China issues draft rules on food delivery subsidy in effort to curb price wars

China's market regulator has issued draft rules to regulate food delivery platform subsidies, aiming to curb price wars and unfair competition in the industry.

China's market regulator ​issued draft rules to regulate ‌subsidies ​by food delivery platforms on Wednesday, citing price wars and "irrational competition".

The draft rules, which are ‌open for feedback until July 17, would bar platforms from forcing merchants to join subsidy campaigns or bear subsidy costs, using capital advantages for monopolistic or ‌unfair competition or selling goods below cost, the State Administration for Market ‌Regulation (SAMR) said. Chinese food delivery leader Meituan said in a statement on social media it supported the proposals and would work to implement the requirements, saying they would ⁠help "define compliance ​boundaries" for ⁠subsidies. Alibaba's Taobao Shangou said it would work with all parties in the industry to maintain ⁠a fair and orderly market competition environment. Meituan posted a third consecutive quarterly loss ​this month but met revenue growth estimates as a year of ⁠tough competition with other major "instant retail" platforms that also include one run by JD.com showed ⁠signs ​of easing.

Chinese authorities have repeatedly called for an end to the "race to the bottom" battle among food delivery platforms. Last month, ⁠China's SAMR instructed local regulators to carry out a special inspection campaign until ⁠December on companies ⁠operating in sectors ranging from live-streaming to food delivery to crack down on excessive price wars.