China’s State Administration for Market Regulation (SAMR) has levied more than 3.6 billion yuan (US$527.3 million) in fines on seven e-commerce and food delivery platforms and their representatives following an investigation, the regulator announced on Friday.

SAMR said the seven platforms, which included retail and food delivery mainstays Pinduoduo (PDD), Meituan and JD.com, failed to properly verify food vendor licences and knowingly allowed unverified “ghost” catering services to operate.

The other platforms fined included Alibaba Group Holding’s Taobao Shangou, ByteDance’s Douyin and Alibaba’s Taobao and Tmall marketplaces.

PDD received the heaviest penalties, with illegal gains of 5.85 million yuan confiscated and a fine of 1.51 billion yuan imposed. The company was also slapped with a nine-month suspension on adding new bakery merchants – as they were a hotbed for malpractice – after the regulator found 9,463 outlets operating without licences or beyond their permitted scope, according to released documents.

The regulatory action follows an extended period of cutthroat competition, which started early last year, that drove down prices and stalled profit-making at China’s food delivery platforms. The state of “involution” led to the SAMR last July ordering Meituan, Alibaba and JD.com to engage in “rational competition”, but the discounts did not stop.

Shares of US-listed PDD rose more than 3 per cent in pre-market trading following the announcement, while US-listed shares of Alibaba gained around 0.7 per cent and JD.com added 0.4 per cent. In Hong Kong, Meituan closed 2.54 per cent lower on Friday.