Chinese regulators have launched an antitrust investigation into Meituan’s acquisition of bike-sharing company Mobike in April 2018.
The State Administration for Market Regulation (SAMR) said on Monday that it is examining Meituan’s business because the company failed to report the deal for a state-mandated antitrust review. At the time, the deal cost Meituan RMB 17.45 billion (USD 2.7 billion), according to media reports.
Regulators also said they will step up oversight of the country’s sharing economy, in which companies provide rental services to customers through online platforms. Bicycles and power banks are two products that are frequently “shared” in this business model. Companies that operated shared bike services mushroomed so quickly that the streets of some cities became clogged, prompting large-scale removals.
In its notice, the SAMR said companies must indicate their prices clearly and refrain from harmful business practices, as companies have been raising prices rapidly after squeezing out competitors.
In early June, Chinese regulators summoned eight companies that operate within the sharing economy—including Hello Bike, Didi Bike, Meituan, Energy Monster, and Street Electric—to inform these firms to “rectify” their pricing and business practices according to the law. After the meeting, the prices of shared power banks dropped slightly, according to the SAMR.
Meituan’s second-quarter earnings were released after the SAMR’s announcement. During the earnings call, Meituan CEO Wang Xing said his company will adjust its business practices to comply with all regulations. He also pledged to improve the working conditions of the company’s many millions of delivery riders, following a demand made by the SAMR and Ministry of Human Resources and Social Security in July.
This week, Wang posted on WeChat that “common prosperity”—a national policy now frequently referred to by Chinese enterprises of all stripes—is part of Meituan’s genes, as the two Chinese characters in its name, mei and tuan, carry the meanings of “goodness” and “togetherness.” His company’s name, Wang said, points to being “better together.”
Meituan was the subject of an antitrust probe in April, where the SAMR suspected the company was forcing merchants to sever ties with rival marketplaces. Bloomberg reported earlier this month that the penalty levied on Meituan may be roughly USD 1 billion, with regulators expected to announce the exact amount in the coming weeks. Alibaba was hit with a record RMB 18.2 billion (USD 2.8 billion) fine in April for the same reason.