The rules are likely to put pressure on companies such as Alibaba, JD.com, Ant Group and Tencent, which dominate e-commerce in China.
China’s market regulator has released new anti-monopoly guidelines for internet platforms, tightening the existing restrictions facing the country’s technology giants.
The new rules, released on Sunday, formalize an earlier anti-monopoly bill published in November and clarify a range of monopolistic practices that regulators want to tackle.
The guidelines are expected to put new pressure on the country’s leading e-commerce sites such as Alibaba Group’s Taobao and Tmall marketplaces and JD.com. They will also cover payment services such as Alipay from Ant Group and WeChat Pay from Tencent Holding.
The rules, published on its website by the State Administration for Market Regulation (SAMR), deter companies from a range of behaviors, including forcing merchants to choose between the country’s best internet players, a long-standing practice in the market. .
SAMR said the latest guidelines would “stop monopolistic behavior in the platform economy and protect fair competition in the marketplace”.
The announcement also said it will stop companies from setting prices, throttling technologies and using data and algorithms to manipulate the market.
In a Q&A comment on the notice, SAMR said reports of Internet-related antimonopoly behavior had increased and it faced challenges in regulating the industry.
‘Hidden’ behavior
“The behavior is more disguised, the use of data, algorithms, platform rules, etc., makes it more difficult to discover and determine what monopoly agreements are,” he said.
In recent months, China has begun to tighten controls on its technology giants, reversing a once-laissez-faire approach.
Chinese authorities halted the USD 37 billion IPO of the $ 37 billion payment company Ant Group in November over antitrust concerns [File: Qilai Shen/Bloomberg]
China’s Politburo, the Communist Party’s main decision-making body, pledged in a meeting late last year to step up anti-monopoly efforts in 2021. Less than two weeks after the meeting, China started an investigation into Alibaba Group Holding Ltd. in December for alleged monopolistic practices.
Those steps followed the dramatic suspension of the $ 37 billion initial public offering plan from its payments partner, Ant Group.
At the time, regulators warned the company against practices including forcing merchants to sign exclusive partnership agreements at the expense of other internet platforms.
Companies have filed lawsuits over competition issues even as regulators step up scrutiny.
ByteDance Ltd last week filed a lawsuit against Tencent Holdings Ltd over alleged monopolies in its WeChat and QQ platforms, escalating a feud between two giants of Chinese social media. A Beijing court has approved the case, a ByteDance representative confirmed to Bloomberg news agency on Sunday.
First strike
In one of the first applications of their recently expanded arsenal of rules, Chinese regulators beat online discount store Vipshop Holdings Ltd with a 3 million yuan ($ 464,000) fine, the highest to date in the recent restriction.
As a sign that regulators are increasingly willing to use more tools to curb monopolistic behavior in the technology sector, Vipshop was punished for violating a law prohibiting unfair competition, which allows fines of up to 5 million yuan.
In comparison, other companies that have been sanctioned since late last year have been fined under China’s 2008 Antimonopoly Law, which allows a much lower maximum fine of 500,000 yuan ($ 77,323).
SAMR said Monday that from August to December last year, Vipshop had developed a system to obtain information about brands that gave Vipshop a competitive advantage. It added that Vipshop used its system to influence user choices and transaction options and to block the sale of certain brands.
New York-listed Vipshop, with a market value of about $ 22 billion, said Monday it accepted SAMR’s findings and would bolster compliance.