China moves to end ‘irrational’ food-delivery subsidies and the sector’s price wars

Chinese authorities introduced draft regulations on Wednesday to crack down on the misuse of subsidies by food-delivery platforms, as Beijing seeks to rein in the sector’s intense competition.

“China’s food-delivery platforms exhibit problems such as using capital advantages to seize market share, coercing businesses on their platforms into taking part in subsidies, and triggering irrational competition in the industry,” the regulator said, adding that such cutthroat competition was hurting businesses, delivery drivers and consumers.

Platforms will also be prohibited from forcing merchants to participate in subsidy activities or making them bear the associated costs. They would also be barred from using their relatively deep pockets to engage in monopolistic or unfair competition, and from pricing goods below cost.

Under the new framework, platforms must make public disclosures, both before launching a subsidy campaign and after completing it. The rules also identify relevant legal obligations and liabilities related to subsidy activities.