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Summary
- An antitrust investigation has been launched by the Chinese regulator, State Administration for Market Regulation today against Alibaba Group Holding Ltd
- In a separate statement, four regulatory bodies including the Central Bank of China have said that they would summon Ant Group, the affiliate company of Alibaba
China’s market regulator State Administration for Market Regulation (SAMR) said that they have rolled out an antitrust investigation into the e-commerce giant Alibaba Group Holding Ltd for its trade practice. Reports said that Alibaba has been putting undue pressure on merchants, who sell goods on its platforms, by asking them not to sell goods on rival’s websites.
Taobao and Tmall are Alibaba’s e-commerce platforms in China that compete with domestic competitors JD.com Inc. and Pinduoduo Inc.
In a separate statement, four regulatory bodies, including the Central Bank of China, have said that they would summon Ant Group, the affiliate company of Alibaba, for discussion on competition and consumer rights.
The meeting notice has been sent and has been received by the Ant Group. The company also added that it would critically study and abide by all regulatory requirements.
Beijing’s efforts
An in-depth scrutiny is being conducted by the Chinese watchdog over alleged anti-competition practices of Alibaba. This step is Beijing’s latest efforts to restrict the expansion of internet giants in the country.
In November, draft rules were issued by Beijing, which primarily focused on avoiding the monopolistic behaviour, which has been marked as the first critical antitrust move of China against the industry.
In December, Politburo of China had pledged to strengthen anti-monopoly efforts and control the disorderly capital expansion. China had also warned internet giants earlier this month that monopolistic practices would not be tolerated. Many senior leaders have spoken about the effects of restricting the market power of Chinese firms and better evaluation of emerging consumer internet sectors.
In order to support the growing scrutiny, the authorities have imposed fines and announced investigations into mergers involving Tencent Holdings and Alibaba.
Last month, the planned IPO of Ant Group in Hong Kong and Shanghai was cancelled, which was estimated to raise $34 billion in the biggest stock market debut in history.
Also Read: Ant Group’s Race to world’s biggest IPO Abruptly Derailed, Regulator Raises Red Flag
Share Price Movement
Alibaba’s shares dipped in Hong Kong as Chinese government launched a probe against the company. Alibaba’s shares dropped by approximately 9 per cent on Thursday morning. JD.com also witnessed a 1.4 per cent decline.
