Alibaba and Hive Box Fined Simultaneously for Alleged Monopoly
[4] Compiled from: Red Star News
Case review
On December 14, 2020, according to the official announcement of the State Administration for Market Regulation:
The State Administration for Market Regulation has imposed administrative penalties on three cases of illegal concentration of business operators that failed to declare in accordance with the law, including Alibaba Investment's acquisition of Intime Retail's equity, Yuewen Group's acquisition of Xinli Media's equity, and Fengchao Network's acquisition of China Post Smart Delivery's equity.
It is understood that the above three transactions are all equity acquisitions. After the completion of the acquisitions, Alibaba Investment, Yuewen, and Fengchao Network respectively obtained control, which constitutes a concentration of business operators as defined in Article 20 of the Anti-Monopoly Law. The turnover of the business operators involved in the concentration clearly meets the declaration standards stipulated in Article 3 of the State Council's Provisions on the Standards for Declaration of Concentration of Business Operators.
[1] The investigation shows that the above three cases all constitute illegal implementation of concentration of undertakings without prior notification, but do not have the effect of eliminating or restricting competition. Alibaba Investment, Yuewen, and Fengchao Network had the obligation to notify but failed to do so. Therefore, the State Administration for Market Regulation, in accordance with Articles 48 and 49 of the Anti-Monopoly Law, decided to impose administrative penalties of 500,000 RMB fines on Alibaba Investment, Yuewen, and Fengchao Network respectively.
[1] Relevant laws and regulations
Anti-Monopoly Law of the People's Republic of China
[2] Article 20 Concentration of undertakings refers to the following circumstances:
[3] (1) Merger of undertakings;
[4] (2) Acquisition of control over other undertakings by an undertaking through the acquisition of equity or assets;
(3) An operator obtains control over other operators or is able to exert decisive influence over other operators through contracts or other means.
(48) Where an operator implements a concentration in violation of the provisions of this Law, the anti-monopoly enforcement authority under the State Council shall order it to cease the concentration, dispose of shares or assets within a specified period, transfer business within a specified period, and take other necessary measures to restore the state prior to the concentration, and may impose a fine of not more than 500,000 yuan.
Article 49: When determining the specific amount of the fine under Articles 46, 47, and 48 of this Law, the anti-monopoly enforcement authority shall consider factors such as the nature, severity, and duration of the illegal act.
[1] Provisions of the State Council on Standards for Notification of Concentration of Business Operators
[2] Article 3: Where a concentration of business operators meets one of the following standards, the business operators shall notify the commerce authority of the State Council in advance; without such notification, the concentration shall not be implemented:
(1) The total global turnover of all operators participating in the concentration in the previous fiscal year exceeds 10 billion RMB, and at least two of them each have a turnover within China exceeding 400 million RMB in the previous fiscal year.
(2) The total turnover within China of all operators participating in the concentration in the previous fiscal year exceeds 2 billion RMB, and at least two of them each have a turnover within China exceeding 400 million RMB in the previous fiscal year.
[1] The calculation of turnover shall take into account the actual conditions of special industries and fields such as banking, insurance, securities, and futures, with specific measures to be formulated by the commerce department of the State Council in conjunction with relevant departments of the State Council.
[1] The author's perspective
[2] Although the fines are relatively low, the penalties in the above three cases can send a signal to the public that antitrust regulation in the internet sector is being strengthened, dispelling any possible luck or wait-and-see attitudes among some enterprises, and producing a corresponding deterrent effect. Through the investigation and punishment of cases involving failure to declare in accordance with the law, enterprises can also be urged to declare concentrations of undertakings legally, preventing mergers and acquisitions from forming monopolies, or stifling potential competitors through acquisitions of small and medium-sized enterprises, thereby hindering innovation and promoting the healthy development of the entire industry.
[1] The Anti-Monopoly Law applies to all entities, treating domestic and foreign capital, state-owned and private enterprises, large and small businesses, and internet and traditional companies equally and without discrimination. Its purpose is to ensure that all market participants can compete fairly in the market and to create a business environment of fair competition. Although competition in the platform economy presents some new characteristics, the internet industry is not beyond the reach of anti-monopoly law. All enterprises must strictly comply with anti-monopoly laws and regulations to maintain fair market competition. Only in this way can the healthy development of the entire industry be ensured.
