draft regulations.
Under the new framework, platforms must make public disclosures. These include details both before launching a subsidy campaign and after its completion, outlining legal obligations and liabilities related to such activities.
Major industry players, including Meituan, Alibaba’s Taobao Shangou, and JD.com, have expressed support for the proposed regulations. Meituan stated that "irrational competition in the food-delivery industry, such as long-cycle, large-scale subsidies, has disrupted normal market order."
This move promotes the healthy development of the sector and aligns with broader regulatory efforts against food-delivery platforms. Authorities have increased scrutiny over food safety, employment benefits, and price wars.
In April, the SAMR fined seven e-commerce and food-delivery platforms USD 532.7 million (3.6 billion yuan). This penalty was for failing to verify food-vendor licences and knowingly allowing unverified "ghost" catering services to operate.
Retail and food-delivery leaders Pinduoduo, Meituan, and JD.com were among those cited in connection with these violations.
Chinese authorities are cracking down on "irrational" food-delivery subsidies and price wars.
The State Administration for Market Regulation (SAMR) introduced draft rules banning specific subsidy practices and merchant coercion.
Platforms must now publicly disclose details of subsidy campaigns.
Source: SCMP