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China releases draft rules for e-commerce platforms

China’s market regulator has published draft rules aimed at preventing monopolistic behaviour by internet platforms, in a move that will increase scrutiny of the country’s e-commerce marketplaces and payment services.

China’s State Administration for Market Regulation (SAMR), which issued the draft, said it wanted to prevent platforms from dominating the market or from adopting methods aimed at blocking fair competition.

The definitions it provided for internet platforms mean the new rules could apply to e-commerce sites, such as Alibaba Group’s Taobao and Tmall marketplaces or JD, as well as payment services like Ant Group’s Alipay or Tencent Holding’s WeChat Pay.

The draft rules would also consider whether a transaction treats different customers in different ways based on big data, payment ability, consumption preferences, and usage habits, according to the statement from SAMR.

They come after China’s Financial Stability and Development Committee, a cabinet-level body headed by Vice Premier Liu He, last month flagged the need to improve mechanisms to ensure fair competition and called for the strengthening of anti-monopoly law enforcement.

The move also comes after the shock suspension last week of the planned $37 billion share market listing of Ant Group, not long after regulators warned the company its lucrative online lending business faced tighter government scrutiny.

The draft rules issued on Tuesday would look to prevent e-commerce practices such as “choose one between two”, under which a marketplace restricts brands from selling on multiple platforms.

A number of competitors and merchants have accused tech giant Alibaba Corp of previously adopting such practices on its platforms. Last year, SAMR called more than 20 platforms to a meeting to ask them to stop requiring merchants to sign exclusive cooperation agreements.

SAMR is seeking reviews and feedback from the public toward the draft rules until Nov. 30.

  • Reporting by Sophie Yu, Cheng Leng and Brenda Goh of Reuters.

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