Antitrust regulator, the State Administration for Market Regulations (SAMR), fined Alibaba [BABA:US] Investments, Shenzhen Hive Box Technology, and China Literature [0772:HK], a subsidiary under Tencent [0700:HK], half a million RMB for not gaining certain acquisition or buyout approvals, thus violating anti-monopoly laws, according to Sina Finance on December 14. Alibaba Investments originally bought Intime Retail with USD2.6bn to build out its online and offline retail channels in 2018. Tencent’s subsidiary also sought to buy New Classics Media to develop its capabilities for recording content in 2018. In Hive Box’s case, it failed to appropriately disclose taking over a competitor, China Post Smart Delivery Technology.
A month earlier in November, regulators published draft regulations targeting monopolistic conduct such as pushing out small rivals, over the top subsidies to pressure competitors, and sharing of consumer data. Despite such deals taking place over a year ago, SAMR’s actions reflect how serious regulators are about targeting anti-competitive behavior and combing recent history to apply new rules.
Although the fine amount is quite small compared to the size of the three companies, it serves as a warning for M&A-happy companies to curb back such frenzied M&A efforts. Regulators are also looking into a recent deal between Huya [HUYA:US] and Douyu [DOYU:US], with the former looking to buy out the latter. Tencent would then have 68% voting shares in the combined companies, allowing for WeChat to gain control over the livestream gaming industry, which saw RMB30bn in revenue this past year, according to iResearch.