The rules are likely to put pressure on companies such as Alibaba, JD.com, Ant Group and Tencent that dominate e-commerce in China.
The Chinese market regulator has released new antitrust guidelines aimed at Internet platforms, tightening existing restrictions faced by the country’s technology giants.
The new rules, released on Sunday, formalize an antitrust bill published in November and clarify a number of monopolistic practices that regulators plan to crack down on.
The guidelines are expected to put pressure on the country’s most important e-commerce sites, such as Alibaba Group’s Taobao and Tmall markets and JD.com. They will also cover payment services such as Ant Group’s Alipay and Tencent Holding’s WeChat Pay.
The rules, published by the State Administration for Market Regulation (MRSA) on its website, exclude companies from diverse behavior, including forcing merchants to choose from the country’s best Internet players, a practice of long date in the market.
SAMR said the latest guidelines “would stop monopolistic behaviors in the platform economy and protect fair competition in the market.”
The notice also said it will prevent companies from setting prices, restricting technologies and using data and algorithms to manipulate the market.
In an explanation of questions and answers that accompanied the notice, SAMR said reports of Internet-related antitrust behavior had increased and it was facing challenges regulating the industry.
“Hidden” behavior
“Behavior is more hidden, the use of data, algorithms, platform rules, etc., makes it harder to discover and determine what monopoly agreements are,” he said.
In recent months, China has begun to tighten the scrutiny of its technology giants, reversing a once-in-a-lifetime approach.
Chinese authorities halt $ 37 billion initial public offering from payment services company Ant Group in November over antitrust concerns [File: Qilai Shen/Bloomberg]
The Politburo of China, the top decision-making body of the Communist Party, pledged at a meeting late last year to step up antitrust efforts in 2021. Less than two weeks after the meeting, China began a research on the celebration of the Alibaba Ltd. group. in December for alleged monopolistic practices.
These moves followed the dramatic suspension of the initial $ 37 billion public offering plan by its payment subsidiary, Ant Group.
At the time, regulators warned the company about practices such as forcing merchants to sign exclusive co-operation pacts at the expense of other Internet platforms.
Companies have filed lawsuits over competition issues, even as regulators move to intensify control.
ByteDance Ltd filed a lawsuit last week against Tencent Holdings Ltd for alleged monopolies on its WeChat and QQ platforms, and escalated the dispute between two Chinese social media giants. A Beijing court has agreed to hear the case, a ByteDance representative confirmed to Bloomberg news agency on Sunday.
First strike
In one of the first uses of its newly expanded arsenal of rules, Chinese regulators managed to retail online discount Vipshop Holdings Ltd with a fine of 3 million yuan ($ 464,000), the largest to date of the recent reduction .
As a sign that regulators are increasingly willing to use more tools to curb the monopolistic behavior of the technology sector, Vipshop was punished for violations of a law banning unfair competition, which allows fines of up to 5 million yuan.
In comparison, other companies that have received sanctions since the end of last year were fined under China’s antitrust law of 2008, which allows for a much lower maximum fine of 500,000 yuan ($ 77,323).
SAMR said on Monday that from August to December last year, Vipshop had developed a system to obtain information about brands that gave Vipshop a competitive advantage. He added that Vipshop used its system to influence user choices, transaction opportunities and to block sales of specific brands.
New York-listed Vipshop, which has a market value of about $ 22 billion, said Monday it accepted SAMR’s findings and would strengthen compliance.