Meituan fined a sky-high price for monopoly, the dream of dominating the sky shattered.
Compiled from: Southern Metropolis Daily
Case review
On the afternoon of October 8, the State Administration for Market Regulation announced the administrative penalty decision in the Meituan "either-or" case —— ordering Meituan to cease its illegal conduct and imposing a fine of 3% of its 2020 domestic sales revenue of 114.748 billion yuan, amounting to 3.442 billion yuan.
The Administrative Penalty Decision disclosed that between 2018 and 2020, Meituan adopted various measures to induce merchants on its platform to sign and implement exclusive cooperation agreements. For example, it charged higher commission rates and minimum guaranteed commissions to non-exclusive operators; when signing exclusive agreements, it typically required platform operators to pay deposits ranging from several hundred to several thousand yuan.
According to the State Administration for Market Regulation, from 2018 to 2020, a total of 1.63 million platform operators signed exclusive cooperation agreements with Meituan and paid deposits, with the total deposit amount reaching 1.289 billion yuan. The State Administration for Market Regulation has required Meituan to fully refund these illegally collected exclusive cooperation deposits.
At the same time, the enforcement agency also issued an "Administrative Guidance Letter," requiring Meituan to improve its platform commission charging mechanism and algorithm rules, and to submit compliance self-inspection reports for three consecutive years to ensure rectification is fully implemented.
Anti-Monopoly Law of the People's Republic of China
Article 17: Undertakings with a dominant market position are prohibited from engaging in the following abusive conduct:
……
(4) Without justifiable reasons, restricting the counterparty to trade only with itself or only with a designated undertaking;
……
Article 47 Where a business operator violates the provisions of this Law by abusing its dominant market position, the anti-monopoly law enforcement authority shall order it to cease the illegal conduct, confiscate its illegal gains, and impose a fine of not less than one percent but not more than ten percent of its sales revenue in the previous year.
Article 49: When determining the specific amount of the fine under Articles 46, 47, and 48 of this Law, the anti-monopoly enforcement authority shall consider factors such as the nature, severity, and duration of the illegal act.
[1] The author's perspective
It is worth noting that the relevant market in this case is defined as the online food delivery platform service market within China. This is because the enforcement authorities determined that online food delivery platform services, offline catering services, and self-operated online food delivery services provided by catering operators do not belong to the same relevant product market. Taking the online and offline distinction as an example, from the perspective of consumer demand substitution analysis, food delivery platforms primarily satisfy consumers’ needs for ordering food anytime and anywhere and dining “without leaving home,” whereas offline catering services primarily satisfy consumers’ needs for on-site catering service consumption, including needs related to the dining venue, facilities and environment, on-site dining, and social interaction. The two also differ markedly in terms of the scope of product choices and the manner of consumption.
On the other hand, Meituan also occupies a “pivotal” position in the market. After defining the relevant market, the enforcement authorities determined that Meituan holds a dominant position based on factors including market share, concentration in the relevant market, ability to control the market, financial resources and advanced technological conditions, the degree of dependence of other business operators on transactions, and the difficulty of entering the relevant market. Taking market share as an example, whether measured by platform service revenue or platform food delivery order volume, Meituan’s market share exceeds 50%, demonstrating the enormous scale of its user base. In addition, after several rounds of financing, Meituan was listed on the Hong Kong Stock Exchange in 2018, with its market capitalization growing from approximately RMB 300 billion in December 2018 to approximately RMB 1.8 trillion in December 2020, which sufficiently proves that Meituan is an undertaking with a dominant market position.
In recent years, the online platform economy has entered a period of rapid development, especially driven by network informatization and the pandemic, with particularly notable effects. However, this has been accompanied by issues such as platform monopolies and vicious competition. The most intuitive manifestation, the “either-or” practice, not only severely disrupts the order of market competition but also greatly diminishes the platforms’ capacity for innovative development, as platforms shift their focus from innovating technology and improving business models to vying for merchant resources, which undoubtedly narrows their path increasingly. The government’s intervention to rectify this situation serves two purposes: on one hand, it aims to crack down on monopolistic practices, preventing the economy from heading toward a singular downturn or even a vicious cycle of cutthroat competition; on the other hand, it considers long-term interests by guiding platforms toward technological reform, making their development more dynamic and sustainable.
