Alibaba and three other companies were fined 500,000 yuan each for “strengthening anti-monopoly”

China’s market regulator has slapped heavy fines on Internet giants and warned that the government will not tolerate monopolistic behaviour.

Market supervision administration of China (December 14) announced on Monday to alibaba investment co., LTD. (hereinafter referred to as alibaba investment) acquisition Yintai commercial (group) co., LTD. (hereinafter referred to as Yintai commercial) equity, reading group (hereinafter referred to as the reading article) buy new beautiful media holdings co., LTD. (hereinafter referred to as new media) equity, shenzhen nest network technology co., LTD. (hereinafter referred to as the abundant nest network) to acquire mailed in wisdom handed technology co., LTD. Three “did not declare concentration of case law in accordance with the” administrative penalty, The administrative penalty of 500,000 yuan ($76,464) was imposed on Alibaba Investment, China Literature and Fengchao respectively.

The Group mentioned in the punishment decision was established on March 30, 2015. It was formed after Tencent Literature, a subsidiary of the Internet company Tencent, acquired shanda Literature. China Literature Group is registered in the Cayman Islands and listed on the Hong Kong Stock Exchange in November 2017.

Fengchao Network is jointly invested by five logistics companies including SF Express, a large privately owned express delivery company in China, and was established on June 6, 2015. Among them, SF Holding the highest proportion, 35%, SF president Wang Wei is the legal representative of Fengchao.

According to the official website of the State Administration for Market Regulation, the chief official of the anti-monopoly bureau of the State Administration for Market Regulation was interviewed by reporters. The official said the amount imposed on the three companies was based on the provisions of Articles 48 and 49 of China’s Anti-monopoly Law. Among them, article 48 of the Anti-monopoly Law stipulates that the anti-monopoly law enforcement agency of The State Council may impose a fine of less than 500,000 yuan on business operators who violate the provisions of this law to implement concentration.

Observers noted that the penalty announced Monday is the largest under China’s anti-monopoly law, which took effect August 1, 2008. However, the fines are small compared with the size of the companies.

In response to Monday’s decision by China’s market regulator to impose penalties under the anti-monopoly law, analysts said it was a warning to big companies that Internet companies should not take a “wait and see” attitude before reporting transactions, and a signal that the government will step up anti-monopoly supervision in the Internet sector.

Monopolistic behaviour by Internet companies is considered to have become a top priority for the Communist Party leadership, the analysis said. A meeting of the Communist Party’s Politburo, chaired by Xi Jinping, general secretary of the Communist Party, on Friday decided to step up anti-monopoly efforts.

In the 12 years since China’s anti-monopoly law came into effect, the Internet industry has been excluded from antitrust scrutiny, leading to a boom in these companies, Reuters quoted a researcher at the National Institute for Strategic Studies at Tsinghua University in Beijing as saying. At the same time, the merger and expansion of Internet companies are unregulated, bringing chaos to the market. The researcher believes that national regulators are now the quickest way to signal increased enforcement by starting with the simplest and least controversial cases.

According to a comprehensive media report, Alibaba said that after receiving the notice, it “has actively rectified the situation in accordance with policy guidelines and requirements”. China Literature Group said it attaches great importance to the notice and will actively rectify; Fengchao network also said it had received the notice and “sincerely accept and actively implement”. Alibaba and Tencent didn’t immediately respond to requests for comment.

Shares in Alibaba, Tencent and China Literature all fell more than 2 percent on Dec. 14.