China’s market regulator has issued a list of restrictions on community group purchases on the internet to maintain a fair trading environment while urging tech companies not to compete for market share with unreasonably low prices.

Group-buying is the hottest type of grocery shopping in China, allowing residents to get discounts by joining others to buy in bulk.

The consumer model involves a group leader creating a social media account where products are posted for neighbors, friends and family. These people place their orders together to secure better discounts, then pick up the goods, which are delivered to one location. The model reduces costs and broadens the customer base.

On Tuesday, the State Administration for Market Regulation met representatives from tech giants including the Alibaba Group, Tencent Holdings, JD.com, Meituan, Pinduoduo and Didi Chuxing at an “administrative guidance meeting” and urged them to follow the rules with diligence.

It is strictly forbidden to dump goods at prices below cost for the purpose of squeezing out competitors or monopolizing the market. The rules also prohibit the abuse of market dominance through tactics such as predatory pricing.

Industry players are not allowed to make use of the big data collected to impose unreasonably high prices or charge consumers unreasonable fees, or to collect or misuse consumer data illegally.

The sale of counterfeit goods is banned as well.

Fighting monopoly and anti-competitive practices are top priorities of Chinese regulators in 2021, as defined during the annual Central Economic Work Conference held in Beijing in mid-December.

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