China Proposes Rules to Regulate Food Delivery Platform Subsidies and Curb Cutthroat Competition

China's State Administration for Market Regulation (SAMR) released draft guidelines on June 17 aimed at regulating subsidy practices among food delivery platforms. The proposed "Ten Principles for Regulating Food Delivery Platform Subsidy Behavior" will be open for public comment until July 17. The regulation responds to escalating competition in the delivery sector, where platforms have engaged in prolonged large-scale subsidies—sometimes at below-cost prices—that have distorted market competition and harmed multiple stakeholders.

The draft guidelines prohibit platforms from using long-term or large-scale subsidies to exclude or limit market competition and disrupt market order. Platforms are also forbidden from forcing merchants to participate in subsidy activities or bear subsidy costs, and from selling goods below cost. The rules require platforms to publicly disclose subsidy activity details before and after implementation, subjecting their practices to public scrutiny. The proposal also outlines legal consequences for non-compliance with these regulations.

According to market regulators' investigation, food delivery platforms have leveraged capital advantages to capture market share, coerced merchants into participating in subsidies, and triggered irrational industry competition. This "cutthroat" or "involutionary" competition has squeezed the profit margins of platform merchants, diminished service quality, harmed consumer interests through unsustainable pricing, and created workforce challenges for delivery riders. The regulation seeks to protect the rights of merchants, delivery workers, and consumers while promoting healthy market competition.

The guidelines emphasize that regulation is not a blanket prohibition on subsidies but rather a correction of subsidy practices that have devolved into destructive competition. Regulators acknowledge that subsidies historically served as a legitimate market-development tool for platform companies building user bases. However, as the market has matured and shifted from growth competition to market-share competition, subsidies have become distortionary mechanisms that suppress quality improvements and technological innovation. The proposed rules aim to redirect platform competition toward innovation and value creation rather than unsustainable price competition.

SAMR stated that it will refine the draft based on public feedback and expedite formal regulation to foster a market order characterized by fair pricing, quality service, and genuine competition. The move aligns with China's broader effort to build a unified national market and ensure sustainable development of the platform economy while protecting consumer welfare and employment in the delivery sector.