On December 22, the State Administration for Market Regulation and the Ministry of Commerce held an administrative guidance meeting on the order of community group buying. At that meeting, platforms were told to strictly regulate their conduct and comply with the so-called “nine don’ts.” It was the first clear regulatory signal after internet-based community group buying became a major trend.
At first glance, the list looks comprehensive. My own view is that it is still fairly rough. It reads more like an early policy warning than a rigorous regulatory framework. I would expect more detailed and systematic rules to follow.
What follows is an economic and market-regulation reading of those nine points. It is not a political statement.
1) The ban on below-cost dumping sounds strict, but enforcement is murky
The first rule prohibits abuse of pricing power through low-price dumping, price collusion, price gouging, price fraud, and similar tactics. It also says that, except in lawful markdown situations involving fresh goods, seasonal goods, or overstocked items, selling below cost to squeeze out competitors or monopolize the market is forbidden.
This sounds straightforward, but fresh produce is one of the hardest categories in which to define “dumping.” Prices change constantly because fruits and vegetables are highly local and highly seasonal. If an internet platform also builds its own production-side supply chain, determining whether a given price is genuinely below cost becomes even more difficult.
The same problem applies to collusion and price gouging. It is not that such behavior is technically impossible to detect. The real issue is that produce prices vary by region, by season, and often day by day. If local regulators had to monitor the price movement of every type of fresh produce in every market, the workload would be enormous—possibly beyond what the current regulatory structure can realistically handle. In that case, enforcement risks becoming ceremonial.
The final part of this rule—prohibiting sales below cost—is especially weak in practice. Large platforms have capital and scale. Through centralized procurement, their costs are naturally lower than those of small vendors. That means they do not even need to sell below their own cost to destroy small competitors; selling at cost, or only slightly above cost, may be enough.
And even if one assumes the platform and the small vendor somehow have identical costs, the platform can keep selling at cost for two or three years. A small vendor may not survive even three months. The competitive result is the same.
2) The anti-monopoly agreement clause is too vague to target the real risk
The second rule prohibits illegal monopoly agreements, including price-fixing, restricting production or sales volume, and market division.
I find this clause unclear. Is it aimed at the production side? The retail side? Alliances among internet platforms themselves? The wording does not make that obvious.
In my view, the bigger long-term danger in community group buying is not necessarily monopoly at the sales end, but at the production end. If the production side, warehousing, and distribution remain genuinely competitive, then it becomes much harder for the retail-facing side to achieve real monopoly power.
That is where the real strategic risk lies.
3) Predatory pricing and tying are easy to ban on paper, hard to stop in reality
The third rule prohibits, without legitimate reason, abuses of dominant market position such as predatory pricing, refusal to deal, and tying.
This seems mainly designed for the stage after a platform becomes dominant and begins to “harvest” consumers—raising prices or selectively restricting access. But again, I suspect this clause can only function at a formal level.
The pricing issue runs into all the same problems mentioned under the first rule. And if pricing itself is difficult to regulate, then policing refusal to deal and tying becomes even harder.
Take a simple example. Suppose eggs normally sell for 4 yuan. After gaining dominance, a platform sells them for 5 yuan and limits supply. At the same time, it launches a promotion: spend 20 yuan on chili peppers, cucumbers, and tomatoes, and receive a coupon for 1 yuan off a pound of eggs.
That is effectively a tying strategy, even if it is not formally mandatory. It would be difficult to classify it cleanly in legal terms. And if regulators decide that offering a coupon tied to those three vegetables counts as tying, then what if the platform expands the list to 30 produce items? The more flexible the bundling structure becomes, the harder it is to define and enforce the rule.
4) Merger control may miss local monopolies that matter most in daily life
The fourth rule says operators may not unlawfully implement concentrations of business operators that eliminate or restrict competition. If a concentration reaches the reporting threshold set by the State Council, it must be declared in advance.
In plain terms, “concentration of business operators” refers to mergers or acquisitions that lead to lasting changes in control—fewer players, larger players, and potentially a market structure drifting toward monopoly. The reporting threshold is supposed to be the red line.
This looks precise, but I think it leaves major gaps.
Imagine a city with 100 township- or subdistrict-level administrative areas and five community group buying players. Suppose they settle into an unspoken arrangement: each one controls about 20 areas, they do not significantly intrude on one another, and their market coverage is staggered across the city.
In a formal sense, this may be difficult to classify as monopoly. In practical daily life, however, it is monopoly. Most people buying vegetables do not travel outside the roughly three-kilometer radius of their normal living area. If there is only one seller within that range, consumers are effectively captive. Even if prices rise, the time cost of going elsewhere is too high.
The same logic can be applied at even smaller geographic units. It can also extend to a market in which different players occupy the same area but divide categories among themselves. These arrangements can produce monopoly in substance even if they do not look like monopoly by conventional thresholds.
5) Through 9) These are general market rules, not really community-group-buying rules
The remaining five points prohibit:
- commercial confusion, false advertising, and commercial defamation;
- using data advantages to discriminate against repeat users or “rip off” familiar customers;
- using technical means, platform rules, or service agreements to undermine competition, impose unreasonable restrictions, or charge unreasonable fees;
- illegally collecting or using personal information;
- selling counterfeit or substandard goods.
None of these are unique to community group buying. They are basic, broadly applicable principles of market regulation. Including them in the “nine don’ts” serves as repeated emphasis, but not as a tailored response to the specific structure of this business model.
If anything, it feels like a general compliance checklist inserted here because “nine” sounds fuller and more authoritative than “four.”
Where regulation should actually focus
My position on community group buying is relatively simple.
Monopoly at the retail end may gradually emerge, and regulators should prevent platforms from abusing a dominant market position. But the practical way to do that is not necessarily to overdesign the retail side. I think platforms should be limited to something closer to a marketplace model—more like Taobao—where the rules guarantee that a group leader can freely join multiple platforms.
The real regulatory priority should be the production side, along with warehousing and distribution. If internet platforms are prevented from monopolizing those links, then even aggressive competition at the sales end is much less likely to create overwhelming power.
Monitoring the production side includes things like futures-style procurement arrangements and cooperative-style planting management. The purpose is to stop platforms from gaining control over the supply of fruits, vegetables, and other fresh goods, and then using that control to influence prices.
Warehousing and logistics should, in my view, be easier to supervise.
Why fresh food deserves stricter oversight
Why support strict controls in the fresh produce market at all?
Because food is fundamental to daily life. This is a livelihood issue, not just another ordinary commodity market. It should not be judged solely through the usual lens of consumer goods competition.
Does support for strict regulation mean opposing higher incomes for group leaders or farmers? No. Anyone familiar with either kind of work knows that, over the long run, stable prices and stable supply are what generate the best outcomes. Wild price swings lead to serious distortions between supply and demand, and in the end both sellers and farmers get hurt.
Why this policy still feels unfinished
Supporting state regulation does not mean every initial regulatory move is good enough.
The reason to criticize the “nine don’ts” is not opposition to regulating community group buying. It is the opposite: the current framework is too coarse, leaves too many loopholes, and does not yet form a tight enough system.
What is needed next is something more complete, more detailed, and more realistic about how this market actually works.