Tencent and Alibaba fined repeatedly, reason being "strong alliance"
[4] Compiled from: Red Star News
On January 5, the Anti-Monopoly Bureau of the State Administration for Market Regulation issued 13 administrative penalty decisions in a single day, involving internet companies such as Tencent Holdings, Alibaba, and Bilibili, with 9 of the decisions targeting Tencent.
Case review
According to the content of the 9 penalty decisions related to Tencent, Tencent Holdings Co., Ltd. was penalized for failing to declare and illegally implementing concentrations of undertakings in the following cases: acquiring equity in Guangxi Jiaojiu Network Technology Co., Ltd., acquiring equity in Beijing Niannian Fenxiang Technology Development Co., Ltd., acquiring equity in VERSA Inc., acquiring equity in Yonghui Yunchuang Technology Co., Ltd., acquiring equity in Beijing Youhu Technology Development Co., Ltd., acquiring equity in Beijing Minglue Software Systems Co., Ltd., acquiring equity in IngageApp Global Limited, and establishing joint ventures with Qingdao Hisense Network Technology Co., Ltd. and Henan Hexie Automobile Trade Co., Ltd. The fines in all 9 penalty decisions were 500,000 yuan each, meaning Tencent will be fined a total of 4.5 million yuan in this round.
The State Administration for Market Regulation also issued an administrative penalty decision for the case where Alibaba (China) Network Technology Co., Ltd. and Guiyang Xingli Department Store Group Co., Ltd. established a joint venture without legally declaring and illegally implementing a concentration of undertakings, imposing fines of 500,000 yuan each on Alibaba Network and Guiyang Xingli. Additionally, for the case where Hangzhou Alibaba Venture Capital Co., Ltd., Zhengzhou Xunjie Trade Co., Ltd., and Guiyang Radio and Television Media Group Co., Ltd. acquired equity in Guizhou Pan-Asia Xintong Network Technology Co., Ltd. without legally declaring and illegally implementing a concentration of undertakings, administrative penalty decisions were issued, imposing fines of 500,000 yuan each on Alibaba Venture Capital, Zhengzhou Xunjie, and Guiyang Radio and Television.
Anti-Monopoly Law
Article 21
If a concentration of business operators reaches the notification threshold stipulated by the State Council, the operators shall notify the anti-monopoly enforcement agency under the State Council in advance; no concentration may be implemented without such notification.
[1] The author's perspective
A concentration of business operators refers to the merger of two or more enterprises, or the acquisition of control over all or part of other enterprises by one or more individuals or enterprises, resulting in a lasting change in their mutual relationships. It is generally a contractual freedom of market entities under market economy conditions. Business operators may implement concentrations through fair competition and voluntary combination in accordance with the law, expand their business scale, and enhance their market competitiveness.
However, because concentrations of business operators may lead to the elimination or restriction of competition, governments in various countries impose regulatory controls on such concentrations. China adopts 事前 a mandatory notification system. If a concentration of business operators reaches the notification threshold stipulated by the State Council, the operators shall notify the State Administration for Market Regulation in advance; no concentration may be implemented without such notification. It is important to note that “事前” the aforementioned enterprise is facing penalties precisely because it failed to notify before the concentration.
The consequences of a concentration of business operators are twofold: on one hand, it helps leverage economies of scale and enhance the competitiveness of operators; on the other hand, excessive concentration may create or strengthen market dominance, restrict competition, and harm efficiency. Therefore, if a concentration produces effects on the competitive order, such as excessive concentration of economic power or the emergence of monopolistic structures that harm competition, it shall be subject to adjustment under the Anti-Monopoly Law to ensure the sound development of the economic market.
