China seeks to rein in 'unfair' food delivery competition with new rules

Beijing: China is seeking to crack down on "unfair" competition among food delivery platforms by introducing new rules to limit subsidy campaigns that regulators say harm the economy.

Beijing has been targeting what it sees as unhealthy developments in the sector, a crucial contributor to national consumption, which has been sluggish in recent years.

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Fierce competition between top platforms including Meituan and Alibaba's Taobao Shangou -- which employ millions of delivery drivers -- has led to price wars, the State Administration for Market Regulation (SAMR) said Wednesday.

It proposed draft regulations targeting subsidy campaigns by platform operators that artificially reduce prices and encourage more orders.

Under the new rules, platforms may not "indirectly coerce" merchants into participating in subsidy schemes through allocation of user traffic, and must not force merchants and delivery drivers to bear the costs of subsidies.

"These practices harm the interests of merchants operating on the platforms, delivery drivers and consumers, squeezing the real economy," the SAMR said.

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The draft measures are open for public comment until July 17.

Meituan said in a statement that it "firmly endorses" the proposals and will "actively cooperate" with regulators and other platforms to promote "win-win results for all parties".

Alibaba-owned delivery platform Taobao Shangou and that of rival e-commerce giant JD. com also voiced support, vowing to uphold "fair" market competition.