The penalty equates to about 4 percent of Alibaba’s revenue in 2019 and comes amid Beijing’s unprecedented regulatory crackdown.
Chinese regulators have fined Alibaba Group Holding Ltd 18 billion yuan ($ 2.75 million) for violating antitrust rules and abusing its dominant market position, marking the highest antitrust fine imposed in the country.
The penalty, equivalent to about 4% of Alibaba’s revenue in 2019, came amid unprecedented regulatory crackdown on self-produced technology conglomerates in recent months that has weighed on the company’s shares.
The business empire of Alibaba’s multimillion-dollar founder Jack Ma has come under particularly heavy scrutiny following its sharp criticism of China’s regulatory system in late October.
In late December, the Chinese State Administration for Market Regulation (SAMR) announced that it had launched an antitrust probe into the company.
This came after authorities stopped the planned $ 37 billion IPO of Ant Group, Alibaba’s Internet financial group.
SAMR said on Saturday that, following an investigation launched in December, it had determined that Alibaba had been “abusing market dominance” since 2015 by preventing its traders from using other online e-commerce platforms.
He said the practice violates China’s antitrust law by hindering the free movement of goods and infringing on the trade interests of traders.
The SAMR ordered Alibaba to make “comprehensive corrections” to strengthen internal compliance and protect consumer rights.
“This sanction will be seen for now as a closure of the antitrust case by the market. In fact, it is the most profiled antitrust case in China,” said Hong Hao, head of research at BOCOM International in Hong Kong.
“The market has long anticipated some sort of penalty … but people need to pay attention to measures beyond antitrust 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 the SAMR resolutions. He said it would also work to improve business compliance.
The Chinese e-commerce giant said it would hold a conference call on Monday to discuss the sanction decision.
Alibaba had in the past been subjected to rivals and vendors for allegedly banning its traders from trading on other e-commerce platforms.
The practice of preventing traders from trading on rival platforms is a long one, and the regulator clarified in the rules published in February that it was illegal.
“The fine bill is a milestone and a traffic signal of great importance,” Shi Jianzhong, a member of the antitrust advisory committee of the State Council and a professor at China University of Political Science and Law, wrote. in the Economy Times.
“It indicates that the application of antitrust law on Internet platforms has entered a new era and has issued a clear policy signal.”