China imposes $533m fine on food delivery company Meituan
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China imposes $533m fine on food delivery company Meituan

11 Oct 2021 (Last Updated October 11th, 2021 12:21)

The company was involved in monopolistic practices and reportedly forced restaurants to sell their products through its app.

China imposes $533m fine on food delivery company Meituan
Meituan is a food-delivery company in China. Credit: Rowan Freeman / Unsplash.

China’s State Administration for Market Regulation (SAMR) has imposed a penalty of $533m on food-delivery company Meituan for antitrust violations.

The company was fined by the government watchdog after an investigation, where it was found to be involved in monopolistic practices, including forcing restaurants to sell their products exclusively through its app.

Meituan is also said to have used algorithms, deposits and agreements to ensure that restaurants remained faithful to the company.

Punitive measures were taken against restaurants that did not agree to Meituan’s terms, according to reporting by CNBC.

SAMR said that Meituan agreed to its faults and cooperated by providing evidence for the investigation officers.

It has also directed Meituan to correct its mistakes.

However, the fine imposed on the company was much lower than the $2.9bn fine imposed on the Chinese e-commerce company Alibaba after an anti-monopoly probe earlier in the year.

The Meituan fine is said to be only 3% of the revenue that the company generated last year.

Since last year, regulators in China have been making more frequent and tougher calls on some technology companies.

They are focusing on stringent rules to curb unfair competition and data protection.

An investigation was filed by the SAMR in April into the Meituan’s abuse of its dominant position in China’s online food-delivery market.

The filing was made in accordance with the Anti-Monopoly Law.

During the same month, Meituan raised close to $10bn through a stock and convertible bonds sale to invest in autonomous delivery vehicles, delivery drones and other advanced technologies.

Backed by Chinese multinational technology conglomerate Tencent, Meituan has a market valuation of $220bn.