The State Administration of Market Supervision made administrative penalties on five community group buying companies for improper price behavior, answering reporters’ questions
By: Date: 2021-03-04 Categories: chinesefood Tags: ,
  Question 1:Recently, the State Administration for Market Regulation imposed administrative penalties on five community group buying companies in accordance with the law. What are the main considerations?

  In recent years, the status of the Internet economy in my country’s national economy and society has significantly improved, becoming an important engine for promoting economic development and an important starting point for improving people’s livelihood. It has played an active role in the impact of the epidemic, improving the shopping experience, and improving the structure of the supply chain. However, as major Internet platform companies enter the community group buying market in large numbers, problems such as irregular order and illegal operations have become increasingly apparent, causing great concern from all walks of life.

   First, improper means are used to squeeze the offline community economic market, which can easily cause disorder and affect social stability. Internet platform companies use their capital and traffic advantages to enter the”community group buying” and compete for the market at a price below the cost. This will impact the offline community economic model such as small merchants and community convenience stores, and bring obvious negative effects. Second, large-scale Internet platform companies have an unfair competition tendency of”burning money to grab the market and raising prices after monopoly”, which is likely to damage the rights and interests of consumers. In the short term, consumers can indeed obtain short-term benefits at lower prices when relevant companies implement the”subsidy” strategy in the early stage of competition. However, after occupying the market, relevant companies are likely to raise prices significantly to obtain high monopoly profits, which will seriously damage the interests of consumers. Third, improper price behavior disrupts the market price order. Community group buying platforms generally have problems such as huge subsidies, selling products below cost, and some community group buying platforms using price fraud to lure consumers. The aforesaid behavior seriously infringes on the legitimate interests of other operators and consumers, harms the market environment of fair competition, and disrupts the normal order of market prices.

The products and services provided by    community group buying are mainly “rice bags” and “vegetable baskets”. The rising prices of these basic livelihood commodities can easily cause economic and social turmoil. The Central Economic Work Conference made it clear to prevent the disorderly expansion of capital. The State Administration for Market Supervision resolutely implemented the deployment of the Central Economic Work Conference, took effective measures to strengthen the supervision of the community group buying market, responded to social concerns in a timely manner, and regulated corporate behavior. Monitor the price behavior of community group buying companies and conduct investigations in accordance with the law. After investigation, it has been found that there are community group buying companies such as Orange Heart Optimal (Beijing) Technology Development Co., Ltd., Shanghai Yucan Information Technology Co., Ltd., Shenzhen Meituan Optimal Technology Co., Ltd., Beijing Shihui Technology Co., Ltd., and Wuhan Qizhong Meiwei Technology Co., Ltd. Low-price dumping, price fraud and other improper price behaviors.

  Question 2:Please introduce the basic situation of the investigation of these five cases?

   The companies punished are:Orange Heart Optimal (Beijing) Technology Development Co., Ltd. (Orange Heart Optimal), Shanghai Yucan Information Technology Co., Ltd. (Buy More Dishes), Shenzhen Meituan Optimal Technology Co., Ltd. (Meituan Optimal), Beijing Shihui Technology Co., Ltd. (Shihui Mission), Wuhan Seven Delicacy Technology Co., Ltd. (Food Sharing Club) The above five companies have a large share of the community group buying market. The basic situation of the case is as follows.

   First, through huge subsidies, there is a “low-price dumping” behavior that sells goods below the purchase cost. Four community group buying companies, including Orange Heart Optimal (Beijing) Technology Development Co., Ltd., Shanghai Yucan Information Technology Co., Ltd., Shenzhen Meituan Optimal Technology Co., Ltd., and Beijing Shihui Technology Co., Ltd., took advantage of their capital and adopted a direct drop in order to seize the market. , The issuance of coupons and other forms of subsidies, resulting in a large number of commodity sales prices lower than the purchase cost. If included in operating, warehousing, logistics and other costs, the actual sales revenue is much lower than the cost of goods, disrupting the normal order of production and operation, and damaging the legitimate rights and interests of other operators. The above behavior violated the relevant provisions of Article 14 of the”Price Law of the People’s Republic of China” and constituted low-price dumping.

   The second is to use price fraud to trick consumers into making transactions with them. Five companies including Orange Heart Optimal (Beijing) Technology Development Co., Ltd., Shanghai Yucan Information Technology Co., Ltd., Shenzhen Meituan Optimal Technology Co., Ltd., Beijing Shihui Technology Co., Ltd., and Wuhan Qizhong Meiwei Technology Co., Ltd. existed when selling goods Using false original prices, discounts, false claims to reduce prices and other methods to lure consumers into buying; there are price violations such as failing to clearly indicate the meaning of price comparisons and crossed prices. The aforesaid behavior falls under Article 7 of the”Provisions on Prohibition of Price Fraud” and Article 21 of the”Interim Regulations on Regulating Promotional Behaviors”. It violates the relevant provisions of Article 14 of the”Price Law of the People’s Republic of China” and constitutes Price fraud.

   Judging from the investigation, the illegal facts of the 5 cases are very clear. In the course of the investigation, we extracted relevant price behavior product pages, relevant financial data and service agreements in accordance with the law, carefully sorted out the relevant information, carried out repeated calculations of the subsidy amount, and solicited opinions from relevant parties based on the specific circumstances of the case. . The investigation showed that the facts of the five companies’ improper price behavior are clear and the evidence is conclusive. The General Administration of Market Supervision has decided to deal with 5 companies including Orange Heart Optimal (Beijing) Technology Development Co., Ltd., Shanghai Yucan Information Technology Co., Ltd., Shenzhen Meituan Optimal Technology Co., Ltd., Beijing Shihui Technology Co., Ltd., and Wuhan Qizhong Meiwei Technology Co., Ltd. Enterprises were fined 6.5 million yuan for low-price dumping and price fraud.

  Question 3:We noticed that the above companies were fined by the top grid. What factors were mainly considered?

   When the State Administration of Market Supervision made the administrative penalty decision, it mainly considered the following aspects. First, illegal activities have a relatively large impact on the normal market competition order. The above-mentioned enterprises sell products below cost, with a wide range of subsidies, frequent subsidies, and large amounts of subsidies. The business volume has shown explosive growth, which has a greater impact on the normal business activities of farmers’ markets, fairgrounds and small vendors. The second is that the social harm of illegal acts is more serious. The above-mentioned companies have great influence in the industry, with a huge number of users and huge market influence. The impact of their illegal activities is rapidly magnified by the scale effect and network effect of the Internet, with wide coverage and serious harmful consequences. The third is that the circumstances of the illegal act are relatively bad. After the administrative guidance meeting of the General Administration of Market Supervision to regulate the order of community group purchases, although the amount of subsidies for the above-mentioned enterprises has been reduced, there is still no comprehensive rectification. Therefore, the State Administration of Market Supervision decided to impose a fine within the scope of the law, hoping to achieve the purpose of investigating a batch of cases, regulating an industry, and purifying an area.

   Question 4:In strengthening the supervision of community group purchases, what work has the State Administration for Market Supervision done, and what are the specific considerations for the next step?

   On December 22, 2020, the State Administration of Market Supervision and the Ministry of Commerce organized an administrative guidance meeting to regulate the order of community group purchases. The meeting affirmed the positive significance of the economic development of the Internet platform, and seriously pointed out the prominent problems such as low-price dumping and price fraud in community group buying. Emphasize that Internet platform companies must strictly regulate community group buying operations, strictly abide by no low-price dumping, price fraud; no unfair competition behavior such as commercial confusion, false propaganda, commercial slander, etc.; no use of data advantages to”kill familiarity” and harm consumers Legitimate rights and interests;”Nine must not”, such as not using technological means to damage the order of competition and hinder the normal operation of other market entities.

   In mid-to-late December 2020, the State Administration of Market Supervision directly initiated investigations into five community group buying companies. On March 3, 2021, the State Administration of Market Supervision publicly imposed maximum fines on the above-mentioned community group buying companies for low-price dumping, price fraud and other improper price behaviors, which formed a powerful deterrent to illegal companies and effectively promoted corporate rectification.

   Next, the State Administration of Market Supervision will actively respond to social concerns, strengthen investigations and studies, study and judge the dynamics of the community group buying market, and address low-price dumping, unfair competition and other issues. Innovate supervision methods, increase law enforcement and case handling, regulate the order of the community group buying market in accordance with the law, effectively safeguard the legitimate interests of other operators and the legitimate rights and interests of the people, and create a fair and orderly market environment.

Related reports:The General Administration of Market Supervision selects Orange Heart, Buy More Vegetables, Meituan Optimal, and Shihui Five community group buying companies, including the group and food sharing club, impose administrative penalties on their improper price behavior