Legal Regulation of "Involution" Competition among E-commerce Platforms

Abstract

In recent years, the "involutionary" low-price competition among e-commerce platforms has intensified, becoming a typical phenomenon of digital market failure. Unlike traditional healthy price competition, e-commerce involution is not a spontaneous behavior of merchants, but rather an irrational, closed competition where platforms, relying on their structural gatekeeper power such as algorithm weighting, traffic allocation, and transaction rules, force or induce merchants to engage in continuous low-price dumping, high-cost marketing, and bottomless price concessions. This model completely reverses the competitive logic of "winning through quality" in e-commerce, creating a vicious cycle of "low prices squeezing profits, profits compressing quality, continuous quality degradation, and continuous weakening of innovation." This directly leads to distorted market price signals, difficulties for small and medium-sized businesses, profit loss for the physical manufacturing industry, and long-term suppression of innovation and upgrading in the digital industry. Currently, China's traditional legal norms, such as the Anti-Monopoly Law, the Anti-Unfair Competition Law, and the E-commerce Law, are based on traditional offline competition models. Their high regulatory thresholds, narrow coverage, and weak penalties make them ill-suited to the systemic, covert, and dynamic characteristics of involutionary competition, resulting in fragmented enforcement and lagging governance. This article analyzes the operational mechanisms, manifestations, and multi-level harms of involutionary competition in e-commerce, precisely defining its legal nature, including malicious price-based traffic diversion, hub-and-spoke monopolies, and abuse of relative dominant position. It also systematically examines the institutional failures of current legal norms. Based on this, it constructs a three-dimensional regulatory system encompassing "anti-monopoly as a safety net, detailed anti-unfair competition measures, supplementary special laws, and supporting mechanisms." This system introduces rules on relative dominant position, adds new types of algorithmic unfair competition, improves special regulatory rules for fair transactions on platforms, and supplements this with penetrating supervision, compliance audits, and public interest litigation mechanisms. This aims to break the low-price involution trap in e-commerce, shift the platform economy from price-driven competition to quality and innovation-driven competition, and contribute to the high-quality development of the digital economy.