China Regulator Fines Vipshop 3 Million Yuan for Unfair Competition Following Probe

Chinese market regulators on Monday issued a 3 million yuan ($464,000) fine to online discount retailer Vipshop Holdings Ltd for unfair competition.

Following an investigation launched in early January, Vipshop was found to have developed an “inspection system” to obtain information on brands that were also listed on rival e-commerce platforms. The company used the system to influence consumer choices and alter operators’ page traffic to block sales and transactions, the State Administration for Market Regulation (SAMR) said in a statement on WeChat.

By disrupting the sales channels of brand operators, Vipshop “violated the principles of voluntariness, equality, fairness, and integrity, disrupted the order of fair competition in the market, and violated Article 12 of the Anti-Unfair Competition Law,” SAMR added.

The company, which s backed by tech giant Tencent, said in a statement on Weibo that it has accepted the penalty and will carry out efforts to update and regulate internal practices to maintain market order and protect the interests of consumers.
It also promised to carry out “comprehensive rectification” following the penalty.

The fine follows SAMR’s Saturday announcement of updated anti-monopoly guidelines targeting tech companies. The new rules aim to end behaviors such as price fixing, compulsory illegitimate collection of user data and using algorithms to manipulate the market.

In December, Vipshop, and Tmall were fined 500,000 yuan ($77,000) each for false advertising on their e-commerce platforms during online shopping events on Singles’ Day and in December.

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Customers accused the companies of raising the prices of products before offering discounts during the events, the regulator previously said. The firms also received complaints regarding false promotions and bait-and-switch selling practices.

Founded in 2008, NYSE-listed Vipshop is known for selling discounted consumer goods from big brands on its platform. As of the third quarter of 2020, the company said it has 43.4 million daily active users, a 36% increase year-on-year.