Chinese Regulators Warn E-Comm Platforms Not to Commit Monopoly Violations

China’s State Administration for Market Regulation has warned top e-commerce platforms about potential antitrust violations, according to a report by Chinese state news agency Xinhua.

At a meeting held in Hangzhou Nov. 5, more than 20 e-tailers were told they cannot require merchants to sign “either-or” contracts — exclusivity agreements that prohibit merchants from conducting sales on other platforms. The SAMR is conducting anti-monopoly investigations into such either-or contracts, Xinhua reports.

Under Chinese e-commerce laws, platforms can be fined up to 2 million yuan ($280,000) by the federal government if found guilty of antitrust violations.

The either-or agreements are the subject of a lawsuit filed in China’s highest court, The Supreme People’s Court in Beijing, by JD.com against its biggest rival, Alibaba. In the suit, JD claims that Alibaba has been enforcing contracts of this nature since 2013, in categories including clothing and home improvement. In response to alleged antitrust violations, JD says it has lost sales opportunities and asks Alibaba to pay damages of 1 billion yuan ($141.8 million).

Additionally, platforms were warned to tighten regulations regarding product standards, eliminating low-quality and counterfeit items, according to Xinhua.

The SAMR meeting comes just days ahead of the biggest shopping extravaganza of the year, Singles’ Day, on Monday, Nov. 11.

Alibaba’s 11:11 Global Shopping Festival, first introduced in 2009, brought in revenue of $30.8 billion last year, up 27% from 2017. Forecasts predict the e-tail behemoth will report increased sales this year. Meanwhile, JD recorded $22.5 billion for Singles Day in 2018, a 25.7% rise over the previous year.

For the past year and a half, the U.S. and China have imposed new duties on billions of dollars in imports coming from both country. On Sept. 1, Washington hit Beijing with a 15% levy on $112 billion worth of goods, the first portion of the fourth tranche of tariffs set to be implemented by the United States. China retaliated by slapping new duties of 5% to 10% on American products. Tariffs on the remaining goods — for a total of roughly $300 billion worth of goods representing the complete fourth tranche — are expected to take effect on Dec. 15.

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