Beijing pressures platforms to end the food delivery price war

What happened: On March 25, state-run Economic Daily published an article titled “It’s Time to End the Food Delivery Price War.”

ICYMI: Since last summer, Alibaba and Meituan have been locked in a delivery market share race to the bottom, pouring vast sums into discounts.

• The market regulator (SAMR) issued multiple warnings to no effect, with the issue eventually escalating to a State Council inter-ministerial antitrust committee.

The latest piece now claims the price war is undermining China’s broader economic goals.

• “The entire [restaurant] industry has fallen into a vicious cycle of ‘losing money to gain attention,’ ultimately dragging down the recovery of consumption – running counter to the central government’s push to boost consumption.”

The piece added:

• “Price wars don’t go far; involution-style competition has no winners. It’s time to end the food delivery price war.”

Our take: Beijing is on the verge of launching a formal investigation into the platforms. 

• All pressure is now on Alibaba, the player most responsible for the ongoing subsidy battle. 
• If things don’t cool down soon, Alibaba will likely be first in the crosshairs.