Five Chinese community group buying firms fined for unfair price war
The community group buying apps installed on user's smartphone. /CFP

The community group buying apps installed on user's smartphone. /CFP

Five Chinese community group buying enterprises were fined on Wednesday for unfair price competition practices, according to China's top market regulator, implicating the country's intensifying regulation on the internet business.

The State Administration for Market Regulation (SAMR) has issued 1.5 million yuan (about $231,965) in penalties to Chengxin Youxuan, Duo Duo Maicai under Pinduoduo, Meituan Youxuan under Meituan, as well as Nicetuan under Beijing Shihuituan Tech Co., respectively, and 500,000 yuan to Wuhan-based Shixianghui.

According to the regulator, to grasp the market, these platforms gave consumers prices lower than costs, which has disrupted market order and hurt the legal rights and interests of other operators.

"If adding up the costs of operation, storage and logistics, the real sales revenue are way smaller than the costs of the goods. [Hence,] they disturb the normal order of production and operation, harm the legal rights of other operators," the SAMR said.

Those big online platforms also tricked consumers into the deal by manipulating prices, according to the SAMR, noting that there is a trend of unfair competition that these large internet platforms acquire market share with low prices and then raise the prices when they monopolize the market.

Community group buying is a popular big e-commerce phenomenon in China. Consumers order daily goods and food on their mobile phones and receive products delivered by internet companies. The prices are often lower than what traditional retailers can offer due to bulk volume purchases, reduction of the middleman, and the subsidies provided by these internet platforms.

Besides starting an investigation on the five platforms from mid-December, the country's top market regulator issued a list of restrictions on community group buying operations in December, aiming to tighten oversight on low-price dumping and unfair competition in the sector.

Read more:

China regulates community group buying, cautions against monopoly behavior

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