LONDON — Alibaba, China’s biggest e-commerce operator was fined 18.23 billion renminbi, or $2.78 billion, by China’s State Administration for Market Regulation for monopolistic behaviors, China’s state media said Saturday morning, and ordered to “stop its illegal conduct.”
The fine was calculated by deducting 4 percent of the group’s 2019 revenues, which totaled 455.712 billion renminbi. It is one of the largest fines Chinese regulators have ever issued, exceeding the $975 million antitrust penalty that the Chinese government imposed on American chipmaker Qualcomm in 2015.
China’s State Administration for Market Regulation found that since 2015, Alibaba Group has abused its dominant position by imposing “pick one over two” requirements on merchants on its platforms, which includes Tmall. According to its investigation, Alibaba prohibits merchants from opening stores or participating in promotional activities on other competing platforms, and adopting incentives, penalties and technical means such as big data and algorithms to ensure its leading position in the market.
The report stated that Alibaba “excluded and restricted competition in the market of online retail platform services in China, hindered the free flow of goods and services and resource elements, affected the innovative development of the platform economy, infringed on the legitimate rights and interests of merchants in the platform, and harmed the interests of consumers.”
In years past, JD.com, a rival to Alibaba complained of anti-competitive behavior and said brands had been pressured off their platform by the larger firm.
Authorities have demanded Alibaba to rectify the company’s practices and to submit a self-examination compliance report to the State Administration for Market Regulation for three consecutive years.
Alibaba responded 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 company added it will hold a conference call on Monday at 8 a.m. Hong Kong time to discuss the fine. Revenue for the group’s fiscal year 2020 was up 35 percent to 509.71 billion renminbi, or $71.97 billion.
Last December, Alibaba became a target for scrutiny after the company’s founder Jack Ma criticized China’s financial regulatory system in front of a room full of high-ranking officials during the Bund Summit in Shanghai. Market regulators shortly after halted Ant’s initial public offering, which would have been the biggest IPO in history.
Since the incident, both Alibaba and Ant have been working on corporate restructuring and regulatory compliance under the directions of the government, while Ma went off the radar for three months until early January. He made a surprise public appearance at a virtual ceremony awarding 100 rural teachers, quashing rumors that he had been detained by the Chinese authorities.
In December, the Chinese government fined both Alibaba and JD.com — along with a third firm VipShop Holdings — 500,000 renminbi, or a little more than $76,000 on charges of misreporting prices and offering false promotions, among other things, after receiving consumer complaints.
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By: Tianwei Zhang
