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China initiates antitrust probe into Alibaba

December 24, 2020: China’s antitrust regulator, State Administration of Market Regulation (SAMR) has started investigating Alibaba Group Holding over suspected monopolistic practices. This comes after the suspension of the much awaited US$37 billion IPO of Ant Group, an affiliate of Alibaba, last month. 

In November , China drafted new antitrust rules aimed at the country’s largest tech companies. Although the rules were not said to be aimed at any particular company, but the rules were aimed to end “monopolistic practices” like price discrimination, the use of exclusive agreements to lock in merchants, and the compulsory collection of user data.

Alibaba is  suspected of monopolistic conduct such as “forced exclusivity”, which means making merchants choose only one platform as their exclusive channel of sales and distribution

Last week, SAMR slapped fines of US$76,300 each on Alibaba Group Holding, Tencent Holdings-backed China Literature and Shenzhen Hive Box for not properly reporting past acquisitions for clearance.

As reported by South China Morning Post, the SAMR stated on December 21 that “The internet industry is not outside of antitrust law.”

Alibaba was founded by Chinese school teacher turned entrepreneur Jack Ma. It is one of the biggest conglomerates in China and one of the three iconic tech giants, BAT – Baidu, Alibaba, and Tencent.

Regulator’s in CHina are also increasing their grip over fintech industries. China’s central bank has called Ant Group’s executives for a meeting with the financial regulators. 

State media supports the latest moves of regulators. An article in the People’s Daily said, “Fair competition is the core of the market economy” while monopoly “distorts allocation of resources, harms the interest of market players and consumers, and kills technological advancement.”

SAMR was constituted in 2018 for regulating areas such as market competition, monopolies, intellectual property, and drug safety. It was formed in an attempt to overhaul government administration. Before merger, the responsibilities of SAMR were distributed among three offices, General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), the China Food and Drug Administration (CFDA), and the State Administration of Industry and Commerce (SAIC).