China regulates community group buying, cautions against monopoly behavior
By Huo Li
China's market regulator on Tuesday issued a list of restrictions on community group-buying operations, tightening oversight on low-price competition emerging in the sector.
China's State Administration for Market Regulation (SAMR) vows to maintain a fair market competition environment, while pointing out that the current price war has squeezed employment and caused other issues.
Community group-buying offers local residents discounts when they make purchases in bulk. The approach has grown in popularity among Chinese buyers. Neighboring residents would usually create a social media account to place orders together, most often groceries, for delivery to one location.
Representatives from China's internet giant Alibaba Group, Tencent Holdings, JD.Com Inc, Meituan, Pinduoduo Inc and Didi Chuxing participated in a Tuesday meeting held by the SAMR.
Many of the prohibitions point to relevant provisions in the China's draft Anti-Monopoly Law. The draft rules was unveiled in November relating to the country's online economy. The State Council then approved the establishment of an inter-ministerial committee, aiming to enhance efforts to combat unfair competition.
"It is strictly forbidden to dump goods at prices below cost for the purpose of squeezing out competitors or monopolizing the market," SAMR wrote in a note published on its website.
It reiterated prohibition of the abuse of market dominance, like predatory pricing. The regulator added that service agreements on platforms cannot be used to impose "unreasonable" restrictions on the transactions, such as on transaction prices, transactions among operators, and charge unreasonable fees from operators on the platform.
It also emphasized the protection of consumer information.
(Cover: People seen picking up groceries in front of a community group buying pickup location in China's northern city of Tianjin, December 19, 2020. /CFP)