After the Hong Kong stock market closed on April 26th, there was news in the market that Meituan was placed on file by the State Administration of Market Supervision and Administration for investigation because he had been reported on suspicion of monopolizing "one of the two".

Some people may have obtained the news in advance. Meituan opened sharply higher in early trading, but opened high and left low, closing down slightly.

Meituan officials responded quickly: today, Meituan received notification from the State Administration of Market Supervision to file a case against Meituan's suspected monopoly behavior in accordance with the law. The company will actively cooperate with the regulatory authorities to further improve the level of business compliance management, protect the legitimate rights and interests of users and all parties, promote the long-term and healthy development of the industry, and effectively fulfill their social responsibilities. At present, the business of the company is running normally.

The matter is roughly a replica of BABA being investigated.

This paper will analyze it from three aspects: the expectation of the result, the corresponding influence and how to interpret it.

Result expectation

Optimistically, Meituan's antitrust investigation results may be between tens of millions and 1 billion fines.

Neutral expectations, Meituan antitrust investigation results may be between 10-3.9 billion fines.

Pessimistic expectations, Meituan antitrust investigation results may be between 39 and 10 billion fines.

Let's start with the reasons for different expectations.

According to BABA's punishment, the announcement explained that the penalty was based on 4 per cent of BABA's 2019 revenue, while the penalty standard was 4 per cent and 10 per cent.

Meituan's total revenue in 2019 is 97.5 billion, if calculated according to 4%, the result is 3.9 billion, if calculated according to 10%, the result is 9.75 billion, close to 10 billion.

The reason for optimistic expectation is that BABA's revenue is the merchant's advertising fees and commissions, excluding express transportation costs, and the express delivery expenses are settled by the merchants themselves and the express delivery company, so BABA makes a lot of money, but its realization rate in 2019 is only 3.74%. Meituan's revenue from takeout includes the rider's meal delivery fee, which is similar to the delivery fee in physical e-commerce, because of the timeliness of takeout, it is more reasonable for the platform to collect from the merchant and then distribute it to the rider. According to Meituan's financial report in 2019, the average fee allocated to riders for a single order is about 5 yuan, accounting for about 70% of Meituan's takeout revenue. The realization rate of Meituan takeout in 2019 is 14%. After putting aside the meal delivery fees allocated to riders, the actual realization rate is only about 4%. Considering that the average price of takeout orders is much lower than that of BABA's physical e-commerce, this realization rate is actually not high.

If we do such a disassembly of Meituan's revenue, we will find that it is not fair to refer to BABA's 4%. The real calculation method should be to remove the 70% of the food delivery fee in the takeout revenue, that is to say, the base of revenue should be 97.5 billion * 0.3 million 0.04 = 1.17 billion.

If you take into account the fact that BABA has helped businesses evade taxes in history, Ant Financial Services Group has moved the sensitivity of financial business cheese, and Meituan has a much higher importance in solving the bottom employment, optimistically anticipate that the final penalty may be less than 1 billion.

Neutral expectations are relatively simple, that is, directly multiply revenue by 4 per cent, and then give due consideration to the history of not helping businesses evade taxes and solve the impact of employment at the bottom to promote social stability. It may be a 50 per cent discount and a fine of about 2 billion.

Under pessimistic expectations, the focus of the so-called anti-monopoly punishment is on punishment, not on anti-monopoly, that is to say, asking for money is the core, anti-monopoly is just an excuse, and there is a good reason to do things. Then a small penalty is obviously not in line with the style of such a big movement, which involves the aspect of people's livelihood that society is most concerned about. according to the top case, BABA was fined 18.2 billion, and Meituan's market capitalization is also close to half of BABA's. Directly according to half of BABA's fine, the fine is more than 9 billion.

Overall, we believe that optimistic expectations account for 30%, neutral expectations account for 60%, and pessimistic expectations account for 10%.

Corresponding influence

It is obvious that the market has already had the expectation of antitrust penalty. Meituan's share price has fallen by as much as 40% in the last two months, so no matter what kind of expected result, the substantive impact on the company is very limited, just like the company's investment surplus of 10 billion in one quarter, the intrinsic value of the company will not increase much, because it is an one-off, even if the loss (penalty) in a certain quarter is 10 billion. In fact, it has no essential impact on the long-term operation of the company.

But those who really understand the nature of the takeout business will understand that Meituan's operational risk has been reduced because of antitrust events.

Although Meituan does benefit in part from the "choose one of two" strategy, even the person who looks down on Meituan the most will not think that Meituan won by this.

Without "choosing one of the two", under the condition of pure market competition, merchants and consumers will further move closer to the leading enterprises, and Meituan's market position will only be more stable, not the other way around.

It seems like a tragedy that the fines are ultimately paid by merchants and consumers, because with the end of the penalty, the platform strengthens its market position and thus reduces consumer subsidies. or reduce merchant discounts-without the previous exclusive cooperative commission discount-the wool ends up on the sheep.

Meituan has been doing takeout for more than 7 years, and the overall operation in these 7 years is at a loss. A loss-making business may be fined. How much capital will be invested in this field?

Of course, it is essentially the resistance brought by the order density effect of merchants, platforms, riders and consumers in the takeout business, which blocks almost all potential competitors, followed by the business's ultra-low gross profit margin. Now another reason has been added: even if it is done, it may not make money and may be fined.

But none of this means that things will not have a negative impact on market sentiment.

Under the penalty of neutral expectations, I think the stock price volatility will be very small, and may even rise slightly.

Under the penalty of optimistic expectation, I think the stock price will have a big upward trend.

Under the penalty of pessimistic expectations, the stock price will have 10-20% room to adjust in the short term, but the long-term trend remains the same.

How to interpret it

This is an unexpected investigation, because from the perspective of economic antitrust, Meituan is suspected, but it is far from the previous level of BABA, let alone substantial monopolies such as banks, tobacco, and electric power.

When the water is clear, there is no fish.

The game between channels and upstream suppliers is the norm of retail-and even all transactions.

For example, if you are a supplier and Walmart Inc says that you and I will cooperate exclusively, I will give you a lower discount point. Of course, you can also supply goods with Carrefour next door, then our deduction point will not be able to give you.

Do you think this is a "one of two" monopoly?

If you are a home appliance manufacturer, SUNING said let's sign an exclusive. I'll give you a 3% rebate at the end of the year. If you insist on working with Gome next door at the same time, then our year-end rebate is only 1%.

Do you think this is a "one of two" monopoly?

If you are a creator, making short videos, writing from media, or making movies, Douyin, Baijia or iQIYI, Inc. say that you and I will cooperate exclusively. I will give you more exposure and a higher commission on cooperation. If you insist on working with Kuaishou Technology, Jinri Toutiao or Tencent video at the same time, then our exposure and commission will have to be reduced.

Do you think this is a "one of two" monopoly?

I think it does not count, for example, if the requirements of these platforms must be exclusive, otherwise they will not cooperate, or they will already cooperate on multiple platforms, forcing them to sign exclusive contracts, otherwise they will unilaterally end the cooperative relationship, then they will be suspected of monopolization, because they are taking advantage of market dominance to hinder competition.

When I say this, I am not saying that there should be no anti-monopoly, but that we should not exaggerate the effect of administrative anti-monopoly, nor should we look at the platform economy with hostility.

Because of international political and linguistic and cultural reasons, it is very difficult for Chinese enterprises to develop globally, and the space of private enterprises can only be limited at home.

In the face of a single domestic market, our finance, insurance, electricity, tobacco, banking, oil, communications and other fields are not open to private enterprises, or there are too many restrictions on private enterprises.

This makes the competition of private enterprises inevitably fall into involution.

In a market with involuted competition, vicious competition is almost inevitable, and the profits are quite meagre and continue to be meagre.

When an enterprise does not have enough profit support, it is very difficult for it to invest in science and technology, especially in the hard technology field at the bottom.

When the public is angry at these Internet companies, which were once under the cloak of technology, and laments their unfortunate criticism, they may also consider whether there is a systematic solution to the problem, and where is the source of the matter?

European and American enterprises naturally face a global market and a market-oriented mature economy-there is no administrative entry threshold for various industries.

When we give an example of "other people's children" Musk's SpaceX, have you ever thought that NASA NASA gave SpaceX billions of dollars in orders, and SpaceX's competitor is the blue origin of Amazon.Com Inc founder Bezos?

When it comes to antitrust, it is not uncommon in Europe and the United States, but an interesting phenomenon is that European antitrust to American companies is more of a fine and tax supplement, while the United States is really trying to avoid monopoly and break up these enterprises, some of which have been successful. for example, the standard oil of Rockefeller, an oil tycoon a few decades ago, was dismantled into several oil companies, and Microsoft Corp 20 years ago was almost dismantled by the antitrust department of the United States. Obviously, we are learning more from Europe than from the United States. Europe is jealous of American companies, and we are dealing with our own "children".

However, in the incident in which BABA was punished and Meituan was filed, I saw that public opinion basically stepped on these enterprises one-sided, which is something worthy of vigilance.

When Ant Financial Services Group was listed on the stock market, I reminded you that this is not an accident of the BABA family. In the long run, it will not be good for Tencent, nor will it be good for Meituan, JD.com, etc., but a "tragedy" for the entire Internet industry, because the Internet financial dreams of almost all platform enterprises are shattered or greatly discounted.

When BABA was fined, I reminded you, "after a few years, people will eventually realize that BABA's' war 'with the State Administration for Industry and Commerce in 2015 is the last dirge in the era of fluttering white clothes on the Internet." Don't get me wrong, I think it's right for BABA to choose one of the two antitrust penalties. I just feel that the attitude of many people towards BABA is not much different from that of the rabble beheaded by Lu Xun. "

Just as Wechat is beneficial to breaking through the real "monopolies" of the communications industry-- mobile telecom and Unicom-- Ant Financial Services Group does not yield much to the significance of breaking the "monopoly" of the financial industry.

While BABA, Pinduoduo and Meituan are breaking the "monopoly" of commercial real estate, and DiDi Global Inc. is breaking the administrative "monopoly" behind the local taxi companies.

Five years later, a much higher proportion of catering merchants will open stores based on the takeout platform, and they do not need to open stores in high-rent business circles or street corners, nor do they need much space, but just do a good job in the food itself and services. at that time, businesses will normalize their cognition of "blood-sucking" or "hematopoiesis" of the platform as a whole.

Generally speaking, over the past two decades, the popularization and commercialization of the Internet have greatly enhanced social productivity and improved people's livelihood.

Ke Neng people are forgetful. Most people have forgotten the days when banks lined up to look at their faces, the days when they bought phone cards and looked everywhere, the days when they had to go to the traffic control office to pay parking tickets, the days when they were dumped by physical store clerks, the days when there was no way to be complained by taxi drivers, and the days when opinions could only be published by newspapers and magazines.

The statement of the General Administration of Market Supervision is to take a report to intervene in the investigation. What is curious is that people forgot to report China Mobile, Petrochina Company Limited, China Petroleum & Chemical Corp, the four major banks and China Tobacco? Or is it useless to report it?

Wang Xing sent a message in 2019: "2019 may be the worst year in the past decade, but it may be the best year in the next decade." "

Will this be a fable that will come true in the days to come?