China issues draft rules on food delivery subsidy in effort to curb price wars (updated)

Alibaba Holding

Today 11:44

Adds statement from JD.com's delivery platform in paragraph 4

    BEIJING, June 17 (Reuters) - China's market regulator issued draft rules to regulate subsidies by food delivery platforms on Wednesday, citing price wars and "irrational competition".
The draft rules, which are open for feedback until July 17, would bar platforms from forcing merchants to join subsidy campaigns or bear subsidy costs, using capital advantages for monopolistic or unfair competition or selling goods below cost, the State Administration for Market Regulation (SAMR) said.
Chinese food delivery leader Meituan 3690.HK said in a statement on social media it supported the proposals and would work to implement the requirements, saying they would help "define compliance boundaries" for subsidies.
Meituan's two main rival "instant retail" platforms, run by tech giants Alibaba 9988.HK and JD.com 9618.HK respectively, issued similar statements, saying they would support the rules and protect fair competition.
Meituan posted a third consecutive quarterly loss this month but met revenue growth estimates as a year of tough competition with other major platforms showed signs of easing.
Chinese authorities have repeatedly called for an end to the "race to the bottom" battle among food delivery platforms.
Last month, China's SAMR instructed local regulators to carry out a special inspection campaign until December on companies operating in sectors ranging from live-streaming to food delivery to crack down on excessive price wars.  

(Reporting by Ethan Wang and Ryan Woo; Editing by Louise Heavens and Alexander Smith)
((Ethan.Wang@thomsonreuters.com))