Chinese Top Market Regulator Fined Alibaba, Tencent for Antitrust Violations

December 15, 2020 3:07 am

Beijing (PingWest)—Chinese top market regulator fined three high-profile companies on Monday for antitrust violations.

The State Administration of Market Regulation (SAMR) said it would fine Alibaba, Tencent-backed e-book China Literature, and Shenzhen Hive Box 500,000 yuan ($76,464) each, the maximum under a 2008 anti-monopoly law, for not reporting past deals properly for anti-trust reviews.

Alibaba failed to seek approval for the acquisition of a combined 73.8% stake in department store operator Intime Retail Group through three deals between 2014 and 2017, according to the statement. China Literature failed to report its purchase of New Classic Media, a producer of TV shows and films, in 2018. Hive Box took over a competitor owned by China Post Corporation in May.

“The fines of the three cases are a signal to society that anti-monopoly supervision in the Internet field will be strengthened,” the SAMR said even as it acknowledged the fines were relatively small.

The regulator also pointed out companies operating under the so-called VIE (variable interest entity) structure are not exempted from the antitrust rules, as in the cases of Alibaba, China Literature, and Hive Box.

After receiving the penalty notifications, in response, the three companies stated that they will actively correct and improve in accordance with policy guidelines and requirements. 

This punishment is the latest sign that Beijing is seriously curbing malpractice among China's fast-growing Internet giants. In November, the market regulator issued a draft guideline that defines anti-competitive behavior among these Internet companies for the first time. It’s the most wide-sweeping attempt to regulate what the Chinese government sees as monopolistic behavior by the country’s tech giants that have grown significantly in the last few years.