Rules announced in July required food delivery platforms to improve workers’ working conditions, including optimizing routes, setting reasonable delivery times and enabling the drivers to participate in social security. The Shanghai Consumer Council criticized Meituan in May for practices that hurt consumers’ rights, including problems with refunds and misleading content on its mobile app.Īlongside Ele.me, Meituan faced an online backlash after several delivery riders were killed or injured while trying to meet strict deadlines. It was among a handful of operators fined by the antitrust watchdog in March for giving improper subsidies to expand in the red-hot arena of community e-commerce. The corporation had also rejected allegations that it charged onerous commissions to restaurants during the Covid-19 outbreak last year. The firm, which competes against Alibaba’s Ele.me in food delivery, had previously been found guilty of unfair competition in at least two legal cases this year and ordered to pay compensation, local media has reported. Meituan has been grappling with regulatory and public scrutiny on multiple fronts this year, a backlash that peaked when Wang posted a millennium-old poem regarded by many as implicit criticism of the government. Founded by 42-year-old billionaire Wang, the company has long been criticized by rivals and merchants for alleged excesses like forced exclusive arrangements. Meituan has lost roughly 40% of its value since reaching a peak in February. That stems from Xi Jinping’s “common prosperity” campaign to get the private sector to share the enormous wealth accumulated during a decade-long internet boom. His administration is also moving swiftly to ensure the country’s sharing-economy behemoths improve the welfare of the millions of low-wage workers they depend on to power growth. Xi Jinping declared his intention in March to go after “platform” companies that amass data to create monopolies, keen to exert control over a valuable asset deemed critical for the economy and stability. In July, authorities ordered China’s online food platforms - of which Meituan is the largest - to ensure workers earn at least the local minimum wage. Since then, the tech crackdown has extended to other aspects of the vast digital industry industry, including a sweeping clampdown on online education and the launch of a cybersecurity investigation into Didi Global Inc. Investors had reacted then by driving up the e-commerce behemoth’s shares more than 6% in Hong Kong on the first trading day after that penalty. The antitrust watchdog had announced an investigation into company in April, weeks after slapping a record $2.8 billion fine on Alibaba Group Holding Ltd. Meituan said in a statement it sincerely accepted the penalty and will resolutely implement the regulators’ instructions as well as ensure fair competition. “The fine could be funded by Meituan’s annual operating cash flow of at least $1 billion this year.” The lower-than-expected penalty “should ease market concerns on its monopoly position amid mainland China’s ‘common prosperity’ push,” said Catherine Lim, an analyst at Bloomberg Intelligence. Meituan’s American depositary receipts were up 1.5% Friday morning in New York.
Bernstein analysts wrote in response to the announcement.
Some analysts had anticipated fines for Meituan in excess of $700 million. and Meituan to rectify businesses that in some cases operate in legal gray zones, hiring unlicensed drivers for instance.
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The government has ordered firms like Didi Global Inc. Investors are likely to regard the sanctions as letting Meituan off lightly, given Beijing’s intensifying scrutiny over the millions of blue-collar workers that power the gig economy.
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