Alibaba fined 2,78 bil USD for anticompetitive practices

Alibaba fined 2,78 bil USD for anticompetitive practices
Source: http://www.samr.gov.cn/xw/zj/202104/t20210410_327702.html 12.04.2021 218

On April 10 the State Administration for Market Regulation of China imposed 18,2 bil CNY (≈2,78 bil USD) fine on Alibaba Group for abusing its dominant position on Chinese market of online retail platforms. Such decision was made after thorough consideration of nature, degree and period of abuse.

The antitrust probe into Alibaba was launched last December. The State Administration established a dedicated group to conduct on-site inspections, to question persons of interest, to review materials and to collect evidence. The group contacted vendors of Alibaba platforms and the Company’s market competitors. The Alibaba participated in the investigation process as well to provide relevant opinions.

As discovered, since 2015 Alibaba has abused its dominant position on the Chinese online retail platform market by imposing ‘either-or choice’ requirement on the platform vendors, which means prohibiting them to open online shops or to participate in promotion on competitive platforms. The Company used technical means, including platform rules, data and algorithms, as well as encouraging or punitive measures to make sure the requirement was fulfilled. Such behavior contributed to Alibaba’s protecting and enforcing its market power and obtaining unfair competitive advantage.

The said practices violated article 17(4) of the Antimonopoly Law of China, which prohibited the undertakings to “abuse their dominant market positions by requiring its counterparty to trade exclusively with it or trade exclusively with the appointed undertakings without legitimate reasons.” The fine of around 2,78 bil USD constituted 4% of Alibaba’s revenue in 2019. In addition to the administrative penalty, the SAMR also issued the Administrative Instructions that are meant to have an educational effect. In the Instructions the market watchdog brought up 16 requirements, including: to inspect self-compliance with the AML; to improve transparency of platform’s management rules; to ensure better protection of personal data; to cooperate with vendors on FRAND terms; to establish the mechanism of external supervision; to perform antimonopoly compliance and conduct trainings; to report to market regulation authority on regular basis; to take relevant measures to guarantee legal rights of vendors and consumers; to establish an effective channel for claims; to make public announcements when punitive measures (dropping ranking in search results, banning, refusing to provide service) take place, etc.

Alibaba must revise its operation plan to fulfil with the abovementioned requirements before April 30, and to report timely to the SAMR on the relevant compliance during three years since the receipt of the Instructions.

Alibaba posted a response in its official Weibo (Chinese Twitter) account, declaring: “We sincerely accept the penalty and are determined to comply. We will enforce law-respecting in our operations, intensify the establishment of compliance system, set foot in innovative development and carry out better our social responsibilities.” It later stated: “We realize that today’s fine is an alert and a horsewhip for us. This day sets an important milestone in Company’s history, and we will take it as a new start. Government’s regulation and service together with public critics, forgiveness and support are crucial elements of our maturity.”

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