China Begins Antitrust Sanctions, Fines Alibaba and Tencent

Jack Ma, founder of Alibaba (top), and Pony Ma, chairman of Tencent.

[Asia Economy Reporter Choi Dong-hyun] The Chinese government has begun to actively apply antitrust regulations to Alibaba and Tencent, which are referred to as 'internet giants.'

On the 14th, the State Administration for Market Regulation (hereafter referred to as the Administration) announced on its official website that Alibaba and Tencent were found to have violated antitrust law regulations and imposed fines of 500,000 yuan (approximately 83 million KRW) each.

The Administration viewed the acquisition and merger (M&A) activities by the two major internet companies, Alibaba and Tencent, without notifying authorities as violations of antitrust law. Alibaba's issue was acquiring 73.79% of shares in Intai (銀泰) Commercial, which operates department stores, without notification between 2014 and 2017 as part of its online and offline distribution integration strategy. In Tencent's case, the reason for the fine was its subsidiary, reading content service company Yuewen (閱文), acquiring 100% of the shares of Xinmeili (新美麗) Media, a film and drama content production company, in August last year.

In addition to Alibaba and Tencent, the Administration also imposed a 500,000 yuan fine on Fengchao (豊巢), China's largest operator of communal residential parcel lockers, for acquiring 100% of the shares of its competitor Zhongyou Zhidi (中郵智遞) in May this year for the same reason.

According to current Chinese antitrust law, antitrust supervisory authorities have the power to nullify mergers and acquisitions in addition to imposing fines. The Administration stated that the M&A results of the three companies fined this time did not lead to reduced competition within the industry or strengthen monopolies, and thus only held them accountable for 'procedural violations.'

Although the fines imposed on these companies are not large amounts, industry experts believe that the fact that Chinese authorities have issued sanctions for the first time amid announcements of strengthened antitrust regulations and a major shift in the internet regulatory environment carries significant implications for the market.

This content was produced with the assistance of AI translation services.