The rules are likely to put pressure on companies such as Alibaba, JD.com, Ant Group and Tencent, which dominate e-commerce in China.
China’s market regulator has introduced new anti-monopoly guidelines aimed at Internet platforms, which tighten the existing constraints facing the country’s technology giants.
The new rules, published Sunday, formalize an earlier draft law on monopolistic legislation introduced in November and explain a series of monopolistic practices that regulators intend to tackle.
The guidelines are expected to put new pressure on the country’s leading e-commerce sites, such as the Taobao and Tmall markets of Alibaba Group and JD.com. They will also cover payment services, such as the Alipay from Ant Group and WeChat Pay from Tencent Holding.
The rules, issued by the State Administration for Market Regulation (SAMR) on its website, prevent companies from engaging in a variety of behaviors, including forcing traders to choose between the leading internet players in the country, which has a long practice in the mark is.
SAMR said the latest guidelines would “stop monopolistic behavior in the platform economy and protect fair competition in the market.”
The notice also says it will prevent prices from pricing, limiting technologies and using data and algorithms to manipulate the market.
In a statement for questions and answers accompanying the notice, SAMR said that reports of internet-related anti-monopolistic behavior have increased and that it has challenges in the industry.
‘Hidden’ behavior
“The behavior is hidden, the use of data, algorithms, platform rules and so on makes it harder to discover and determine what monopolistic similarities are,” he said.
China has begun intensifying its investigation into its technology giants in recent months, reversing a once-laissez-faire approach.
The Chinese authorities suspended Ant Group’s initial public offering in November over antitrust issues with payment services firm Ant Group [File: Qilai Shen/Bloomberg]
China’s Politburo, the top decision – making body of the Communist Party, promised in a meeting at the end of last year to strengthen its anti-monopoly efforts in 2021. Less than two weeks after the meeting, China launched an investigation into Alibaba Group Holding. Ltd. in December for alleged monopolistic practices.
These moves follow the dramatic suspension of the initial $ 37 billion public offering plan for its payment subsidiary, Ant Group.
At the time, regulators warned the company about practices that forced merchants to sign exclusive cooperation agreements at the expense of other Internet platforms.
Lawsuits over competition issues have been filed by companies, even as regulators are intensifying their investigation.
ByteDance Ltd last week filed a lawsuit against Tencent Holdings Ltd over alleged monopolies on its WeChat and QQ platforms, raising a dispute between two social media giants. A court in Beijing has agreed to hear the case, a representative of ByteDance confirmed to the Bloomberg news agency on Sunday.
First strike
In one of the first uses of their newly expanded arsenal of rules, Chinese regulators beat online discount retailer Vipshop Holdings Ltd by a fine of 3 million yuan ($ 464,000), the largest to date in the recent tightening.
In a sign that regulators are increasingly willing to use more tools to curb monopolistic behavior in the technology sector, Vipshop has been punished for violating a law that prohibits unfair competition, allowing fines of up to 5 million yuan.
By comparison, other companies fined since the end of last year were fined under China’s anti-monopoly law in 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 developed a system to obtain information about brands that give Vipshop a competitive advantage. He added that Vipshop used its system to influence user choices, transaction opportunities and block sales of specific brands.
The New York-listed Vipshop, which has a market value of about $ 22 billion, said Monday it accepts SAMR’s findings and will strengthen compliance with them.