China’s E-commerce Platforms Alibaba, JD.com, Vipshop Fined Over Pricing Complaints

JD.com, Alibaba’s Tmall and Vipshop were each slapped with a fine of 500,000 yuan (US$77,000). (Source: KrAsia)

China’s market regulator said it fined operators of Alibaba’s Tmall, JD.com and Vipshop for mispricing products in November and early December, as Beijing steps up regulation of the e-commerce sector.

The companies were each slapped with a fine of 500,000 yuan (US$77,000) — the maximum for price irregularities.

The State Administration for Market Regulation (SAMR) said Wednesday it launched an investigation into the three platforms after receiving complaints from customers.

The clients accused the companies of raising the prices of products before offering discounts during online shopping events on Singles’ Day and in December, the regulator said, as well as of false promotions and bait-and-switch selling, which happens when a product is advertised at a bargain price, but is not available for sale in reasonable quantities.

For example, popular Kangshifu (康师傅) instant noodles were priced at 12.5 yuan on Tmall following a promotion campaign on Nov. 14, but in fact, the price was no different than that on Nov. 12 and Nov. 13.

On JD.com, toilet paper from Vinda was retailed “at a heavily discounted price” for 79.9 yuan on Nov. 3, but the price was actually a 2 yuan jump from the day before.

On Vipshop, products tagged with the claim “cheapest out of all e-retailers” constitutes false advertising as the operators could not provide supporting material to verify the claim.

The fines were issued to the three companies on December 24, the same day the market regulator announced an anti-trust probe into Alibaba over alleged anti-competition practices – mainly for its “choosing one from two” policy, in which merchants are forced to sell on its platforms exclusively and are prevented from doing business on rival e-commerce platforms such as JD.com and Pinduoduo.

Vipshop, backed by Tencent, said in a statement late Wednesday it would comprehensively address the matter in accordance with the regulator’s requirements and further standardize its business operations to protect the rights and interests of consumers.

JD.com also issued a similar statement on Thursday saying it is actively rectifying the issue in strict accordance with the requirements of relevant departments.

China’s anti-trust watchdog in November unveiled regulations that would seek to curb anti-competitive behavior such as compulsory collection of user data, price discrimination among customers, alliances that squeeze out smaller rivals and over-subsidizing services to eliminate competitors.

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