Sun. Nov 28th, 2021
Billion-dollar fine against alibaba - violation of competition law

China’s competition watchdog has imposed a fine of 18 billion yuan, the equivalent of 2.3 billion euros, on the Chinese Alibaba group. The world’s largest online trading platform had used its dominant position to punish traders who offered their goods through rival services, state media quoted the market regulator as saying on Saturday.

Antitrust authorities’ largest-ever fine against a Chinese Internet giant raises new questions about the future of charismatic founder Jack Ma’s Alibaba Group, which has rarely been seen in public since fall. At the time, the 56-year-old had apparently incurred the displeasure of higher authorities by criticizing the Chinese financial supervisory authority.

Violation of antitrust law

For violating antitrust law, the fine was set at four percent of 2019 sales amounting to 455 billion yuan, Xinhua news agency reported. Alibaba said it would accept the fine and strengthen cooperation with authorities. It said the group will strengthen its compliance system and "better fulfill its social responsibility".

The unusually high fine from competition regulators is another blow to the powerful Alibaba Group, which has expanded its operations from online retailing to financial services to areas such as logistics, entertainment and tourism. Since influential founder Ma fell out of favor with the government in the fall, the company has come under increasing prere.

Investigations into alleged monopoly violations

In early November, authorities briefly halted the planned borsengang of Alibaba’s financial subsidiary Ant Group, citing new rules. It was supposed to be the biggest Borsengang ever. The trading platform also came under the scrutiny of investigators in December, when antitrust watchdogs began investigating allegations of monopoly violations.

Alibaba’s crackdown on traders who also offer on competing platforms, "eliminates or impedes competition", the market watchdog argued in its decision. It impaired innovation and development of the platforms. The rights and interests of consumers were harmed.

"Tighter controls do not bode well"

According to experts, the billion-dollar fine for Alibaba can be easily absorbed. In the last three months of last year alone, the company made a profit of the equivalent of ten billion euros. However, the tighter control by the authorities does not bode well for the company, observers said in their comments.

In a commentary of the communist party organ Volkszeitung it was said that the high penalty was an effective "effective measure", to bring platforms under control. It does not affect the state’s support for commercial hubs that play an important role in economic and social development. Rather, it is intended to encourage healthy and sustainable development.

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