China Fines Tech Superstars’ Group-Buying Platforms for ‘Deceptive Pricing’
What’s new: China’s market regulator gave a slap on the wrist to group-buying platforms backed or run by Alibaba, Pinduoduo, Meituan, Didi Chuxing and Tencent for “deceptive pricing” on Wednesday.
Alibaba-invested Nice Tuan, Didi’s Chengxin Youxuan, Pinduoduo’s Duo Duo Maicai, and Meituan Select all copped the maximum penalty of 1.5 million yuan ($232,000), while Tencent-backed Shixianghui was fined 500,000 yuan.
The regulator accused the firms of using their large capital reserves to “disrupt market order” through excessive price subsidies, and warned them not to burn money to grab market share in order to price gouge later.
The background: The State Administration for Market Regulation hauled in China’s community group buying companies for a dressing down in December about how their subsidies were distorting the market.
Community group-buying — which often involves bulk grocery deliveries coordinated by community leaders who collect neighbors’ orders through group chats or WeChat mini-programs — exploded in popularity last year, with tech firms piling into the space.
But regulators have viewed the phenomenon cautiously, saying the platforms should not sell below cost for the purpose of monopolizing the market. Small business owners and vegetable growers have been incensed by the price war, with some refusing to do business with the platforms.
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