Trip.com Fined $5.2 Billion in China! Abusing Market Dominance, Restricting Hotel Competition with Anti-Monopoly Penalty

China's State Administration for Market Regulation (SAMR) announced on Saturday (25th) a massive anti-monopoly penalty against Trip.com Group (Trip.com, 09961-HK), China's largest online travel platform, which owns brands including Ctrip, Skyscanner, and Qunar. The total penalty, combining confiscation of illegal gains and fines, amounts to 5.179 billion RMB (approximately 25.2 billion New Taiwan Dollars), due to the company's abuse of its dominant position in China's online hotel booking market.

According to Reuters, regulatory authorities determined that Trip.com used traffic allocation mechanisms, platform rules, and technical means to establish exclusive partnerships with certain hotels, requiring them to offer the lowest market prices.

In an official statement on its website, the regulator stated that Trip.com's actions harmed market competition and consumer rights, restricted hotels' freedom to operate on different platforms, and affected their ability to independently set prices.

SAMR's investigation revealed that since 2020, Trip.com had categorized hotels on its platform into different tiers: 'Special Card,' 'Gold Card,' and 'No Card.'

Hotels with high transaction volumes and good service quality could become 'Special Card' merchants through exclusive cooperation, gaining greater traffic and platform benefits, in exchange for not partnering with competing platforms. The remaining 'Gold Card' and 'No Card' hotels, even if allowed to operate on other platforms, were required to ensure that prices on Trip.com were the lowest across the entire internet.

Details uncovered by the investigation show that hotel tiering, traffic bias, price monitoring, and penalty measures had formed a complete cycle. As a result, SAMR ultimately concluded that exclusive cooperation and mandatory lowest-price clauses constituted two distinct types of monopolistic behavior.

Based on the findings, SAMR confiscated 1.66 billion RMB in illegal gains from Trip.com and imposed an additional fine of 3.52 billion RMB. Furthermore, the regulator ordered Trip.com to refund 122 million RMB in booking deposits collected from hotel operators that were deemed not to have been returned.

In the history of China's platform anti-monopoly enforcement, Trip.com's penalty amount ranks second only to Alibaba (09988-HK) and slightly exceeds that of Meituan (03690-HK). However, in terms of the penalty as a percentage of domestic sales, Trip.com's penalty surpasses the combined total of both Alibaba and Meituan.

In response, Trip.com stated: 'The company sincerely accepts and will fully comply with the relevant decision, strictly implement all corrective measures in accordance with regulatory requirements, and ensure the effective execution of all measures.'

Notably, the Chinese government launched an anti-monopoly investigation into Trip.com in January this year, triggered by market complaints alleging that the company imposed unfair terms on hotel operators and manipulated pricing mechanisms.

This penalty comes at a time when Beijing continues to crack down on unfair competition and excessive price wars among online platforms. Chinese regulators believe that vicious price competition among certain platforms has damaged corporate profitability and exacerbated deflationary pressures.