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Hangzhou market regulator summoned Meituan, Ele.me and other food delivery platforms over poor regulation and price-cutting

·3 min read

China's Hangzhou market regulator said it had summoned on-demand services giant Meituan, Ele.me and other food delivery platforms this month for talks over "vicious price-cutting" and poor regulation, according to a statement released by the regulator.

The Hangzhou municipal market supervision bureau said in a notice on its website on Thursday that it summoned food delivery platforms on July 21 to "strengthen the food safety supervision of food delivery platforms".

The market regulator said it strictly prohibited "vicious, low-price competition" and that the relevant delivery platforms would be responsible for food safety in accordance with the law.

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The news comes just as China has signalled an easing of a long period of increased regulatory scrutiny of the platform economy. China's top leadership said on Thursday it would give "the green light" to a number of pending technology investment deals, sending a policy signal that Beijing is ready to encourage certain financing pacts involving Big Tech firms.

Regulatory hostility has been one of the biggest investment risks associated with Chinese tech stocks in recent months, having wiped out trillions of dollars in market value across New York and Hong Kong.

"Low-price, vicious competition is often accompanied by potential food safety issues, and the catering industry needs to take further steps to standardise business order," according to the regulator's statement.

The market regulator also warned food delivery platforms to carry out self-examination to ensure food safety and to make sure that malicious, low-price competition does not occur again.

The food delivery market in mainland China is almost entirely dominated by Meituan and Ele.me, which is owned by Alibaba Group Holding. Both are known for their armies of delivery drivers, who are a ubiquitous sight on Chinese city streets. Alibaba also owns the South China Morning Post.

Meituan has been urged to improve working conditions, which have long been criticised. Last July, SAMR and six other government agencies ordered the company to pay its delivery riders more than the country's minimum wage, and to free them from unreasonable demands made by algorithms that predetermined the number and timing of their deliveries.

E-commerce giant Alibaba and Meituan have both received big fines by regulators, and together contributed 92 per cent of the antitrust fines handed out in China in 2021, according to an annual report published last month by the State Anti-Monopoly Bureau.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.