Key facts
- China's State Administration for Market Regulation (SAMR) released draft regulations on Wednesday.
- The proposed rules aim to stop food delivery platforms from using subsidies to disrupt the market and sell goods at a loss.
- Platforms will be banned from forcing merchants to participate in subsidy activities or bear their costs.
- The regulations prohibit using deep pockets for monopolistic or unfair competition.
- Platforms must disclose subsidy campaigns publicly before and after they occur.
Chinese authorities have introduced draft regulations aimed at curbing the misuse of subsidies by food delivery platforms, as Beijing seeks to rein in the sector's intense competition. The proposed rules, open for public comment until July 17, identify several practices that would be banned, including using subsidies to disrupt the market and selling goods at a loss, according to a statement from the State Administration for Market Regulation (SAMR).
"China’s food-delivery platforms exhibit problems such as using capital advantages to seize market share, coercing businesses on their platforms into taking part in subsidies, and triggering irrational competition in the industry," the regulator said, adding that such cutthroat competition was hurting businesses, delivery drivers and consumers.
The draft regulations will ban platforms from using “long-term, large-scale” subsidies to hamper market competition or disrupt market order, according to the SAMR. Platforms will also be prohibited from forcing merchants to participate in subsidy activities or making them bear the associated costs. They would also be barred from using their relatively deep pockets to engage in monopolistic or unfair competition, and from pricing goods below cost.