Shanghai Regulator Warns eCommerce Platforms Against Pandemic Price Gouging

Shanghai’s market regulator has summoned a dozen eCommerce firms, including food delivery platforms Meituan and eleme.me, to discuss a range of topics including price gouging during the COVID pandemic.

As Reuters reported Monday (April 18), the regulator told platforms to improve the way they manage delivery riders and curtail practices like improper price increases by riders.

See also: Congress Eyes Giving Federal Regulators More Tools to Combat Pandemic-Related Scams, Price Gouging

Price gouging has been an issue in the U.S., as well. In February, Sen. Richard Blumenthal (D-Conn.) said his office received 800 reports of price gouging in his home state of Connecticut and insisted the lack of regulation by the federal government has contributed to the problem.

“There is a glaring lack of enforcement at the federal level,” Blumenthal said at a hearing in early February. “The federal government, including the Federal Trade Commission and the Department of Justice, have few legal tools to hold price gougers accountable.”

Related: PBOC Pledges Loans to Protect Supply Chain

The meeting comes as China is dealing with a rise in supply chain disruptions in Shanghai — home to the world’s largest container port — following COVID lockdowns. Congestion in ports and road checks have extended delivery times, lessened production and reduced consumption, making China’s yearly growth target of 5.5% difficult to attain.

As PYMNTS reported last week, the People’s Bank of China (PBOC) has promised financial backing for trucks and logistics companies amid the country’s worst COVID outbreak in two years. The move is designed to bolster China’s supply chain, with the central bank requesting that lenders “reasonably” extend and renew loans for the sector.

Read more: Meituan Loses $26B in Value as Chinese Regulators Step In

Earlier this year, Meituan reported losing $26 billion in value after regulators called for a reduction in the fees food platforms are charging restaurants. The company had controlled around 70% of the food delivery market in China, and the segment contributed to more than half its revenue in the third quarter.

China’s National Development and Reform Commission (NRDC) said its goal was to get delivery platforms to “take another step to lower the service fees charged to restaurants in order to lower their operating costs,” adding that it also wanted to ask platforms to discount eateries in areas hit harder by COVID.