The penalty is equivalent to about 4% of Alibaba’s revenue in 2019 and comes amid Beijing ordering an unprecedented crackdown on regulation.
Chinese regulators fined Alibaba Group Holding Ltd 18 billion yuan ($ 2.75 billion) for violating antitrust rules and abuse of market dominance, marking antitrust fines. the highest ever applied in this country.
The penalty, equivalent to about 4% of Alibaba’s revenue in 2019, comes amid an unprecedented regulatory crackdown on homegrown tech corporations over the past few months that has affected to company stock.
Billionaire Alibaba founder Jack Ma was under scrutiny after his harsh criticism of China’s regulatory system in late October.
In late December, the State Administration of China’s Market Regulations (SAMR) announced it had launched an antitrust investigation against the company.
That comes after the authorities blocked a $ 37 billion IPO from Ant Group, Alibaba’s internet finance arm.
SAMR said on Saturday that after an investigation was launched in December, it determined that Alibaba had “abused market dominance” since 2015 by preventing its merchants from using use other online e-commerce platforms.
It said this violated China’s antitrust law by obstructing the free circulation of goods and infringing the business interests of merchants.
SAMR ordered Alibaba to take “thorough rectification measures” to strengthen internal compliance and protect the interests of consumers.
“This penalty will be considered to close the antitrust case for the current market. It’s actually the most famous antitrust case in China, ”said Hong Hao, head of BOCOM International research in Hong Kong.
“The market has been anticipating some penalties for some time … but people need to pay attention to measures beyond antitrust investigations, such as divestments of media assets.”
Alibaba said in a statement posted on its official Weibo account that it “accepts” the decision and will adhere to SAMR’s decisions. It said it will also work to improve corporate compliance.
The Chinese e-commerce giant said it would hold a meeting on Monday to discuss the penalty decision.
In the past, Alibaba has been criticized by rivals and sellers for allegedly banning its merchants from listing on other e-commerce platforms.
Preventing sellers from listing on rival platforms has been around for a long time, and the regulator pointed out in the February’s rules that it was illegal.
Shi Jianzhong, member of the State Council’s antitrust advisory committee and professor at the Chinese University of Political Science and Law, wrote in the state-backed Economic Times: “The fine bill is a milestone and a road of great importance.
“It shows that the enforcement of antitrust laws on internet platforms has entered a new era and gives clear policy signals.”