Chinese state regulators hit Alibaba, Tencent with fresh fines under new anti-competitive measures
Sputnik news agency and radio 12:18 GMT 14.12.2020
The news comes as Beijing tightens its crackdown on Chinese tech giants accused of having excessive control of the mainland internet market, leading to the suspension of one of the world's largest initial public offering in decades.
Alibaba Group Holding Ltd and a unit of Tencent Holdings Ltd were fined due to acquisitions made in an upcoming merger led by the latter firm, Bloomberg reported on Monday.
China's State Administration for Market Regulation will scrutinise a merger between DouYu International Holdings Ltd and Huya Inc aimed at building a game streaming service to compete with Amazon's Twitch, the report read.
According to Bloomberg, Alibaba was also slapped with a 500,000 yuan ($76,500) for failing to seek approval from the regulatory body on its stake increase to 73.79 percent in department store franchise Intime Retail Group Co in 2017.
Chinese authorities began passing measures and draft regulations in November aimed at cracking down on anti-competitive behaviours, namely tech companies sharing sensitive data, monopolising markets and subsidies, among others.
Shares for the Tencent and Alibaba have plummeted 2.5 percent due to the measures. Meituan shares also nosedived 3.8 percent after a People's Daily article on Monday criticised the sector's focus on increasing traffic volumes rather than innovating scientific innovation, it read.
“Investment and takeovers are important means for development and growth of internet companies. The above-mentioned companies have a large influence in the industry, carry out many investments and takeovers, have specialized legal teams and should be familiar with the regulations governing M&A. Their failure to actively declare has a relatively severe impact," the state regulator said in a statement as quoted by Bloomberg.
Despite the "modest" size of the the penalty, the measure had "symbolic importance", antitrust lawyer for Zhong Lun Law Firm, Scott Yu, said.
“The announcement, together with the draft antitrust guidance unveiled in November, signals that Beijing will pay close attention to the monopolistic status of Chinese internet companies,” the Beijing-based lawyer said in a statement.
The news comes after state regulators suspended Ant Group's historic initial public offering (IPO) in early November for failing to "meet listing qualifications or disclosure requirements", a statement from state regulators read at the time.
Company founder Jack Ma criticised state authorities for excessive bureaucracy at an event in October. The Shanghai Stock Exchange later said the move would force the fintech giant to "fail to meet" issuance and listing conditions.
Tencent president Martin Lau Chi-Ping vowed in November to work with Beijing as well as shareholders to facilitate fair competition practices and innovation, adding its intention was to "prevent misconduct" and "ensure long-term healthy growth".
