Meituan becomes the focus of China’s antitrust investigation as government’s scrutiny of business practices shifts

China’s antitrust regulator said on Monday that it has officially started an investigation into Meituan, the country’s largest on-demand delivery service provider, over the alleged monopolistic business practice of forcing merchants to “pick one from two,” as the focus of the country’s anti-monopoly crackdown shifts from Alibaba Group Holding to more companies.

The State Administration of Market Regulation (SAMR), the antitrust watchdog agency, announced the probe in a one-line statement on its website, saying it is looking into whether Meituan forced merchants to pick its platform as the exclusive distribution channel, after receiving a tip-off from the public.

“The company will actively cooperate with the investigation by the regulatory authorities to further improve the level of business compliance management, protect the legitimate rights and interests of users and all parties, promote the long-term and healthy development of the industry, and earnestly fulfil its social responsibilities,” Beijing-based Meituan said in a statement. “At present, the company’s various businesses are operating normally.”

The tactic, in which merchants are forced to choose only one platform as their exclusive distribution channel, is widespread in China. Alibaba’s Ele.me delivery service, which competes with Tencent-backed Meituan, had over 20 per cent market share in China as of last year.

Shares of Meituan, the fifth-largest company on the Hang Seng Index by weighted market capitalisation, fell 0.5 per cent to HK$305 (US$39), marking the first decline in three trading days. The company’s American depositary receipts rose 5.3 per cent on Friday to US$80.02 in New York.