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China has announced a new regulatory package aimed at curbing intensifying competition in the e-commerce sector, banning practices that pressure merchants into offering discounts or participating in compulsory promotional campaigns, in a move designed to stabilize the market and protect small sellers.

According to a report by Bloomberg, the new rules, set to take effect in February, prohibit major digital platforms from abusing their market dominance to force vendors into price cuts or promotional activities that could undermine market stability. The regulations also ban online influencers from making false or misleading claims.

Under the new framework, e-commerce platforms are required to strengthen consumer protection measures and enhance safeguards for users’ personal data. Violations may result in penalties, including warnings and fines, as part of broader government efforts to rein in aggressive price competition and subsidy-driven sales wars.

Markets reacted swiftly to the announcement, with shares of several e-commerce companies coming under pressure amid concerns that the new restrictions could disrupt business models heavily reliant on discounts and financial incentives.

The move is part of China’s broader push to tighten oversight of the sector, with regulators increasingly targeting practices seen as harmful to smaller merchants and detrimental to fair competition within the domestic market.