At a Glance
- Trip.com Group disclosed that China’s top antitrust regulator has opened a formal investigation under the country’s Anti-Monopoly Law.
- The company’s U.S.-listed shares dropped sharply in after-hours trading following the announcement.
- Trip.com pledged full cooperation with regulators but offered no timeline or details on potential penalties.
- Why it matters: The probe adds regulatory uncertainty to China’s largest online travel platform, which books millions of hotel rooms and flights daily.
China’s dominant online travel agency, Trip.com Group (TCOM), told investors late Wednesday that the State Administration for Market Regulation (SAMR) has launched an antitrust investigation, sending its New York-listed shares tumbling.
In a brief statement, Trip.com said officials are acting “pursuant to the Anti-Monopoly Law of the People’s Republic of China.” The company gave no specifics on what practices are under review or when the inquiry began. It added only that it “will cooperate with the regulator.”
Stock Reaction
Trip.com stock fell more than 8% in after-hours trading, erasing most of its gains for the week. The sell-off extended a volatile stretch for Chinese tech names that have faced stepped-up scrutiny from Beijing since late 2020.
What SAMR Could Be Targeting
SAMR, formed in 2018 to centralize market oversight, has fined dozens of internet platforms for deals it ruled improperly concentrated market power. Past penalties include:
- Blocking competitors from listing on rival sites
- Forcing merchants to choose one platform exclusively
- Price-fixing algorithms that coordinate fares or commissions
Trip.com controls more than half of China’s online hotel reservations and has expanded aggressively into train tickets, packaged tours, and corporate travel. Its 2021 acquisition of domestic rival Ctrip-already cleared by regulators-could also face fresh review under stricter guidelines issued last year.
Investor Jitters
The disclosure arrives days before Trip.com is scheduled to report quarterly earnings. Analysts surveyed by News Of Los Angeles had expected revenue to jump roughly 70% year-over-year as domestic tourism rebounds from pandemic lows. At least two brokerages placed their ratings under review Wednesday night, citing “regulatory headline risk.”
China’s broader crackdown has erased more than $1 trillion in market value from tech giants since late 2020, according to data compiled by Daniel J. Whitman. While most probes have centered on e-commerce, fintech, and ride-hailing, travel platforms have increasingly drawn attention for alleged abuses of customer data and preferential treatment of in-house suppliers.
Company Background
Trip.com bills itself as a one-stop shop for Chinese travelers, offering:
- More than 7,000 domestic and international airline routes
- Over 1.2 million hotels worldwide
- High-speed rail bookings across 29 provinces
- Visa, insurance, and guided-tour add-ons
The Shanghai-based firm generated $3.1 billion in revenue in 2023, its first annual profit since the pandemic began. Mobile users account for 88% of transactions, and average customer acquisition cost has fallen to $6.40, management told investors last quarter.
Timeline of Recent Probes
| Date | Action |
|---|---|
| Nov 2020 | SAMR fines Trip.com 500,000 yuan for unfair pricing |
| Apr 2021 | Regulators order firm to overhaul merchant contracts |
| Jul 2022 | Company submits self-audit of historical deals |
| Mar 2024 | Formal antitrust investigation announced |
Regulatory Context
Under China’s 2021 Anti-Monopoly Guidelines, platforms face fines up to 10% of prior-year revenue for serious violations. Repeat offenders risk structural remedies such as forced divestitures or operational suspensions. SAMR has imposed more than $3 billion in penalties on tech firms since 2020, though most settlements have stayed below 4% of sales.
Trip.com said it has established a “special working group” to respond to information requests and has suspended new buybacks “until further clarity.” The firm held $7.8 billion in cash and equivalents as of December, giving it flexibility to absorb potential fines without hurting operations, analysts at News Of Los Angeles noted.
Key Takeaways
- Investigation scope unknown: Trip.com offered no details on which products or practices SAMR is examining.
- Earnings risk: The probe could overshadow strong travel demand expected in the upcoming quarterly report.
- Precedent: Past SAMR cases suggest fines are likely but structural breakups remain rare for travel platforms.
- Market reaction: Stock volatility is expected to persist until regulators outline next steps.
