The punishment equates to about 4 percent of Alibaba’s revenues in 2019 and comes amidst Beijing’s unprecedented crackdown.
Chinese regulators fined Alibaba Group Holding Ltd 18 billion yuan ($ 2.75 billion) for violating antimonopoly rules and abusing its dominant market position, imposing the largest ever antitrust fine in the country.
The fine, equivalent to about 4 percent of Alibaba’s 2019 revenues, came amid an unprecedented crackdown on homegrown technology conglomerates weighing on the company’s stock in recent months.
The business empire of Alibaba’s billionaire founder Jack Ma has come under particular scrutiny following his harsh criticism of China’s regulatory system in late October.
In late December, China’s State Market Regulation Administration (SAMR) announced that it had launched an antitrust investigation into the company.
That came after authorities halted a planned $ 37 billion IPO of Ant Group, Alibaba’s internet finance arm.
SAMR said Saturday that after an investigation launched in December, it found that Alibaba was “abusing market dominance” since 2015 by preventing its merchants from using other online e-commerce platforms.
It said the practice violates China’s antimonopoly law by impeding the free movement of goods and infringing on the business interests of merchants.
The SAMR ordered Alibaba to make “thorough rectifications” to strengthen internal compliance and protect consumer rights.
“This fine will be seen by the market for the time being as a closure of the anti-monopoly case. Indeed, it is the most prominent anti-monopoly case in China, ”said Hong Hao, BOCOM International’s head of research in Hong Kong.
“The market has been anticipating some sort of fine for a while … but people should pay attention to measures that go beyond the anti-monopoly investigation, such as divesting media assets.”
Alibaba said in a statement on its official Weibo account that it “accepted” the decision and would resolutely implement SAMR’s rulings. It said it would also work to improve business compliance.
The Chinese e-commerce giant said it would hold a conference call on Monday to discuss the sanction decision.
Alibaba had come under fire in the past from rivals and sellers for allegedly banning its merchants from listing on other ecommerce platforms.
It is a long-standing practice to avoid listing traders on competing platforms, and the regulator explained in February that it was illegal.
“The fine is a milestone and a road sign of great importance,” Shi Jianzhong, member of the State Council’s Antitrust Consultation Committee and professor at China’s University of Political Science and Law, wrote in the state-sponsored Economic Times.
“It indicates that antitrust law enforcement on internet platforms has entered a new era and sent a clear policy signal.”