(By You Yunting) Recently, Ctrip, the largest online travel platform in China, was reported to be subject to an anti-monopoly investigation by China’s market regulators. In response, Ctrip promptly issued a statement, saying that it would actively cooperate with the regulators and fully comply with relevant requirements to foster a sustainable market environment together with the industry. If Ctrip is found to have abused its dominant market position, it will face fines of hundreds of millions of yuan or even more. However, what really determines Ctrip’s future competitive landscape is not the fine itself, but rather the specific “rectifications”—what the regulators mandate it must or must not change. Today, we will analyze which of Ctrip’s business lines face the highest risk of rectifications based on previous platform-related anti-monopoly cases.
I. Anti-Monopoly Fines: Thousands of Times Higher Than Ordinary Penalties
First, let’s talk about the potential anti-monopoly fines Ctrip may face. Currently, the case is in the factual investigation stage. If the regulators determine that Ctrip has engaged in monopolistic conducts of abusing its dominant market position, a hearing will be held regarding the appropriate penalty. Although Ctrip has stated that it will cooperate with the investigation, such cooperation merely indicates that it may acknowledge the existence of disputed business practices. The key issue, however, lies in how these practices are legally identified—whether they constitute general administrative violations or anti-monopoly violations. The difference is crucial, as the potential fines may differ by several thousand-fold. Thus, the defense strategy is of paramount importance.
For instance, if Ctrip’s practice of forcing merchants to install a price adjustment tool and adjusting hotel or guesthouse prices without merchants’ consent is deemed monopolistic conducts of abusing its dominant market position, the fine will range from 1% to 10% of the company’s total sales revenue from the previous year. Based on Ctrip’s 2024 revenue of over RMB 53 billion, an anti-monopoly fine will sit between RMB 530 million and RMB 5.3 billion.
In contrast, if the practice is identified as a general violation, such as a violation of Article 14 of the Price Law, the fine will be capped at five times the illegal gains, or, where no illegal gains exist, between RMB 100 thousand to RMB 1 million. If it is deemed a violation of Article 35 of the E-commerce Law, the fine will range from RMB 50 thousand to RMB 2 million.
II. Offensive and Defensive Arguments Regarding Ctrip’s Market Dominance
In future anti-monopoly penalty hearings, Ctrip’s denial of its dominant market position can be based on Article 24 of the Anti-Monopoly Law, which provides that an undertaking with a market share of one-half or more in the relevant market may be presumed to have a dominant market position; however, an undertaking subject to such presumption may rebut it with evidence proving otherwise. The likely offensive and defensive arguments are as follows:
1. The Battle Over the Definition of Relevant Market
Considering the market share and the competitive situation, Ctrip is likely to argue for a broader definition of the relevant market, such as the “Online Travel and Local Life Services Market”, rather than a narrower Online Travel Agency (OTA) market. Under this broader definition, platforms such as Meituan Travel, Fliggy, Tongcheng, Xiaohongshu (as a communication and marketing channel), offline travel agencies, and merchants’ self-operated websites will all be included, thereby diluting Ctrip’s market share below the 50% threshold.
Conversely, regulators may opt for a simplified dominance analysis. Given existing data indicating that Ctrip’s share in the OTA market exceeds 50%, regulators can adhere to a “Narrow Market + High Share” approach, defining the relevant market as “domestic online travel booking services platform”, excluding offline and self-operated channels. Under this approach, Fliggy, Tongcheng, and Meituan Travel will be viewed as smaller challengers, allowing regulators to presume its market dominance. Combined with extensive merchants’ complaints and records of regulatory interviews, a finding of abuse can then follow.
2. The Argument Over Barriers to Entry
Regarding the competitive situation in the relevant market, Ctrip may argue that internet platforms face no policy-based entry barriers, that entry costs are relatively low, and that competitors can rapidly expand through capital investment, subsidies, and traffic acquisition. For instance, in recent promotional campaigns, JD.com Food Delivery and Taobao Flash Sale have quickly diverted orders from Meituan, demonstrating that the market share of even leading platforms can be eroded in a short period. High market concentration, therefore, does not necessarily equate to the long-term exclusion of competition.
Regarding the ability to control trading conditions and upstream/downstream resources, Ctrip may submit evidence that hotels and guesthouses can still reach consumers via other platforms, mini-programs, or self-operated channels. As such, it has limited control over the industrial chain of either key upstream resources or offline stores, so that it cannot decide the pricing, volume or contractual terms of the whole industry, suggesting weak lock-in effects, low switching costs, and insufficient network effects to form a monopoly moat.
However, the regulatory logic is likely to counter that low theoretical entry barriers do not negate high practical switching costs. In practice, many hotels and guesthouses rely heavily on Ctrip for revenue and customer acquisition, and departing Ctrip would result in immediate and significant losses. Through approaches such as price adjustment tools, exclusive arrangements, and traffic demotion, Ctrip may in fact exert substantial influence over merchants’ pricing and listing strategies. Therefore, the theoretical possibility that competitors can rapidly expand through capital investment, subsidies, and traffic acquisition is insufficient to rebut the presumption of dominance.
3. The Referability of the “3Q War” Precedent
By analogy with the “3Q War” (Tencent vs. Qihoo 360) ruling, Ctrip may invoke the reasoning of the Supreme People’s Court that a high market share does not equal market dominance and that competition among internet enterprises is highly dynamic, to argue that substitutability and innovation pressure must be assessed, rather than relying solely on a 50% market share presumption. Regulators, however, may downplay this precedent by emphasizing the specific characteristics of the platform economy. They may cite Article 11 of the Anti-monopoly Guidelines of the Anti-monopoly Commission of the State Council for the Field of Platform Economy, focusing on network effects, data control, and traffic allocation capabilities, and argue that Ctrip’s control over entry to travel booking differs from the conflict between instant messaging software and free compatibility tools in the “3Q War” case, thereby weakening the probative value of that judgment.
Although Ctrip’s defenses may have some merits, in administrative enforcement practice, regulators are still likely to uphold their finding of its dominant market position, with only mitigation in the range of fines due to Ctrip’s cooperation and rectification efforts.
III. Rectifications Expected by Regulators
As noted above, if abuse of its dominant market position is confirmed, regulators will also impose rectification measures on Ctrip, which are likely to focus on removing entry barriers to restore competition, rather than directly intervening in business decisions such as pricing. Compared with policies affecting the Consumer End, rectifications are more likely to target Ctrip’s management of the Business End (merchants in its platform). The following is our specific analysis:
1. “One or the Other” Exclusive Dealing
Ctrip’s exclusive partnerships with hotels through the “special brand” program may directly limit its competitors’ access to resources, causing substantial harm to market competition. Given that Alibaba and Meituan were both heavily fined for “one or the other” practices, there is a high likelihood that Ctrip could be found to have engaged in similar conduct. Once confirmed, Ctrip will be highly likely to be ordered by regulators to immediately cease such practices and restore merchants’ freedom to operate on multiple platforms.
If regulators require Ctrip to rectify the above practices, this may, in the short term, undermine Ctrip’s exclusive access to premium hotel resources and even divert internet traffic to competing platforms. In prior cases, after Tencent’s QQ Music was found to have unlawfully merged with China Music Corp in China, regulators required Tencent to rectify its exclusive licensing arrangements; nevertheless, some key rights holders (e.g., Jay Chou) continued to cooperate exclusively with Tencent. Similarly, while many hotels that have previously entered into exclusive arrangements with Ctrip are likely to expand cooperation with its competing platforms, a small number may still opt to remain exclusive cooperation with Ctrip.
2. “Lowest Price Across the Internet” Clauses and Forced Price Adjustments
Such practices may constitute the imposition of unreasonable trading conditions under the Anti-Monopoly Law. The European Union has previously investigated Booking.com, one of the largest OTA platforms worldwide, for similar “lowest price” practices. By pursuing the lowest price across all platforms through mandatory price-adjustment tools, Ctrip may have deprived merchants of pricing autonomy and distorted price competition. Regulators may require Ctrip to restore merchants’ pricing autonomy and remove unreasonable penalty mechanisms. If rectifications are to be imposed on Ctrip by regulators, despite diminution of Ctrip’s price advantage, it may also push Ctrip to attract merchants to offer discounted prices through lower commission rates or better services, potentially fostering healthier competition.
3. Retaliation or Coercion Through Traffic Suppression
Such conduct may constitute refusal to deal or disguised refusal to deal under the Anti-Monopoly Law. If Ctrip is found to have systematically retaliated against or coerced merchants through traffic suppression for their refusing to provide the lowest price, regulators may order an immediate halt to such conduct. Rectification measures may include prohibiting Ctrip from unjustifiably blocking merchants’ products, demoting their search rankings, or restricting their inventory display, and ensuring that merchants will not be penalized for operating on other platforms or refusing unreasonable demands, provided they have complied with basic platform rules. If these rectification measures are to be put into practice, Ctrip can still rely on positive incentives (such as preferential traffic allocation to close merchants), but this requires more refined merchant management strategies.
4. Big Data-Driven Price Discrimination
Big data-driven price discrimination may constitute discriminatory treatment under the Anti-Monopoly Law and can significantly harm consumer rights and fair competition. However, due to the opacity of algorithms, rectification enforcement is challenging. At present, allegations against Ctrip’s price discrimination are largely confined to isolated cases and individual user complaints. Regulators require conclusive evidence to establish the existence of systemic price discrimination. If no explicit evidence is collected in the investigation that Ctrip’s algorithms has implemented unfair pricing tailored to different users, it will be difficult to impose punishment directly on such “price discrimination“ behavior in the short term.
5. Algorithmic Collusion
Ctrip’s “Licheng Revenue Management System” (RMS) may facilitate coordinated price increases among hotels by algorithm, potentially constituting a hub-and-spoke conspiracy under the Anti-Monopoly Law. According to the RMS’s description on its website, it provides hourly pricing data and booking information of competitors, enabling hotels to promptly optimize their prices and channels. In this RMS, Ctrip may act as the hub organizing different hotels to fix prices in collusion with each other. If Ctrip is found to hold a dominant market position, such hub-and-spoke agreements may also be characterized as the conduct of abusing its dominant market position although they belong to monopolistic agreements in nature. However, given the difficulty of proving coordination, regulators may be more inclined to issue compliance warnings rather than mandate structural rectification.
6. Monopolistic Pricing
If Ctrip charges excessively high commissions or service fees for hotel bookings, flight changes, or bundled services, it may be accused of monopolistic pricing. However, this issue involves the legitimacy of the platform’s pricing strategies, which requires a comprehensive assessment of cost and profit, an evaluation of whether such commission significantly exceeds the industry average and whether excess profits are seized through unreasonable pricing. Overall, the likelihood of regulators requiring rectification on this basis appears relatively low.
Considering the anti-monopoly enforcement philosophy regarding platform economies in recent years and the subsequent efforts to restore fair competitive order, following the investigation, Ctrip is most likely to be mandated to implement substantive rectifications in three areas: “one or the other” exclusive dealing (including its variants of exclusive cooperation), “lowest price” clauses integrated with mandatory price adjustment tools, and “refusal to deal” practice executed through technical means. Issues like algorithmic collusion, price discrimination, and monopolistic pricing will be more probably subject to self-regulation rather than forced rectification.
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