David BECK analyzes technological issues from a political, economic and management perspective.

China shows anti-monopoly commitment

David BECK Academic - Society, Politics & Techology

China’s antitrust watchdog has handed another round of penalties to the country’s tech giants including Alibaba and Tencent that involve investments in two of the country’s leading drinks trading platforms in ongoing crackdown on monopolies.

According to a government announcement from the State Administration of Market Regulation (SAMR), Alibaba, Tencent, Baidu, Suning and other companies have to pay up for a total of RMB 21.5 million (US$3.36 million) in fines for failing to disclosed 43 deals in apparent antitrust violations.

Two of the violations singled out by the Chinese watchdog involve Alibaba and Tencent’s massive investment in two drinks e-commerce platforms a few years back, with the former pumping US$290 million in China’s leading wine and drinks e-retailer 1919.cn and the latter in B2B drinks trading platform Yijiupi.

In 2018, Alibaba invested RMB 2 billion (US$288.25 million) in southwestern Chengdu-based online wine and spirits retailer 1919.cn to tap into resurgent demand for imported wine in China.

Its main competitor Tencent in the following year bet on a start-up B2B platform for wine and spirits, Yijiupi, with US$80 million investment.

In both cases, the Chinese antitrust watchdog found the two deals failed to comply with Chinese antitrust laws, and each company will pay RMB 500,000 (US$ 78,000) respectively for the deals.

It is rare for regulators to trace back cases that happened a long time ago, but indeed a large number of companies didn’t declare their deals according to the law in the past.

Zhai Wei, executive director of the Competition Law Research Centre at East China University of Political Science and Law in Shanghai

The fines pale in comparison with the record US$2.8 billion fine that antitrust regulators have slapped on Alibaba earlier this year for abusing its market dominance.

It’s worthy to note that the latest round of penalties targeted deals made as early as 2012, which suggests that the breadth of investigations that authorities are willing to go to shake up market monopoly.

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