(Yicai Global) July 2 -- China’s market regulator is proposing a financial penalty of as much as 0.5 percent of annual sales on e-commerce platform operators that flout pricing regulations, according to new draft rules the watchdog published today.

The State Administration for Market Regulation wants to be able to fine companies 0.1 percent to 0.5 percent of their previous year’s revenue if they are found to use big-data analysis to price products to the disadvantage of consumers and other operators, a practice commonly known as big data price discrimination.

China has been stepping up supervision of internet platforms since the second half of last year. The SAMR issued anti-monopoly guidelines covering the platform economy in February, clarifying that at e-commerce platforms unfair pricing, selling below cost and forcing customers to buy bundled products are all monopolistic practices that abuse market dominance.

In serious cases, firms could also see their illegal gains confiscated, business suspended for ‘rectification,’ or trading licenses revoked, according to the draft rules posted on the SAMR’s website.

E-commerce platforms that cut product prices below cost by means of subsidies and disrupt the normal order of production and operation to exclude competitors or monopolize the market, will also face punishment, the draft rules showed.

Some local governments began to introduce penalties after the SAMR released its anti-monopoly guidelines for the platform economy earlier this year. Platforms involved in serious big data price discrimination can be fined up to CNY50 million (USD7.7 million), according to draft regulations the southern city of Shenzhen published last month.

The SAMR is soliciting feedback until Aug. 2 on the draft rules to punish illegal pricing activities. It has not yet said when the revised regulations will come into effect.

Editor: Tom Litting