China’s three biggest on-demand delivery service companies, Alibaba Group, JD.com and Meituan, said they had called a truce to relentless price-cutting, after China’s market regulator expressed concerns over excessive competition and urged a “rational” approach.

Alibaba’s Taobao and Ele.me, as well as e-commerce giant JD.com, have been trying to catch up to Meituan’s lead in the “instant commerce” sector, which offers deliveries of a range of items within an hour, using the companies’ existing food-delivery networks.

The situation has resulted in large price reductions, and by last month the three companies had progressed to offering free cups of tea and free lunch deals to spur consumer interest.

Instant commerce

In late July the State Administration for Market Regulation summoned Ele.me, Meituan and JD.com and urged them to rein in promotions and engage in “rational” competition in the overheated market.

The meeting was intended to “further regulate promotional behaviour, encourage rational competition, and foster a healthy ecosystem and a win-win situation for consumers, merchants, delivery riders and platform operators”, the regulator said.

Meituan said it would strictly abide by competition regulations, which prohibit goods from being sold “significantly below cost”, distorting price signals, disrupting markets and causing waste.

Market-leading e-commerce platform Taobao and food-delivery service Ele.me, which launched the Taobao Instant Commerce offering in late April, said they would “plan and distribute subsidies rationally” while resisting “unhealthy competition”.

JD.com, which launched its food-delivery service only in February, said it would “not leverage order volume to demonstrate market dominance or create market bubbles”.

Free lunches

Alibaba and JD.com said they would cease offering free lunches, a type of promotion that local media reports said has been reduced since the regulatory meeting.

In 2021, Chinese regulators launched a wide-ranging crackdown across a variety of sectors, amidst fears that sectors including crypto-mining and crypto-trading, online gaming, e-commerce and electronic banking had grown out of control.

In a more recent intervention, in 2023 the country’s media regulator announced measures aimed at cutting spending and promotions that encourage video gaming.