(Yicai Global) March 9 -- Unfair competition practices by internet-based titans who stamp out the competition with a ‘winner takes all’ mentality have become an important topic of concern for delegates at this year’s ongoing Two Sessions, the annual meetings of China’s top legislative and political bodies.

“Large internet-based firms, on which we have come to rely, are using their overbearing dominance in their respective markets to gain maximum benefits and eliminate competitors,” Lv Hongbing, a member of the National Committee of the Chinese People’s Political Consultative Conference, vice president of the All China Lawyers Association and partner of Grandall Law Firm Shanghai, told Yicai Global.

Monopolistic practices come in many different forms. Internet giants can force merchants to choose between platforms and block traffic to their online stores or remove goods from their shelves if they continue to trade on other sites. They can use Big Data to arbitrarily raise prices for certain consumers. They can monopolize intellectual property rights through exclusive copyright authorization. They can buy out small firms to inhibit innovation, and so on.

China has been cracking down on these behaviors since the second half of last year and last month released its first finalized anti-trust guidelines for the sector. Many big names, including e-commerce titan Alibaba Group Holding, are being probed and face having their wings clipped.

Last week, leading takeout company Meituan and four other bulk-buying e-retailers were slapped with a combined fine of CNY6.5 million (USD1.01 million) for predatory pricing. Beijing-based Meituan is also in hot water for allegedly charging unduly high commissions, squeezing the profit margins of the catering firms who depend on the platform for online orders.

“Such behaviors directly violate the legitimate rights and interests of small and medium-sized businesses, not to mention end-consumers, and undermine the normal order of competition in the digital market,” said Zhang Zhao’an, an NPC delegate and deputy director of the Shanghai Academy of Social Sciences.

As long as consumers and vendors have no power to counter powerful platforms, the latter will be able to do whatever they want, said Huang Qi, a member of the CPPCC’s National Committee and an associate professor at the Shanghai International Studies University’s Law School. It is an important responsibility of the government to prevent monopolies and enable healthy market competition.

Bigger Penalties

Penalties need to be increased, said Zhu Lieyu, an NPC deputy and director of Guangdong Guoding Law Firm. An anti-monopoly class action system should be enforced, he added.

Anti-trust law enforcement agencies need to develop specific guidelines for e-commerce platform cases, so that leading platforms dare not overstep the mark, Zhang said.

More legal provisions regulating the digital economy should be added to the Anti-Monopoly Law, for which reference could be made to the European Union’s Digital Market Act, Zhang added.

Editors: Tang Shihua, Kim Taylor