State Administration for Market Regulation (SAMR) on April 10 announced administrative punishments on Alibaba [BABA:US] for the abuse of its dominant market position according to the Anti-Monopoly Law, as reported by Caixin on the same day. SAMR ordered Alibaba to stop its illegal acts and imposed a fine equivalent to 4% of its 2019 sales in China, totaling RMB18.228bn. Moreover, the ministry asked the group to conduct a comprehensive rectification and submit a compliance report of self-inspection for three consecutive years.
SAMR carried out the on-site investigation at Alibaba on December 24, 2020. As stated in the notice of a penalty decision, Alibaba had been requiring the merchants on its platforms to make exclusive operation agreements since 2015, which prohibited the merchants from opening stores or participating in promotional activities on other e-commerce platforms. Later, Alibaba responded that it would improve the construction of its regulatory compliance system and operate according to the laws and regulations.
Strengthening the antitrust enforcement aims to regulate the monopolistic behaviors in the domestic platform economy, which brings small companies and platforms the opportunity of a healthy competing and growing environment for innovation and sustainability. State Council, SAMR, and other relevant departments have issued a number of supporting documents around the platform economy. The action plan for building a high standard market system published at the beginning of this year strengthened the anti-monopoly and anti-unfair-competition regulations in the fields of the platform economy, sharing economy, and other new-format economies. On February 7, the antimonopoly committee of State Council released the antitrust guide. On March 15, SAMR promulgated the measures for the supervision and administration of online transactions, which proposed to prohibit the mandatory exclusive operation agreements imposed on merchants. Furthermore, the Legislative Affairs Commission of the Standing Committee of the National People’s Congress indicated that the revision of the anti-monopoly law was one of the key legislative targets in 2021.
In addition to Alibaba, on March 12, SAMR also announced punishments on ten cases of monopolistic practices in the internet industry, including Tencent [0700:HK] and Baidu [BIDU:US], with a fine of RMB500,000 in total. Besides, according to Reuters, Pony Ma, founder of Tencent, met with officials of Chinese anti-monopoly institutions in the middle of March to discuss the company’s compliance. Tencent is expected to be the next company facing a more stringent anti-monopoly regulatory investigation.