Vipshop Photo: VCG

China's market regulator on Monday imposed 3 million yuan ($464,662) in fines, the maximum possible under the country's unfair competition legislation, on online discount retailer Vipshop, the latest step in a sweeping regulatory tightening intended to put the platform economy on track for healthier growth.

In a statement on its website announcing the penalty, the State Administration for Market Regulation (SAMR), revealed that between August and December 2020, Vipshop developed and used an inspection system to gain a competitive edge and transaction opportunities, which limited the sales channels of brand operators, hampering the normal operation of network products and services that were provided by brand operators and other operators. 

This led to disruption of normal market competition orders and constituted a breach of the Anti-Unfair Competition Law, read the statement.

The 3 million yuan administrative fine hit the ceiling of allowable fines under the law. 

The move came a day after the Anti-Monopoly Committee of the State Council, the cabinet, unveiled new anti-monopoly guidelines tailored for the platform economy, as the country moves to align with global practices to toughen anti-monopoly regulation on giant internet platforms. 

The Vipshop penalty apparently points to an emerging trend in which platform companies will more frequently fall under the purview of the country's rules and laws against unfair competition and monopolistic practices, Fang Xingdong, the founder of Beijing-based technology think tank ChinaLabs, told the Global Times on Monday.

In a sign of accelerated legal action, video-sharing platform Douyin, owned by tech start-up ByteDance, confirmed to the Global Times on Sunday that the lawsuit it filed against Tencent over monopoly claims has been accepted by the Beijing Intellectual Property Court, making it the first such suit after the new guidelines were introduced. 

Chinese e-commerce giant Alibaba, also in hot water over an anti-monopoly probe by the SAMR, revealed earlier in February that the probe is ongoing and a special task force has been created to conduct internal reviews. 

While the country has increased scrutiny and regulation of the platform economy, its legal framework is not on par with its international counterparts, especially when it comes to penalties for breaches of laws and rules, Fang commented, urging revisions to the current legislation to enable sufficient deterrence. 

Faced with internet "super-platforms', antitrust authorities across the globe are taking a tougher regulatory stance.

The US, which was the first to introduce an antitrust law worldwide, has stepped up antitrust probe into internet giants in recent years, focusing on their alleged abuses of market dominance, clampdowns on rivals and their acts as a hindrance to innovation. 

The European Commission unveiled two legislative initiatives in mid-December - the Digital Services Act and the Digital Markets Act - aiming to curb unfair competition by internet titans.

Technology heavyweights including Google, Apple, Facebook and Amazon have become the targets of anti-monopoly investigations globally over the past four years. The EU has fined Google in the three consecutive years from 2017 to 2019, with resultant penalties amounting to over $9 billion.  

Global Times