Alibaba fined $2.78 bn for violation of China's anti-monopoly laws
09 April 2021
China's regulator has imposed a fine of 18.23 billion yuan ($2.78 billion) on e-commerce giant Alibaba for alleged violation of anti-monopoly laws. The fine, the largest anti-monopoly fine ever imposed by Chinese authorities, is equivalent to about 4 per cent of the company's domestic sales in 2019.
The State Administration for Market Regulation (SAMR) also directed Alibaba Group to carry out "comprehensive and profound" self-inspections, according to the Anti-monopoly Law, to inspect and standardise their business operations.
To improve their internal law compliance system, Alibaba was asked to carry out law compliance trainings of their executives and employees regularly, and to report these relevant proceedings to government authorities.
Besides, they should establish a reporting channel as well as dispute resolution mechanism, while informing the public of any penalty measures they propose on businesses, such as halting services or removing their products, the guidance showed.
Alibaba has been requested to make a rectification plan according to such requirements listed in the guidance, and to submit the plan to the SAMR before 30 April. The company is also required to submit self-inspection reports to the SAMR for three years consecutively.
The platform is also required to establish an external appraisal system by consumers and social experts, as well as to carry out cooperation with businesses based on fair and indiscriminative principles.
The SAMR also suggested that Alibaba should reveal law-compliance situation to the public to seek social inspection.
If Alibaba does not agree with the penalty, it could apply to the SAMR for administrative reconsideration within 60 days after receiving the penalty notice, or file an administrative litigation to the court.
The authorities imposed the penalties on the merits of several legal provisions under China's Anti-monopoly Law. According to the SAMR's administrative punishment written decision, Alibaba has abused its market dominance position 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 fine of 18.23 billion yuan also amounts to about 40 per cent of the group's net profit in the first quarter. The company earned a profit of 46.4 billion yuan in the first quarter of the 2021 fiscal year.
The company said it would further strengthen focus on customer value creation and experience, as well as continuing to introduce measures to lower entry barriers and business costs of operating on the platform.
Alibaba's shares lost 2.24 per cent in Hong Kong trading on Friday. Its American depository Receipts also shed 2.16 per cent on Friday.