Chinese regulator may hit Meituan with $1b fine for alleged monopolistic practices

Details:

• Meituan could potentially face the hefty fine in the coming weeks. The firm will also reportedly be asked to revamp its operations, the people said.
• According to the sources, the food delivery firm may also have to end a practice that has been dubbed “er xuan yi,” which literally means to “choose one out of two.” This refers to the way the platform has forced merchants to have exclusive partnerships or distribution channels with Meituan, preventing businesses from selling their goods on rival platforms.

Dive deeper:

• In April, China slapped a record US$2.8 billion fine on Alibaba Group after an anti-monopoly probe found that it had exploited its market dominance. The fine was based on 4% of Alibaba’s domestic revenue in 2019 and amounts to about 12% of its fiscal 2020 net income.
• As part of Beijing’s clampdown on its internet giants, the government also banned private firms that teach school subjects from earning profits and raising capital, triggering a sell-off that wiped out over US$1 trillion in value from Chinese equities.