Alibaba is accused of monopolizing the market with the “two-for-one” advantage.
China’s State Administration of Market Supervision announced Saturday (10) that it has fined Alibaba Group Holding Ltd (Alibaba) about 18.2 billion yuan (about $2.7 billion) and imposed administrative penalties under the Anti-Monopoly Law for its “two-for-one” monopolistic practices on online retail platforms in China. (By Chen Junhao)
The State Administration of Market Supervision announced that in December 2020, the authorities opened an investigation into Alibaba’s monopolistic practices under the Anti-Monopoly Law and found that Alibaba had a “dominant position” in the market for e-tailing platform services in China. The announcement stated that since 2015, Alibaba has abused its dominant market position by imposing “two-for-one” requirements on merchants on its platform, prohibiting them from opening stores or participating in promotional activities on other competing platforms, and by using market forces, platform rules, and technical means such as data and algorithms to protect the market with various incentives and penalties. The “two choices” advantage.
In 2015, the online shopping platform “Jingdong” to the market regulators, reported “Tmall Mall”, complaining that e-merchants can only “choose one” in “Tmall” and “Jingdong”.
The investigation by the General Administration of Market Supervision stated that Alibaba’s “two-for-one” practice “excludes and restricts market competition in the market of e-tailing platform services in China”, impedes the free flow of goods and resources, infringes on the legitimate rights and interests of e-merchants, and harms the interests of consumers. This act violated Article 17(1)(d) of China’s Anti-Monopoly Law, which refers to the abuse of dominant market position.
The General Administration of Market Supervision (GAM) imposed an administrative penalty on Alibaba, ordering Alibaba to “stop the illegal acts” and imposing a fine of 4% of its 2019 sales in China of RMB 457.512 billion, or approximately RMB 18.228 billion. In accordance with the Administrative Penalty Law, the General Administration of Market Supervision issued an Administrative Guidance Letter to Alibaba, requiring it to strictly implement the “main responsibility of platform enterprises”, strengthen internal control and compliance management, maintain fair competition, and protect the legitimate rights and interests of merchants and consumers on the platform, and requiring Alibaba to submit a self-inspection and compliance report to the General Administration of Market Supervision for three consecutive years. Alibaba is required to submit self-inspection compliance reports to the General Administration of Market Regulation for three consecutive years.
Alibaba issued a statement saying, “The Group accepts the punishment and is determined to comply. Alibaba’s CEO, Zhang Yong, nicknamed “Easy-going Son,” issued an internal statement to the company’s employees, saying that “we will deal with the issue openly and together,” and that the company will improve and start anew. Alibaba will hold a meeting next Monday (12) to discuss the penalty.
The authorities fined Alibaba, which is believed to be related to Alibaba founder Jack Ma’s criticism of China’s financial regulators in a public forum in October 2020, and the abrupt halt to the IPO in November, when Ant Group’s de facto owner Jack Ma and Chairman Jing Xiandong were interviewed by the Chinese Communist Party authorities.
Reuters quoted Hong Hao, chief strategist at Bank of Communications International (Hong Kong), as saying that the punishment of Alibaba would be seen as the end of the anti-monopoly case. He described it as the most high-profile anti-monopoly case in China. According to Hong Hao, the outside world needs to pay attention to whether there are other measures outside the anti-monopoly investigation. The president of Wisdom East Securities Limited (Hong Kong), Mr. Lin Changnian, said the Chinese government may hit other Internet giants after this heavy blow to Alibaba.
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