Alibaba Slapped With $2.8 Billion Anti-Trust Fine As Analysts Ponder Whether Worst Is Over

 

Chinese anti-trust regulators have just slapped Alibaba with a record RMB18.2 billion ($2.8 billion) fine after concluding that the Chinese e-commerce giant had abused its market dominance for the sake of profit at the expense of Chinese society.

The FT reported that China's State Administration of Market Regulation announced the penalty on Saturday. It was set at 4% of Alibaba's 2019 revenues, amounting to a slap on the wrist. Alibaba was meant to "carry out a comprehensive rectification" drive on its platform, a reference to what antitrust regulators deemed the company's primary sin: forcing merchants to sell exclusively on its Tmall and Taobao online shopping platforms. The review is intended to force Alibaba to strengthen its legal controls and compliance with the new antitrust framework. Alibaba has 15 days to submit a report detailing changes to this "illegal behavior. In a statement, Alibaba said it "sincerely accepted" the penalty.

A Chinese antitrust lawyer, who asked to remain anonymous, said the fine "was meant to teach Alibaba 'don’t think you can do whatever you want,' but [would] not materially harm the business." He noted the penalty was not as large as it could have been and was limited to Alibaba’s ecommerce operations, rather than its other industry-spanning operations.

In a roundup of commentary from domestic lawyers, academics and analysts, Reuters quoted Wu Ge, director at the Beijing Zhongwen law firm, who cautioned that the fine was a message not only to Alibaba, but to Chinese consumers.

“The fine indicates that internet platforms should also obey the laws and create real value for consumers - not just chase profits or make profitability their top priority.

The Communist party’s People’s Daily, the party's most influential mouthpiece inside China, said the fine represented a "normative correction for the company’s development, a clean-up and purification of the industry environment, and a strong defence of fair competition."

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