China is stopping companies from abusing their dominant status by squeezing out small rivals amid an ongoing crackdown on malpractice and monopolistic behavior, a top official with China’s market regulator said on Tuesday.
Chen Zhijiang, head of the department in charge of price supervision and cracking down on unfair competition under the State Administration for Market Regulation (SAMR), reiterated the government stance on monopolistic behavior at a State Council Information Office press conference on Tuesday.
China has been intensifying anti-monopoly crackdowns on internet platform companies this year. On Tuesday, the SAMR imposed a penalty totaling 36.5 million yuan ($5.7million) on 15 off-campus training institutions including New Oriental Education & Technology Group, Xueersi Online School and Wall Street English.
Chen emphasized that fair competition is essential for small and medium-sized companies and benign market order and a benign competition ecosystem is the cornerstone for sound development of the economy.
Chen noted that the SAMR will ensure all market participants, including the self-employed, are treated as equals and have access to fair competition.
Crackdowns on monopolistic behavior and unfair competition will go deeper, Chen said, noting that the government will prohibit dominant market players from abusing their advantageous position.
In April, the SAMR handed out a record $2.8 billion fine for Alibaba over the company’s forced exclusivity arrangements, or agreements that forced vendors to “choose one out of two (platforms).”
Chen noted that the rapid growth of the platform economy has brought convenience for consumers and business owners.
However, Chen also pointed out that certain platform companies have expanded in a disorderly fashion, abusing their advantages in terms of scale and technology and grievously harming the interests of SMEs and micro-sized businesses as well as the self-employed, imperiling their survival.
The large companies have also charged exorbitant prices or imposed unreasonable terms for their services, eating into the margins of small businesses.
Amid the government’s crackdown, a number of well-known Chinese companies, including Chinese internet giant Tencent, ride-hailing company DiDi and e-commerce giant Suning, have been fined over minor breaches.
The country’s largest online food delivery platform, Meituan, has also been probed for suspected monopolistic practices.
China has been ramping up supervision of digital platform companies as the digital economy now accounts for a growing percentage of the world’s second-largest economy.
The government hopes to regulate the market, curb the disorderly expansion of capital and inject vitality into the sector, which accounted for 36.2 percent of the nation’s GDP by 2019.