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August 2, 2021

China Slaps $2.8 Bn Fine On Jack Ma’s Alibaba Group

China Slaps $2.8 Bn Fine On Jack Ma’s Alibaba Group

Chinese regulators have fined Alibaba Group Holding Ltd 18 billion yuan ($2.75bn) 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 approximately 4 percent of Alibaba’s revenues in 2019, came 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 $37bn 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.

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

“This penalty will be viewed as a closure to the anti-monopoly case for now by the market. It’s indeed the highest-profile anti-monopoly case in China,” said Hong Hao, head of research BOCOM International in Hong Kong.

“The market has been anticipating some sort of penalty for some time … but people need to pay attention to the measures beyond the anti-monopoly investigation, such as the divestment of media assets.”

Alibaba 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 Chinese e-commerce giant said it will hold a conference call on Monday to discuss the penalty decision.

Alibaba had come under fire in the past from rivals and sellers for allegedly forbidding its merchants from listing on other e-commerce platforms.

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The practice of preventing merchants from listing on rival platforms is a longstanding one, and the regulator spelled out in rules issued in February that it was illegal.

“The fine bill is a milestone and road sign with great importance,” Shi Jianzhong, antitrust consultant committee member of the State Council and professor at China University of Political Science and Law, wrote in state-backed Economic Times.

“It indicates that the antitrust law enforcement on internet platforms has entered a new era, and released clear policy signal.”

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