SAMR orders Huolala to end unfair business practices

China's market regulator has ordered freight platform operator Huolala to stop using algorithms that unfairly suppress freight rates and to scrap rules requiring drivers to display exclusive vehicle decals.

The State Administration for Market Regulation said on Thursday it had formally summoned Huolala under China's anti-monopoly law and instructed the company to carry out a comprehensive compliance overhaul, operate in accordance with the law and respond to concerns from drivers, consumers, and the broader market.

As part of the rectification plan, Huolala was ordered to stop using algorithms to unreasonably drive down freight prices and to limit the proportion of orders subject to complex dynamic pricing mechanisms.

SAMR said Huolala must fully abolish mandatory exclusive vehicle decal requirements for drivers and stop imposing penalties such as higher commission rates or fines on drivers who refuse to comply.

The company will refund 120 million yuan ($16.7 million) in fees deemed unreasonable, according to the regulator.

Huolala has also committed to lowering platform commission rates. Overall commission levels will fall from about 11 percent before the rectification process to around 9 percent, a move expected to reduce drivers' costs by more than 1.3 billion yuan annually, SAMR said.

The company will also be required to apply pricing algorithms in a fairer manner, promote a reasonable recovery in average freight rates per order and per kilometer, and regularly disclose pricing rules, as well as explanations for fare increases or reductions.