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China’s regulator warns on e-commerce platforms, in order to stop monopolistic practices

SHANGHAI (Reuters) – China has warned a top e-commerce platforms, including Alibaba (BABA).And JD.com (JD.).D) in order to stop the practice, which can be considered as a monopoly, such as the industry, tensions are growing ahead of the country’s banner as the Singles Day shopping event on Nov. 11.

FILE PHOTO: An employee works at an Alibaba Tmall logistics center in Suzhou, Jiangsu province, China, on October 28, 2015. (REUTERS photo/Aly Song, File/Photo

State news agency Xinhua reported on Tuesday that china’s State Administration for Regulation of the Market (SAMR) is called more than 20 platforms to the one meeting, and urged them to stop the practice of requiring the sellers to sign exclusive agreements to prevent the sale of products to the rival platform.

The regulator’s move comes as Alibaba’s Tmall marketplace in the past few weeks, it was being sued by some of its competitors and to the merchants of the adoption of such a practice, which is also known as “the pick of the two.

The competition for the shoppers among China’s leading e-commerce platform is heating up as the world’s second-largest economy struggles with a slowdown. Singles Day, the country’s biggest shopping event of the year, it is also a very competitive event, with the platforms to roll out a range of promotions.

“In the SAMR, the relevant responsible person pointed out recently, there are a few issues that have arisen as a result of the activities of the network operators,” Xinhua said.

For example, in the platform, in the competition to intensify, and the problem of choosing one of the two,” the practice has arisen, which has drawn the concern of a lot of people,” he said, adding that the practice would violate anti-monopoly, e-commerce law.

Two of the units of the JD.com filed a lawsuit in the Beijing high court against Alibaba’s Tmall, require the latter to pay damages, and apologize for the use of such agreements and abuse of dominant position on the market. The Details of the case were made public by the court in the last month.

The local government supported media outlet, The Paper reported on Wednesday, without saying where they obtained the information, that is the Chinese e-commerce platforms, Pinduoduo (PPD) (PPD.D) and Vipshop Holdings (vips.(N) was applied to the Beijing court to conclude JD.com in’s case. All three of these companies are being backed by Tencent Holdings (0700.HK).

“We strongly believe in an open, fair and legal competition, but not everyone in the industry agrees,” JD.com it said in a written statement to Reuters.

“We believe that brands and consumers need to be able to sell it, and the place where they want to be, without any interference, and will continue to support the ability of brands to choose from in order to sell it, but many of the sites that they want to do,” he said.

Vipshop and the Pinduoduo declined to comment on whether or not they had applied for in the JD.com’s court case. PDD said, “the e-commerce act, it is clear that the monopolistic practices, and in particular, to a binding exclusivity arrangements, which are illegal.”

Alibaba and Tencent did not respond to requests for comment.

Alibaba is to be the subject of a separate lawsuit filed by a Chinese home appliance manufacturer Galanz, that is, on Tuesday, the case was accepted by a district court in the southern province of Guangdong. Galanz, says it was punished due to Alibaba after he refused to stop the sale of the property at the Pinduoduo.

Written by Brenda Goh; Editing by Simon Cameron-Moore

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