Market regulator fines three tech companies for illicit acquisitions

Source: Global Times Published: 2020/12/14 15:03:40


Three Chinese companies - Alibaba Investment, Tencent-backed online literature platform China Literature and express locker solutions provider Shenzhen Hive Box Co - were each fined 500,000 yuan ($76,465) for breaching the country's Anti-monopoly Law, said a statement by the State Administration for Market Regulation (SAMR) on Monday.

The three companies were earlier investigated in connection with illicit acquisitions. Alibaba Investment bought share rights of Intime Retail, China Literature purchased share rights of New Classic Media, and Hive Box purchased share rights of China Post Zhidi (, without notifying regulators beforehand, according to Chinese media reports.

The exposure of these cases concerning the country's internet giants is a clear signal that the Anti-monopoly Law is applicable to all entities - domestic or foreign-funded, state-owned or private, large or small, internet giants or traditional businesses, the SAMR said.

The SAMR also said that although the fines are relatively low, the penalties send a signal to the public that anti-monopoly oversight in the digital economy will be strengthened, pouring cold water on the wait-and-see psychology that some internet giants held in executing their market strategy. 

"After receiving the notice from relevant government departments, we have actively rectified and improved our work in accordance with the policy guidelines and requirements," Alibaba told The Paper on Monday afternoon. 

China Literature and Hive Box Co gave similar responses, saying that they had received notices from relevant departments and would improve their work procedures according to the policies, according to a report by Beijing Business Today.

In response to the penalties, the shares of Alibaba and Tencent were down about three percent during the afternoon at the Hong Kong stock market. At the close, Alibaba, Tencent and China Literature were down by 0.12 percent, 2.89 percent and 4.12 percent, respectively. 

"It is a clear signal to the market that internet giants leveraging their capital scale to monopolize the market won't be tolerated by regulators any longer," Tian Yun, a vice director of the Beijing Economic Operation Association, told the Global Times on Monday.

If a company simply depends on its capital scale to squeeze out small competitors and gain a larger market share, it will face regulatory action, he added.

According to the SAMR statement, the agency is investigating a merger between Chinese streaming platforms Huya and Douyu, which is also suspected of running counter to the Anti-Monopoly Law .

China's policymakers have placed increasing attention on taking action against monopolistic and anti-competitive behavior by huge companies. A meeting of the Political Bureau of the Communist Party of China (CPC) Central Committee on Friday analyzed economic policy for 2021, a development that came after the SAMR in November issued additional anti-monopoly rules relating to the country's online economy to enhance oversight of giant internet platforms.

Posted in: COMPANIES

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