<p>Regulatory authorities have introduced new regulations for food delivery platforms, leading to a rise in the stock prices of Meituan and JD.com.</p>
<p>On September 24, the State Administration for Market Regulation released the &#34;Basic Requirements for the Management of Food Delivery Platform Services (Draft for Comments),&#34; aimed at regulating key issues such as platform fees and promotional activities, guiding platform companies towards open and orderly competition.</p>
<p>According to CCTV News, experts introduced that the new regulations limit the fee items charged by platforms to merchants, prohibit platforms from forcing merchants to share promotional costs, and require the establishment of a mechanism for reducing technical service fees. This regulatory measure directly addresses the escalating price war in the food delivery industry since this summer, with JD.com entering the food delivery market, prompting Meituan and Alibaba's Ele.me to increase their subsidy efforts.</p>
<p>Driven by this news, Meituan's stock price in Hong Kong rose by 3% at one point on Wednesday, while JD.com closed up 3.6%.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5620e31e-2a72-4b72-8e91-f660535e086c.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/5620e31e-2a72-4b72-8e91-f660535e086c.png"/></p>
<p>The introduction of the new regulations marks a formal response from regulators to the disorderly competition in the food delivery industry. In August of this year, the three major internet giants reached a ceasefire agreement, but it lacked specific details, and the burdens borne by merchants in the fierce competition have drawn regulatory attention.</p>
<h2>Transparency in Fees Becomes Regulatory Focus</h2>
<p>The draft for comments clearly limits the fee items that food delivery platforms can charge merchants and prohibits arbitrary new fee items. The new regulations detail the platform's fees in terms of disclosure methods, content, settlement details, and promotional effects to prevent opaque charging practices.</p>
<p>Li Qiangzhi, deputy director of the Policy and Economic Research Institute of the China Academy of Information and Communications Technology, stated that in recent years, the rules for platform fees, billing methods, and subsidy requirements have become increasingly complex, often leading to situations where merchants find it &#34;hard to understand, unclear, and difficult to calculate,&#34; and even resulting in scenarios where &#34;the more they sell, the more they lose.&#34;</p>
<p>The new regulations require platforms to set technical service fees, delivery service fees, and promotional service fees based on reasonable matching principles. Platforms must establish a mechanism for reducing technical service fees and gradually lower the basic commission, especially for small and micro merchants, and formulate support measures such as fee reductions.</p>
<h2>Curbing &#34;Coercive&#34; Competitive Practices</h2>
<p>According to CCTV News, citing expert analysis, since the beginning of this year, food delivery platforms have engaged in a &#34;subsidy war&#34; to capture user traffic and strengthen delivery capabilities, forcing many merchants to get involved, resulting in the transfer of subsidy costs and squeezing the reasonable profit margins of merchants.</p>
<p>The draft for comments focuses on regulating the pricing and promotional behaviors of platforms and merchants, clearly stating that the costs of price promotions by platforms should not be indirectly or directly required to be shared by merchants. The new regulations explicitly prohibit platforms from forcing or indirectly forcing merchants to conduct price promotions or interfering with the promotional efforts of merchants.</p>
<p>Some analysts indicate that China's new regulations targeting the operations of food delivery platforms may formalize the agreements reached between Meituan, Alibaba, and JD.com with regulatory authorities in recent months. The new regulations may have a more significant impact on companies like Pinduoduo, Douyin, and Kuaishou, which plan to actively expand their rapid business services</p>
<h2>Strict Crackdown on &#34;Phantom Takeaway&#34; to Ensure Food Safety</h2>
<p>In response to issues such as &#34;phantom takeaway&#34; and merchants experiencing &#34;explosive orders,&#34; the draft opinion proposes systematic requirements from aspects like merchant onboarding and information verification. &#34;Phantom takeaway&#34; refers to merchants without business licenses or food operation permits who provide illegal catering services on takeaway platforms through fake certificates, borrowed licenses, or other illegal means.</p>
<p>Zhang Xin, a professor at the Law School of the University of International Business and Economics, stated that the draft opinion requires merchants to provide authentic licenses, store scene information, and even &#34;one-shot&#34; location videos, with platforms executing merchant access and dynamic audits, supplemented by social supervision through &#34;online license display.&#34;</p>
<p>To mitigate the risk of &#34;explosive orders,&#34; the draft opinion introduces a &#34;order acceptance control prompt&#34; mechanism. Platforms can use algorithms to monitor merchants' order loads and proactively issue warnings when a backlog trend appears, while also encouraging platforms to simultaneously inform consumers of &#34;merchant busy&#34; status.</p>
<h2>Protecting Delivery Personnel's Rights Becomes a New Highlight</h2>
<p>The draft opinion focuses on aspects such as delivery personnel's labor remuneration, working hours, and social security, requiring platforms to improve the labor remuneration distribution mechanism that matches the work tasks and labor intensity of delivery personnel.</p>
<p>The new regulations specify that platforms should reasonably limit the order acceptance duration for delivery personnel to avoid health and safety risks caused by excessive labor. For delivery personnel who continuously accept orders for more than 4 hours, platforms should issue fatigue alerts. Additionally, platforms need to reasonably set limits on the number of simultaneous orders and the maximum number of orders per day.</p>
<p>The State Administration for Market Regulation officially began soliciting public opinions from the 24th. The introduction of the new regulations aims to help takeaway platform companies standardize service management, improve service quality, reduce the operational burden on merchants, and guide platform companies towards open and orderly competition</p>

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<p>The State Administration for Market Regulation has released the "Basic Requirements for the Management of Takeaway Platform Services (Draft for Comments)," which clearly limits the charging items that takeaway platforms can impose on merchants and prohibits the arbitrary establishment of new charging items. The new regulations provide detailed provisions on platform charges in terms of publicity methods, publicity content, settlement details, promotional effects, etc., to prevent opaque charging practices</p>

- On September 24, the State Administration for Market Regulation released a draft regulation aimed at standardizing fees and promotional practices on food delivery platforms.  
- The new rules prohibit platforms from forcing merchants to share promotional costs and require a mechanism for reducing service fees, addressing the ongoing price wars intensified by competition from major players like JD and Meituan.  
- Following the announcement, Meituan's stock rose by 3% and JD's by 3.6%, reflecting market optimism about the regulatory changes aimed at fostering fair competition and protecting merchants.

The "new regulations" for food delivery have arrived! Standardizing platform fees, merchant onboarding... Meituan and JD.com stocks both rise