Meituan faces customer lawsuit for alleged abuse of market power amid China’s ongoing antitrust crackdown

Food delivery couriers for Meituan stand with insulated bags during a morning briefing on a street in Shanghai on November 29, 2020. Photo: Bloomberg

The Beijing Intellectual Property Court has accepted a case of alleged abuse of market power by online-to-offline services giant Meituan, according to a court notice seen by the Post and confirmed by the plaintiff’s lawyer.

The case, brought by an individual customer, alleges that Meituan’s decision in July to temporarily remove Alipay as a payment option from its main app was an abuse of its market position, Chen Pengfei, the plaintiff’s lawyer who works at the Beijing Shijing law firm, told the Post.

The court issued a notice of acceptance at the end of October but the case came to light only after local media outlet China Economic Weekly reported it on Tuesday.

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Meituan declined to comment when reached by the Post on Wednesday.

Chinese authorities have moved to tighten regulation of the country’s internet platforms, including launching an antitrust probe into Alibaba Group Holding for suspected monopolistic conduct in its e-commerce business. The probe comes after fines of 500,000 yuan (US$76,300) each were imposed on Alibaba, Tencent Holdings-backed China Literature and Shenzhen Hive Box for not properly reporting past acquisitions for regulatory clearance.

Beijing lectures e-commerce platforms in new antitrust warning to Big Tech

Meituan’s share of China’s food delivery market increased from 63.4 per cent in the first quarter of 2019 to 68.2 per cent in the second quarter of 2020, while the share of its rival, Alibaba-owned Ele.me, decreased from 27.5 per cent to 25.4 per cent in the same period, according to a report by research firm Trustdata.

Meituan’s app, which currently offers discounts of around 5 yuan for customers using its own payment service, supports both WeChat Pay and Alipay, but users must tap on the options menu to see Alipay.

Currently, customers cannot pay via WeChat Pay on Alibaba’s e-commerce platforms Taobao and Tmall. Similarly, WeChat users cannot use Alipay to pay for products and services in the super-app. Facing a backlash for blocking Alipay in July, Meituan founder Wang Xing asked on a social media post: “Why doesn’t Taobao support WeChat Pay? It has more active users and lower transaction fees.”

Alibaba owns the South China Morning Post.

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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

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