New rules aim for platforms' healthy growth

China's latest comprehensive set of rules on regulating pricing practices of internet platforms marks a significant step toward fostering fair competition and promoting innovation and the sound development of the platform economy, while protecting the legitimate rights and interests of consumers, experts said.

They added that the policy development signals the country's firm determination to build a more rules-based and predictable regulatory framework, safeguard an orderly market environment and curb excessive competition.

The rules, jointly released on Saturday by the National Development and Reform Commission, the State Administration for Market Regulation and the Cyberspace Administration of China, place great emphasis on regulating pricing behavior, enhancing transparency and strengthening coordination mechanisms to cultivate a robust platform ecosystem.

The document, which comprises seven chapters and 29 articles, provides clearer guidance on acceptable pricing conduct.

One key focus area is regulation of pricing competition. The guidelines refine regulatory requirements to promote a fair market characterized by "quality products at fair prices".

The rules strengthen protection of merchants' independent pricing rights by explicitly prohibiting platform operators from imposing unreasonable restrictions or attaching unjustified conditions to the pricing decisions of merchants on the platforms.

Furthermore, the rules reinforce transparent pricing requirements, mandate greater disclosure of dynamic and differentiated pricing mechanisms, and tighten oversight of services such as password-free payments, automatic renewals and automatic payments, in a bid to better safeguard consumers' rights to information and choice.

The rules will take effect on April 10. During the interim period, major platform operators are ordered to conduct self-inspections in line with each regulatory requirement to ensure compliance ahead of implementation.

Hong Yong, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation, said the rules set out clear regulatory requirements for the pricing practices of platforms, limit the abuse of algorithms by platforms and protect merchants' independent pricing rights.

"The new rules will drive a shift from price-driven and 'involution-style' competition among platforms to a healthier development path focusing on service quality and differentiated products," Hong said, adding that it will be conducive to safeguarding the rights and interests of consumers and greatly enhancing the transparency of consumption. Involution-style competition refers to a cycle of excessive competition for limited resources.

The move is of great importance in providing a solid foundation for supervision by formulating executable, specific regulations, and effectively curbing issues such as false promotions and big data-based price discrimination, he said.

Zhu Keli, founding director of the China Institute of New Economy, said the new rules explicitly prohibit platform operators from forcing merchants to lower prices by limiting data traffic, and require them to disclose fee-charging standards and promotional rules. This means that platforms need to reconstruct business models and transition toward a high-quality growth method centered on "optimizing supply chain efficiency and enhancing quality of services to gain profits", he said.

Zhu noted that consumers' right to information will be strengthened, as platforms' use of algorithms to implement differential pricing based on user characteristics will be strictly prohibited. The latest move is vital for curbing unfair competition, stimulating platforms to invest more resources in technological innovation and product upgrades, and boosting the healthy and regulated development of the platform economy, he added.

Leading Chinese e-commerce and food delivery platforms, such as JD and Alibaba Group-backed Ele.me, have pledged to resist disorderly and vicious competition and foster a win-win ecosystem.

Cao Lei, director of the Internet Economy Institute's e-commerce research center, said the release of the document marks a clear transition in China's platform regulation from "centralized rectification" to "rule-building".

"Regulation is shifting from after-the-fact enforcement to ex-ante (forecast-based) and ongoing guidance," Cao said. "The rules draw both 'red lines' and 'bottom lines' for platform pricing behavior, aiming to steer the industry away from disorderly expansion and toward regulated innovation."

Contact the writers at?fanfeifei@chinadaily.com.cn