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China intensifies antitrust crackdown with latest fines on internet giants

Several leading Chinese internet companies, including Tencent, Alibaba, ride-hailing company Didi Chuxing, and e-commerce giant Suning, were each fined 500,000 yuan ($77,345) per breach in relation to the anti-monopoly laws on Wednesday, as China steps up its crackdown campaign against monopolistic behaviors that threaten to stifle market vitality.

Analysts said that the companies received a lesser penalty as their violations do not constitute exclusivity and restriction on competition – a type of monopolistic conduct that led to the record $2.8 billion fine on Alibaba in April.

However, the companies were determined by market regulators to have breached the “concentrations of undertakings” provision under the anti-monopoly law in a total of 22 equity investment and joint venture deals, the State Administration for Market Regulation (SAMR) said in a statement. Regulators ruled out the effects of exclusivity or restriction on competition.

The companies and their counterparties are each fined 500,000 yuan – a cap fine – over each case for failing to complete a required file and documentation process before the completion of the deals and for noncompliance, documents posted on the SAMR’s website showed.

Multiple subsidiaries of Didi – Xiaoju Kuaizhi Inc – were among the penalized parties, days after Didi was removed from Chinese app stores by order of China’s cyberspace regulator over cybersecurity issues.

Li Junhui, a professor at the China University of Political Science and Law, told the Global Times on Wednesday that the fines showed that the regulatory body is keeping up the pressure in its anti-monopoly crackdowns.

Each confirmed case of noncompliance was resolutely slapped with a fine, showing regulators’ serious execution and unforgiving attitude in anti-monopoly law enforcement, Li said.

The fines serve as a reminder to internet companies to comply with their legal obligations on their own initiative, noted Li.

The probes of the 22 cases, which involved fields such as new retail, e-commerce, logistics, fintech, ride-hailing and charging piles in the new-energy vehicle industry, started in March and April this year, according to the SAMR.

For example, Xiaoju Kuaizhi Inc and BAIC Mobility Co, subsidiary of Beijing Automotive Industry Holding Co (BAIC Group), failed to report to the SAMR about their joint venture before the company obtained a business license on May 17, 2018, which violated Article 21 of the Anti-Monopoly Law and constituted an illegal concentration of business operators.

“It is the continuation of the monopoly supervision of the platform economy and internet firms. It is not closely related to the removal of Didi Chuxing’s app for data security. But Didi is of course in the spotlight as it is the most recent and high-profile example,” Wang Peng, an assistant professor at the Gaoling School of Artificial Intelligence at the Renmin University of China, told the Global Times on Wednesday.

Many of the companies fined on Wednesday are listed on overseas stock markets.

E-commerce company Suning and a subsidiary controlled by China’s largest online food delivery platform Meituan were also on the receiving end of fines.

Chen Da, executive director of Anlan Capital, said that the amount of the fine is insignificant for such giant companies and investors generally welcome such gentle reminders keep the companies on the right track of development. Nonetheless, the ruling could result in some short-term jitters in investor sentiment, Chen said.

China has been ramping up crackdowns on its digital platform companies, as the digital economy accounts for a growing percentage of the world’s second-largest economy and poses some serious risks.

The government is seeking to regulate the market, curb the disorderly expansion of capital and inject vitality into the vital sector, which already accounted for 36.2 percent of the nation’s GDP as of 2019.

Chinese market regulators began to step up crackdowns on monopolistic behavior and unfair competition last year.

The country’s antitrust push was marked by the iconic year of 2020, when the SAMR closed 109 monopoly cases throughout the previous year with penalties totaling 450 million yuan and intensified anti-monopoly crackdowns on internet platform companies.

The crackdown campaign continued into 2021, with the SAMR in April telling 34 platforms – including Tencent, Alibaba, Baidu and Meituan – to stand in awe of the rules and undertake comprehensive rectification of their monopolistic behavior, and tax-related irregularities or violations, within one month
Source: Global Times

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