After Alibaba, China Extends Its Big Tech Crackdown by Opening Antitrust Probe into Meituan

(Source: Visual China)

The Chinese government announced on Monday that it has launched an anti-monopoly investigation into food delivery giant Meituan, stepping up its campaign aimed at reining in the power of the country’s big tech groups.

The State Administration for Market Regulation carried out the probe amid reports that Meituan had engaged in suspected monopolistic conduct including forcing merchants to use its services exclusively – a practice known locally as “pick one of two” – according to a statement posted on the watchdog’s website.

Meituan, the country’s third-largest internet company, said in a statement that it will actively cooperate with regulators and redouble its efforts to comply with rules, adding that its businesses will be operating normally in the meantime.

The food delivery behemoth is the latest target of Beijing’s intensifying anti-monopoly action against the country’s tech titans, a development that picked up steam after officials abruptly halted Ant Group’s $34.5 billion IPO last November. Earlier this month, regulators imposed a record $2.8 billion fine on Alibaba for anti-competitive behavior, demanded its fintech subsidiary Ant Group receive supervision of the central bank, and ordered 34 major Chinese internet companies – including Meituan – to publicly promise to follow antitrust regulations.

According to China’s anti-monopoly law, Meituan could face a penalty of up to 10% of its annual turnover if regulators determine that it violated rules. The firm reported 114.8 billion yuan ($17.7 billion) in revenue for 2020. Alibaba received a $2.8 million fine, representing about 4% of the company’s 2019 revenue.

SEE ALSO: Baidu, ByteDance and JD.com Pledge to Comply with Antitrust Rules after Regulators Ask for Compliance with Alibaba Case

Meituan’s Hong Kong-listed shares rose 2.62% to HK$313 ($40.3) on Tuesday after analysts estimated the company may only have to pay a fine of 4.6 billion yuan ($709.1 million) based on Alibaba’s case. “We expect a limited impact on Meituan’s business,” Nomura analysts Thomas Shen and Jialong Shi wrote in a research note on Monday.

Besides food delivery, Meituan’s businesses include restaurant reviews, hotel booking and community group buying, which allows buyers living in the same neighborhood to obtain discounts by purchasing in bulk and is currently the hottest e-commerce sector in China. In March, Meituan’s community group buying platform Meituan Select was fined 1.5 million yuan ($232,000) by regulators, on allegations of price dumping and cheating.