Fine on Alibaba for Violations : China

On Alibaba Group Holding Ltd 18 billion yuan ($2.75 billion) Fine for violating anti-monopoly rules and abusing its dominant market position, marking the highest ever antitrust fine to be imposed in the country.

The penalty, equivalent to around 4% of Alibaba’s revenues in 2019, comes amid an unprecedented regulatory crackdown on the home-grown technology conglomerates in the last few months that have weighed on company shares.

Alibaba’s billionaire founder Jack Ma’s business empire has been particularly put under intense scrutiny after his stinging criticism of China’s regulatory system in late October.

In late December, China’s State Administration for Market Regulation (SAMR) announced it launched an antitrust probe into the company. That came after authorities halted a planned $37 billion IPO from Ant Group, Alibaba’s internet finance arm.

SAMR said on Saturday that after an investigation launched in December, it had determined that Alibaba had been “abusing market dominance” since 2015 by preventing its merchants from using other online e-commerce platforms.

It said the practice violates China’s anti-monopoly law by hindering the free circulation of goods and infringing on the business interests of merchants.

In November, China proposed sweeping antitrust regulations targeting its tech industry. In late December, the State Administration for Market Regulation said it had launched an antitrust probe into Alibaba. SAMR, the country’s top market regulator, said on Saturday it had determined that Alibaba had been “abusing market dominance” since 2015 by forcing its merchants to sell on one of the two main e-commerce sites in China instead of letting them choose freely.

Since late 2020, a clutch of internet giants including Tencent and Alibaba have been hit with fines for violating anti-competition practices. The meager sums of these punishments were symbolic at best compared to the benefits the tech firms reap from their market concentration. No companies have been told to break up their empires and users still have to hop between different super-apps that block each other off.

The SAMR ordered Alibaba to make “thorough rectifications” to strengthen internal compliance and protect consumer rights.

The company said in a statement posted on its official Weibo account that it “accepted” the decision and would resolutely implement SAMR’s rulings. It said it would also work to improve corporate compliance.

The practice of preventing merchants from listing on rival platforms is a long-standing one. The regulator spelled out in rules issued on February that it was illegal. ($1 = 6.5522 yuan)

“Today, we received the Administrative Penalty Decision issued by the State Administration for Market Regulation of the People’s Republic of China,” Alibaba said in a statement. “We accept the penalty with sincerity and will ensure our compliance with determination. To serve our responsibility to society, we will operate in accordance with the law with utmost diligence, continue to strengthen our compliance systems and build on growth through innovation.”

The thick walls that tech companies build against each other are starting to break down, too. Alibaba has submitted an application to have its shopping deals app run on WeChat’s mini program platform, Wang Hai, an Alibaba executive, recently confirmed.