Industry

China slaps $2.8 bn fine on Ma’s Alibaba

The logo of Alibaba Group is seen at its office in Beijing, China.   | Photo Credit: REUTERS

Chinese regulators have imposed a record $2.78 billion fine on the Alibaba Group, capping a months-long probe into the homegrown e-commerce giant’s dealings and troubles with the government that had raised questions about the future of its billionaire founder Jack Ma.

The State Administration for Market Regulation (SAMR) in December announced an antitrust probe weeks after a record $37 billion IPO from the Ant Group, the group’s financial payments arm, was suspended at the last minute.

The suspension followed sharp comments from Mr. Ma criticising China’s financial system, and a broader tug-of-war with the authorities over Alibaba’s amassing of consumer data, which regulators felt gave it an unfair advantage over its rivals.

On Saturday, the SAMR said it had levied an 18.23 billion yuan ($2.78 billion) fine on the Alibaba Group “for indulging in a monopolistic act of abusing its dominant market position”, state broadcaster China Global Television Network (CGTN) reported.

The notice from the SAMR “ordered the group to stop illegal activities and imposed a fine of 4% on its 2019 domestic sales of 455.71 billion yuan ($69.57 billion), totalling 18.23 billion yuan ($2.78 billion)”, CGTN reported, adding that the regulator “concluded from a four-month investigation that Alibaba has been abusing its market dominance since 2015 by prohibiting merchants from opening stores or participating in promotional activities on other competitive platforms.”

Alibaba’s “one out of two” requirement, which required users of the platform to not use rival merchants’ services, had “hurt consumers’ interests”, the SAMR said, adding that the policy “hinders competition in China’s services market involving online retail platforms, impedes the free flow of goods, services and resources, and infringes the legitimate rights and interests of merchants on the platform as well as the interests of consumers.”

The SAMR said the group had “abused its dominant market position” and “also used market forces, platform rules, data, algorithms and other technical means to ensure the implementation of the exclusive dealing agreement”.

The company in a statement said it “accepts the penalty with sincerity and will ensure its compliance with determination.” Mr. Ma has kept a low profile even as the company said it would cooperate fully with the authorities as they conducted the probe.

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Printable version | May 6, 2021 4:40:48 AM | https://www.thehindu.com/business/Industry/china-regulators-fine-alibaba-275-bn-for-anti-monopoly-violations/article34287469.ece

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