Timely move to rein in monopolistic behavior

The latest data from the China Academy of Information and Communications Technology showed that the number of digital platforms with a valuation of over $1 billion each hit 197 in China as of the end of last year, up by 23 year-on-year. The number of platform-based companies in China and the United States with a valuation of more than $10 billion each accounted for 84.2 percent of the global total.

Liu Xu, a research fellow at the National Strategy Institute at Tsinghua University, said the nation's market regulators have maintained a generous and inclusive attitude toward the booming internet industry over the past 13 years.

"In terms of publicly filed cases related to market dominance and undeclared operator concentration, the total number of anti-monopoly enforcement cases in traditional industries far exceeded that of the internet industry during the period," Liu said.

The State Administration for Market Regulation, China's top market regulator, imposed a fine of around 3.4 billion yuan ($534 million) on food delivery giant Meituan on Oct 8 for monopolistic behavior.

According to the administration, Meituan had abused its dominant market position since 2018 to compel merchants to sign exclusive agreements with its platform. It also leveraged merchant deposits, algorithms, data and other technical methods to ensure that merchants remained loyal to it.

As part of the punishment, Meituan will be fined 3 percent of its domestic revenue last year. The company will also have to return nearly 1.3 billion yuan in deposits paid by merchants to partner exclusively with its platform.

"The punishment of Meituan vigorously maintains the fair market order of the online take-away market. It also protected the interests of smaller businesses on the platform as it asked the company to return deposits of merchants," said Wang Jian, an expert with the advisory group of the Anti-monopoly Commission of the State Council, China's Cabinet, and a professor of law at Zhejiang Sci-Tech University.

The draft amendment proposed that operators must not abuse data, algorithms, technology, capital advantages and platform rules to eliminate or restrict competition, nor can they organize other operators or provide substantive assistance for other operators to reach monopoly agreements.

It also proposed that operators that misuse data, algorithms, technology and platform rules to create obstacles or impose unreasonable restrictions on other operators will be seen as abusing their dominant market positions for unfair advantage over other market entities.

"These newly added proposals reflect that the difficulties and other problems encountered in the implementation of the Anti-monopoly Law have been improved this time, whether it is for data, algorithms, technology, platform rules, corresponding emerging capital or industries," said Deng Zhisong, a lawyer with the multinational law firm Dentons in Beijing.