China steps up antitrust crackdown with latest fines on internet giants
Law. Photo: VCG
Several large Chinese internet companies including Tencent, Alibaba, rideshare company Didi Chuxing and e-commerce giant Suning were each fined 500,000 yuan ($ 77,345) on Wednesday for violating anti-monopoly laws. , as China steps up its efforts. its campaign of repression against monopolistic behavior which threatens to stifle the vitality of the market.
Analysts said the companies received a lesser penalty because their violations did not constitute exclusivity and restriction of competition – a type of monopolistic behavior that led to the record fine of $ 2.8 billion imposed on Alibaba in April.
However, market regulators determined that the companies violated the “business concentrations” provision under the antimonopoly law in a total of 22 equity and joint venture transactions, the Administration said. State for Market Regulation (SAMR) in a statement. . Regulators have ruled out the effects of exclusivity or restriction of competition.
The companies and their counterparties are each fined 500,000 yuan – a capped fine – for each case for failing to complete a case and documentation process required before the transactions are concluded and for non-compliance, showed. documents posted on the SAMR website.
Several Didi subsidiaries – Xiaoju Kuaizhi Inc – were among the penalized parties, days after Didi was pulled from Chinese app stores on orders from the Chinese cyberspace regulator over cybersecurity concerns.
Li Junhui, a professor at the China University of Political Science and Law, told the Global Times on Wednesday that the fines showed the regulator was keeping up the pressure in its anti-monopoly crackdown.
Each confirmed case of non-compliance has been resolutely fined, testifying to the regulators’ serious execution and ruthlessness in enforcing the anti-monopoly law, Li said.
The fines remind internet companies to comply with their legal obligations on their own initiative, Li noted.
Investigations of the 22 cases, which involved areas such as new retail, e-commerce, logistics, fintech, ridesharing and charging batteries in the new energy vehicle industry, began in March. and April of this year, according to the SAMR.
For example, Xiaoju Kuaizhi Inc and BAIC Mobility Co, a subsidiary of Beijing Automotive Industry Holding Co (BAIC group), did not report their joint venture to SAMR until the company obtained a business license on May 17, 2018, which violated Article 21. of the Antimonopoly Law and constituted an illegal concentration of commercial operators.
“This is the continuation of the monopoly surveillance of the economy of Internet platforms and businesses. It is not closely related to the removal of Didi Chuxing’s application for data security. Profile example,” a Wang Peng, assistant professor at the Gaoling School of Artificial Intelligence at Renmin University of China, told the Global Times on Wednesday.
Many companies fined Wednesday are listed on foreign stock markets.
E-commerce company Suning and a subsidiary controlled by China’s largest online food delivery platform Meituan were also fined.
Chen Da, executive director of Anlan Capital, said the amount of the fine is insignificant for these giant companies and investors generally welcome such soft recalls to keep the companies on track for development. Still, the move could cause some short-term nervousness in investor sentiment, Chen said.
China has stepped up the crackdown on its digital platform companies because the digital economy represents a growing percentage of the world’s second-largest economy and poses serious risks.
The government seeks to regulate the market, curb the disorderly expansion of capital and boost the vital sector, which already accounted for 36.2% of the country’s GDP in 2019.
Chinese market regulators began to step up crackdown on monopoly 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 in the previous year with penalties totaling 450 million yuan and stepped up the anti-monopoly crackdown on companies. Internet platforms.
The crackdown continued until 2021, with SAMR in April calling on 34 platforms – including Tencent, Alibaba, Baidu and Meituan – to stand in awe of the rules and undertake a complete rectification of their behavior. monopoly and tax irregularities or violations, within a month.