New regulations limit aggressive pricing practices by marketplaces, protecting sellers' autonomy and ensuring pricing transparency for consumers.
China has unveiled new rules to rein in aggressive pricing tactics by online platforms, prohibiting e-commerce operators from forcing merchants to offer discounts or setting different prices based on user demographics without consent.
The 29-article regulation - jointly issued over the weekend by the National Development and Reform Commission, State Administration for Market Regulation (SAMR), and Cyberspace Administration of China - lays out detailed compliance requirements that target several long-standing pain points as competition among internet giants has often eroded the rights of both consumers and merchants.
To restore merchant autonomy on pricing, the rules ban platform operators from leveraging their dominant scale to impose "lowest price" agreements. Platforms are prohibited from using traffic throttling, search ranking demotions, or algorithm penalties to pressure merchants into predatory price-cutting or exclusive pricing arrangements.
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The regulation also forbids platforms from setting different prices or charging standards for the same goods or services "without user consent" based on data - including users' willingness or ability to pay, consumption preferences and consumption habits - algorithms, platform rules and "other means".
In a bid to crack down on "price traps", the rules mandate clear labelling of estimated prices versus settlement prices, while barring platforms from displaying lower prices on homepages or other prominent locations other than those shown on product detail pages.
For goods or services appearing in paid search rankings, the term "advertisement" must be prominently shown. For services like "express checkout without inputting a password, bundled sales, or auto-renewals", platforms must obtain clear consumer consent and provide prominent cancellation options.
The regulation is scheduled to come into effect on April 10 next year.
"Large platforms have typically leveraged their scale to demand that brands guarantee the lowest prices on their platform, often infringing on merchants' operational autonomy,"
said Li Chengdong, founder and chief analyst at Beijing-based e-commerce consultancy Dolphin.
Li said such practices have forced brands to create "different product variants - similar items with distinct model numbers across platforms", driving up the operational costs for merchants.
China has cracked down on the vicious pricing strategy of online platforms several times this year. Last week, market regulator SAMR warned that platforms demanding merchants offer the "lowest price across the internet" could face antitrust action, following draft guidelines issued in November to address hidden risks of algorithm-driven price manipulation.
Source: SCMP
