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Home > Anti-Monopoly Law
Alibaba fined USD 2.68 billion for abusing dominant market position in China
By Henry Chen | 2021/4/10 19:13:42

In December 2020, the State Administration for Market Regulation filed an investigation against Alibaba Group Holding Co., Ltd. (hereinafter referred to as Alibaba Group) for abusing its dominant market position in the online retail platform service market in China in accordance with the Anti-Monopoly Law.

 

The State Administration for Market Regulation established a special case team to conduct on-site inspections of Alibaba Group, investigate and inquire relevant personnel, consult and copy relevant documents and materials, and obtain a large number of evidential materials on the basis of solid preliminary work; extensive investigation and evidence collection on other competitive platforms and businesses within the platform; in-depth verification and big data analysis on the evidential materials of the case; organize experts to carry out case analysis and argumentation on multiple occasions. It has listened to the opinions of Alibaba Group on many occasions and safeguarded its legitimate rights. Accordingly, the facts of this case are clear, the evidence is conclusive, the nature is established, the handling is appropriate, and the procedures are complete and lawful.

 

According to the investigation, Alibaba Group has a dominant position in the online retail platform service market in China. Since 2015, Alibaba Group has abused its dominant market position by imposing a compulsory condition "either Alibaba or no service" requirement on merchants on its platforms, barring them from opening stores or participating in promotional events on competing platforms. With the help of its market strength, platform rules, data, algorithms and other technical means, Alibaba utilized a variety of reward and punishment measures to guarantee the implementation of the  "either Alibaba or no service" requirement, maintain and enhance its own market power, and gain unfair competitive advantages.

 

The investigation shows that Alibaba Group's implementation of the  "either Alibaba or no service" policy practice excludes and limits the competition in the service market of online retail platforms in China, impedes the free circulation of goods, services and resources, affects the innovative development of the platform economy, infringes the legitimate rights and interests of merchants on the platform, and damages the interests of consumers. Such act, therefore, constitutes the prohibited conduct mentioned in Article 17, Paragraph 1, Item (4) of the Anti-Monopoly Law.

 

In accordance with the provisions of Article 47 and Article 49 of the Anti-Monopoly Law, and taking into account the nature, extent and duration of Alibaba Group's illegal acts, the State Administration for Market Regulation made an administrative penalty decision on April 10, 2021, ordering Alibaba Group to cease its illegal acts. The State Administration for Market Regulation also imposed a fine of 4 percent of Alibaba’s 2019 sales revenue in China of 455.712 billion yuan, with the fine totaled 18.228 billion yuan (which is about USD 2.68 billion). At the same time, according to the “punish-and-educate” principle prescribed in the Law on Administrative Punishment, the authority issued the "Administrative Guidance" to Alibaba Group, requiring it to make comprehensive rectification in the management of its online platform, strengthening internal control and compliance management, maintaining fair competition, and protecting the legitimate rights and interests of merchants and consumers on the platform, and submit self-inspection and compliance reports to the State Administration of Market Regulation for three consecutive years.


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The author, Henry Chen, licensed to practice law in China and New York, is a senior partner at the Dentons office in Shanghai. Before joining Dentons, Henry was AP Compliance Director of Ford. Henry's practice areas include FCPA and anti-bribery, antitrust, cyber security and data governance, economic sanctions and trade controls, compliance management systems, corporate matters and dispute resolution. You can reach Henry by sending an email to henry.chen@dentons.cn. Henry is the author of the book Risk Management on Commercial Bribery in China and the book Compliance Risks of Enterprises in Globalization: Outbreak and Control.




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