China’s State Administration for Market Regulation announced on July 25 that it issued an aggregate anti-monopoly fine totaling RMB 5.18B to Trip.com Group (Hong Kong Stock Exchange: 09961-HK), China’s largest online travel platform. Trip.com Group is under the umbrella of a company that owns brands including Trip.com, Skyscanner, and Qunar. Trip.com Group is a Hong Kong-listed company, and this penalty is only second to Alibaba in China’s history of anti-monopoly enforcement.
State Administration for Market Regulation: confiscates illegal gains of RMB 1.66 billion and imposes a fine of RMB 3.52 billion
According to the official announcement from the State Administration for Market Regulation, the three penalties imposed on Trip.com are as follows:
Confiscation of illegal gains: RMB 1.66 billion
Additional fine: RMB 3.52 billion
Refund of hotel booking deposits: RMB 122 million (the portion collected from hotel operators but deemed not to have been returned)
Total: RMB 5.18B (about NT$25.2 billion)
Trip.com’s hotel tiered system: “special-brand” exclusive cooperation and a requirement that gold- and non-licensed hotels offer the lowest prices across the whole web
According to the investigation by the State Administration for Market Regulation, since 2020 Trip.com has categorized hotels on its platform into three tiers: “special-brand” (特牌), “gold” (金牌), and “non-licensed” (无牌). Hotels with high transaction volumes and good service quality can become Trip.com special-brand merchants through exclusive cooperation, gaining more traffic and support for related rights and interests; the trade-off is that they may not cooperate with other competing travel platforms. Gold and non-licensed hotels may also appear on other platforms at the same time, but they must ensure that Trip.com’s prices are the lowest across the entire web.
The regulator concluded that hotel tiering, traffic skewing, price monitoring, and penalty measures have formed a complete closed loop, and that exclusive cooperation and the mandatory lowest-price policy across the whole web each constitute a type of monopolistic conduct.
Ranking in China’s platform anti-monopoly history: Trip.com’s fine is second to Alibaba, slightly higher than Meituan
In China’s platform anti-monopoly history, Trip.com’s fine of RMB 5.18B is only second to Alibaba (09988-HK) and slightly higher than Meituan (03690-HK). However, if measured by the ratio of the fine to sales in mainland China, Trip.com’s ratio is higher than those of the first two.
This penalty comes as Beijing authorities continue to crack down on unfair competition by online platforms and on excessive price-competition practices. The regulatory body believes that some platforms’ vicious price wars have harmed companies’ ability to generate profits and have intensified deflationary pressure.
FAQ
What is the total fine amount imposed on Trip.com by China’s State Administration for Market Regulation, and how is it broken down?
According to the official announcement from the State Administration for Market Regulation, the total fine is RMB 5.18B (about NT$25.2 billion), comprised of three parts: confiscation of illegal gains of RMB 1.66 billion, an additional fine of RMB 3.52 billion, and a requirement to refund hotel booking deposits of RMB 122 million.
What specific conduct did the State Administration for Market Regulation identify as monopolistic behavior by Trip.com?
The State Administration for Market Regulation identified two types of monopolistic conduct: first, entering into exclusive cooperation agreements with special-brand hotels (hotels are not allowed to cooperate with other platforms); second, requiring gold and non-licensed hotels to ensure that Trip.com’s platform prices are the lowest across the whole web. The above conduct was found to have harmed market competition and consumers’ rights and interests.
How does this penalty against Trip.com rank in China’s platform anti-monopoly history?
Based on the figures in the article, Trip.com’s fine of RMB 5.18B is the second-largest in China’s platform anti-monopoly history, only behind Alibaba (09988-HK) and slightly higher than Meituan (03690-HK). But when measured by the ratio of the fine to sales in mainland China, Trip.com’s ratio is higher than those of the first two.
