Regulators review Taobao

Chinese industry regulators are studying whether Taobao Mall engaged in a monopoly, after a group of small- and medium-sized vendors launched a protest last month against the country's largest business-to-consumer (B2C) site.

The Ministry of Commerce suspects Taobao Mall may have held a monopoly, Nie Linhai, deputy commercial counselor of the ministry's Department of Electronic Commerce and Informatization, told China Daily on Monday.

He added that the ministry is discussing this issue with the Ministry of Industry and Information Technology and National Development and Reform Commission.

This is the first official response to questions that were raised over whether Taobao Mall abused its dominant position in the market by raising fees it charged vendors.

The B2C unit of e-commerce giant Alibaba Group Holding Ltd increased service fees and the cash deposit it takes from vendors starting next year.

This sparked "malicious buying" operations against larger Taobao Mall vendors. Alibaba then placated the small- and medium-sized vendors with measures including a grace period for regular vendors to pay fees and a reduction in their deposits.

However, Liu Lu, a seller and one of the organizers of the protest, said many sellers are still dissatisfied and an application has filed to the Ministry of Commerce for an anti-monopoly probe into Taobao Mall. He added that some of his counterparts have closed their Taobao Mall stores and opened new ones on other websites.

Nie said the ministry hasn't received any applications from sellers. "As a public (e-commerce) platform, Taobao should not serve its own interests regardless of those of other people," Nie said.

Taobao Mall declined to comment on the issue.

Shen Danyang, the ministry spokesman, said last month that the ministry will step up efforts to come up with regulations for the online retail market after the Taobao Mall incident. Nie added that a measure against monopolies in the sector will be part of those regulations.

Opinions differ over whether Taobao Mall has abused its dominant position.

The market Taobao Mall is suspected of monopolizing needs to be clarified and also whether its fee increases are excessive, said Wang Junlin, a lawyer with Beijing Yingke Law Firm.

Liu Haijun, a professor of Renmin University of China and a member of the expert group on online retail regulations, said that Taobao should have a pricing procedure that takes account of sellers' views and that more competition should be welcomed.

Taobao Mall and Taobao.com, the consumer-to-consumer online shopping site, accounted for 71.3 percent of the country's online retail market during the second quarter, according to the domestic research company Analysys International.