SAMR sets record penalty on Alibaba, sends policy signal
China’s chief market regulator has imposed a record fine of 18.23 billion yuan ($ 2.78 billion) on Chinese e- commerce giant Alibaba Group over violation of the nation’s anti- monopoly laws. The fine is equivalent to about 4 percent of the company’s domestic sales in 2019.
The State Administration for Market Regulation ( SAMR) also released an administrative guidance, urging Alibaba to carry out “comprehensive and profound” self- inspection under the Anti- monopoly Law to inspect and standardize its business operations.
Alibaba must make a rectification plan covering these requirements and submit it to the SAMR by April 30. It must also submit self- inspection reports to the SAMR for three consecutive years.
The authorities imposed the penalties on the merits of several legal provisions under China’s Anti- monopoly Law. According to the SAMR’s written decision, Alibaba abused its market dominance and violated anti- monopoly laws.
For example, it has forbidden businesses on is platforms to open online shops on other platforms deemed as competitors by Alibaba. Those shops are also banned from participating in other online platforms’ promotional campaigns.
The financial penalty is China’s largest fine for anti- monopoly violations. It also exceeds the scale of many similar anti- monopoly fines on foreign internet giants, such as the 2.42 billion euros ($ 2.7 billion) Google was fined by the EU in 2017, as well as the $ 975 million fine levied by Chinese authorities on Qualcomm for unfair market practices in 2015.
Following the SAMR’s moves, Alibaba published an open letter addressed to its customers and the public, saying that it accepts the penalty with “sincerity and will ensure our compliance with determination.”
“It is an important action to safeguard fair market competition and quality development of internet platform economies,” the letter read.
The fine represents China’s efforts to strengthen anti- monopoly management and prevent companies from disorderly expansion. But it doesn’t mean the government is denying the important role of online platforms, wrote the People’s Daily.
“The government’s attitude to support online platforms’ development has not changed, but it will focus both on development as well as regulations,” read the article.
Shi Jianzhong, a professor with the China University of Political Science and Law, said that the Alibaba case indicates that the implementation of China’s anti- monopoly law on online platforms has “entered a new phase”.