Meituan settles antitrust probe with $530m fine
Chinese food-delivery giant agrees to refund 1.6 million restaurants and merchants
Meituan stock closed up 2% on Friday to HK$256 (£24.15, $32.88, €28.43), 12% above the month-long low it slumped to on Wednesday.
The rise came despite the Chinese food-delivery giant being fined $530m for violating anti-monopoly regulations.
The State Administration for Market Regulation (SAMR) highlighted the company’s use of exclusivity agreements as a particular cause for concern.
Until recently, Meituan, like many of its rivals, practiced a strategy known as ‘pick one of two’, whereby businesses and restaurants would be booted off a platform if they opted to list simultaneously with a competing service.
In addition to the fine, which is equivalent to around 3% of Meituan’s 2020 sales, the firm was also ordered to return the deposits charged to over 1.6 million restaurants and merchants as part of the exclusivity agreement. The cost of the refunds is expected to amount to $200m.
Earlier this year, Meituan came in for substantial criticism for its inhumane treatment of workers.
In July, SAMR and six other government regulators ordered the company to ensure it paid its delivery drivers China’s minimum wage (currently RMB21. 00 [$3.02] per hour in Shanghai) and to ease the pressures exacted by its platform’s algorithms.
‘Common Prosperity’ initiative
The move came as part of President Xi Jinping’s ‘Common Prosperity’ initiative, which seeks to address the issues of wealth inequality triggered by China’s economic development and to reassert the influence of the Chinese Communist Party (CCP) over big business.
In the wake of the push, Meituan founder Wang Xing stated: “Common prosperity is built in the genes of Meituan because the company name means ‘better together’.”
Although the company’s stock has recovered by 32% from the 2021 low suffered in the immediate aftermath of the regulatory crackdown, it still stands 12.5% below the level at which it started the year.