(Yicai Global) Dec. 23 -- Shares in tech giants Alibaba Group Holding and Tencent Holdings wobbled today as China’s regulators yesterday introduced a new slew of anti-monopoly regulations to prevent dominant internet platforms from undercutting the competition with substantial subsidies for bulk orders.

Hangzhou-based Alibaba’s stock price [HKG:9988] closed down 0.16 percent at HKD248.40 (USD32), while Shenzhen-based Tencent [HKG:0700] fell 0.26 percent to HKD571.

Big players in the country’s e-commerce sector have been upsetting the normal order of things and squeezing out smaller retailers by offering discounts on bulk-buy orders that go below the manufacturer’s price.

Online grocery shopping, in particular, has taken off this year amid the Covid-19 pandemic. Social messaging app users can send round a list of products to their local community that are available at special discounts for a minimum order of a certain size. In this way, large e-marketplaces are able to sell fresh produce at as little as a third of the price in real market stalls.

"The policy will help ensure market order and call off the price war," said Qian Qinghua, chairman of Cangzhou Huahai Shunda Grain and Oil Seasoning, a supplier to US retail giant Walmart. He was among a group of food suppliers who earlier this month forbade their dealers from selling their products to bulk-buying platforms in a bid to put an end to the disruption they were causing to the pricing system.

The new regulations are a good start to get leading e-commerce platforms to toe the line and become less aggressive market players, said Zheng Lei, director of the digital research center at the Hong Kong International New Economic Research Institute.

If tech giants were to use their ample resources to develop group buying to benefit consumers, small businesses and self-employed individuals it would be welcomed by society and the state, Shen Meng, executive director of Chanson Capital, told Yicai Global. But if their intention is to crowd existing operators out, this is unacceptable, he added.

The new rules stipulate that e-retailers must not upset independent pricing by dumping large volumes of goods at low prices. They must not engage in price collusion and fraud. They must not form monopolies to control prices. They must not impose predatory pricing by refusing to negotiate. They may not eliminate nor restrict competition. They must not engage in unfair competition through false propaganda or commercial slander, and they may not use technological means to damage the order of competition.

Editor: Kim Taylor