ISSUING AUTHORITY:

The State Administration for Market Regulation

DATE OF ISSUANCE:

April 10, 2021

On April 10, 2021, China’s watchdog, the State Administration for Market Regulation (“SAMR”) released its decision on imposing a RMB18.228 billion (USD $2.8 billion equivalent) on the e-commerce giant Alibaba Group Holding Ltd. for violating China’s Anti-Monopoly Law (AML). The fine comprises 4% of the company’s domestic annual turnover and constitutes the largest fine ever issued by the SAMR.

To complement its decision, the SAMR also released an administrative instruction with 16 suggestions for Alibaba to improve its internal control and compliance management, to maintain fair competition, and to protect the legitimate rights, interests of business users and consumers on the platform. Alibaba was also ordered to submit reports to the SMAR on its compliance for the next three years.

The SAMR’s investigation focus was based on the online retail practice engaged by Alibaba that forces its business users to choose one of two online retail platforms rather than being able to work with both. This meant that a seller had to choose between using Alibaba’s online platform or those of its competitors. This ‘exclusive dealing’ stipulation was found by the SAMR to constitute monopolistic behavior in contravention of the AML.

The SAMR started the investigation in 2020, and delivered the initial investigation report to Alibaba on April 6, 2021, and under which, Alibaba has 60 days to appeal, but in a letter issued the same day by Alibaba, Alibaba stated that it accepted the penalty.

Alibaba’s share price on both the HK stock exchange and the New York based Nasdaq increased sharply the next working day.

Reference:

http://www.samr.gov.cn/fldj/tzgg/xzcf/202104/t20210409_327698.html

国家市场监督管理总局行政处罚决定书国市监处〔2021〕28号