The recent case of Chinese online travel platform Ctrip ignoring the warnings of provincial competition authorities until the central government stepped in reveals the limits of China’s decentralized regulatory system. Chun-Kit (Kitson) Ng suggests several ways that China can reform its system to empower the provincial authorities and fulfill the regulatory system’s design to avoid drawing on the central government’s resources.
In January 2026, China’s State Administration for Market Regulation (SAMR) opened an antitrust investigation into Ctrip Group, the country’s dominant online travel platform. By July, SAMR had imposed a record penalty of 5.18 billion renminbi (approximately $720 million) on Ctrip for abusing its market dominance. This included 1.66 billion renminbi in disgorgement of illegal gains and 3.52 billion in fines. Yet, the case’s lesson for competition policy in China begins with what happened before the SAMR’s intervention. In 2025, Ctrip was administratively interviewed twice by provincial and municipal market regulators—in Guizhou and Zhengzhou—over its anticompetitive practices. Those interviews yielded little, and Ctrip failed to implement meaningful corrective measures. Only when “talking” proved insufficient did regulators escalate to formal enforcement. This sequence raises a fundamental question about China’s tiered enforcement architecture: if provincial authorities are legally empowered to enforce competition law, why did their interventions fail to change Ctrip’s behavior, and what does that imply about the gap between legal empowerment and actual enforcement capacity?
In August 2025, the Guizhou Provincial Market Regulation Bureau interviewed Ctrip and four other online travel platforms: Tongcheng, Douyin, Meituan and Fliggy. The interviews identified several anticompetitive practices, including “choose-one-of-two” exclusivity arrangements—wherein a dominant platform forces merchants to deal exclusively with it, to the exclusion of competing platforms—and the use of technological tools to interfere with merchant pricing. The Bureau required all five platforms to conduct self-inspections and rectifications. Specifics about the platforms’ respective compliance efforts are not public, and SAMR independently opened its own investigation in January 2026.
Meanwhile, in September 2025, the Zhengzhou Municipal Market Regulation Bureau conducted a separate administrative interview with Ctrip, finding that the platform had imposed unreasonable restrictions on merchants’ transactions and pricing through service agreements, trading rules, and technical means, in violation of China’s E-Commerce Law. In response, the Zhengzhou bureau issued a formal Order for Rectification on September 4.
The actions of both the Guizhou and Zhengzhou authorities were done separately from the “Three Letters and One Notice” system: a tiered regulatory framework in coordination between provincial authorities and SAMR consisting of: (1) Reminder and Urging Letters, for early risk warnings; (2) Interview Notices, for formal interviews requiring corrective action plans; (3) Investigation Notices, for launching formal probes when evidence warrants; and (4) Administrative Penalty Decisions (for business operators) or Administrative Recommendation Letters (for government bodies). Provincial authorities are generally responsible for the first two steps, and SAMR for the latter two.
Under this framework, interview notices are triggered when a party fails to rectify issues after receiving a reminder, or when suspected monopolistic conduct has generated adverse public impact. The interviewed party must submit written corrective measures within a specified period. If the party fails to correct the issues, does so only partially, or repeats the violation, regulators may escalate to a formal investigation. The “Three Letters and One Notice” framework envisions a continuum of enforcement authority, with provincial regulators empowered to act as first responders and SAMR serving as the ultimate backstop. In theory, this gives provincial interventions real teeth: the credibility of a local interview rests on the understanding that SAMR can and will escalate if compliance is not forthcoming.
It is not clear from public information whether Ctrip ever received a Reminder and Urging Letter or an Interview Notice from SAMR under “Three Letters and One Notice” framework prior to the formal investigation. The Guizhou and Zhengzhou interviews were local actions, not SAMR framework steps. It is not clear why Guizhou and Zhengzhou authorities pursued enforcement outside the “Three Letters and One Notice” system. It may have been more expedient to do so, or because they pursued action under the E-Commerce Law, which observes a slightly different procedure than the national law that established the “Three Letters and One Notice” system. However, the procedure for escalation to SAMR was still established, and so the interviews and warnings by the provincial authorities should have been treated with the same weight.
Despite the provincial bureaus’ warnings, Ctrip made no substantive progress on rectification. The company offered no public explanation for its failure to implement corrective measures. According to the Yunnan Provincial Tourism and Homestay Industry Association—a non-profit industry organization representing homestay operators (small-scale accommodation providers operating guesthouses, boutique inns, etc.), who had levied the main complaint against Ctrip for abuse—Ctrip denied the existence of any monopolistic conduct. Instead, it attributed the disputes to “cognitive discrepancies,” suggesting that homestay operators misinterpreted and misunderstood the platform’s rules. At this stage, local regulators had fulfilled their role: they had identified violations, issued formal warnings, and demanded corrective action. But when those measures failed to produce results, the case was ripe for escalation to the national level.
In January 2026, SAMR formally launched an antitrust investigation. In July, the investigation found that Ctrip had held a dominant position in China’s online hotel booking platform service market since 2020, with market share by transaction value consistently exceeding 50 per cent. SAMR identified two distinct abuses: first, inducing premium “special-card” hotels into exclusive cooperation agreements through search weighting, and second, forcing other hotels to offer “lowest-price-on-the-web guarantees, enforced through algorithmic price-adjustment tools (“price-adjustment assistants”) and punitive measures including search weighting restrictions and de-listing. These were precisely the same practices that Guizhou and Zhengzhou had identified five months earlier.
For those outside China, the administrative interview is a unique feature of the country’s regulatory system. It is rooted in the concept of “flexible administrative enforcement,” referring to the modality of enforcement (non-coercive means such as interviews and warnings), rather than the locus of enforcement authority. It is an alternative to the traditional command-and-control model that imposed rigid, codified administrative penalties and compulsory measures. Legally, the interview sits at the intersection of administrative guidance and administrative investigation: it does not directly produce legal effects, yet it often serves as a precursor to stronger enforcement actions.
The legal foundation for antitrust interviews has been substantially strengthened in recent years. The 2022 revisions to China’s Anti-Monopoly Law explicitly authorized interview-based enforcement. In 2023, the State Council’s Anti-Monopoly and Anti-Unfair Competition Committee, together with SAMR, established the “Three Letters and One Notice” system. The tiered framework is designed to move from softer interventions to hard enforcement when voluntary compliance proves insufficient. Legally, provincial authorities have been empowered to enforce the law. However, the Ctrip case shows that there remains a gap between legal empowerment and actual enforcement capacity. Local authorities can “talk” and “warn,” but when facing a national platform with enormous market power, they lack the resources and authority to compel compliance.
The Ctrip case shows that the provincial authorities lack bite. The administrative interview is designed as a low-cost, preventive tool to address potential violations before they become entrenched anticompetitive structures. It preserves regulatory resources, reduces adversarial confrontation, and offers firms an opportunity to self-correct. Yet, these advantages turn into drawbacks if companies see interviews as cheap delays instead of real warnings. In some ways, the system worked as it was supposed to in holding Ctrip accountable. The local authorities acted as first responders, identifying violations and issuing warnings. When those warnings failed, SAMR stepped in as the escalatory authority, activating the national tiered framework.
But the system is also designed to avoid relying on SAMR’s resources. Ctrip shows that the system needs refinement so that the provincial authorities’ investigations carry more weight, even when conducted outside the “Three Letters and One Notice” framework. China’s regulators could improve the initial interview stage in several ways. First, it can establish clearer escalation triggers. The “Three Letters and One Notice” framework currently provides for escalation but leaves considerable discretion to regulators. Introducing more rule-based triggers—with built-in flexibility for different circumstances—would strengthen the interview’s deterrent signal as companies know exactly what will automatically refer them to the central authority. Second, publicly disclose correction timelines that would create reputational pressure that complements legal enforcement. Third, require independent compliance audits so that corrective commitments are verified through third-party review rather than self-reporting alone, serving as a complement to, rather than a replacement for, government monitoring. And fourth, ensure that repeated or material non-compliance leads to immediate investigation, while leaving room for calibrated responses to minor violations.
The Ctrip case shows that even with its flexibility and efficiency, the administrative interview has a limit: it cannot replace real law enforcement. When firms perceive that “talking” carries no real cost, the interview ceases to be a governance tool and becomes a delay tactic. China’s “Three Letters and One Notice” framework represents a sophisticated attempt to tier regulatory intensity to the severity of the violation, moving from soft guidance to hard enforcement. But the framework’s success depends on the credibility of the escalation mechanism. Ctrip’s experience suggests that the front end of the system lacks a deterrent effect. The takeaway here isn’t that interviews are useless—they are a valuable early intervention tool. Rather, they need to be part of a predictable, transparent, and automatic escalation process. The true test of China’s antitrust enforcement is not whether SAMR can impose record penalties; it already has. The true test is whether provincial authorities will be taken seriously before SAMR’s involvement becomes necessary.
Author’s Disclosure: The author reports no conflicts of interest. You can read our disclosure policy here.
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