Lower Entry Barriers After Record Antitrust Fine: Alibaba As Shares Rally

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Alibaba, China’s largest e-commerce company, will introduce measures to lower entry barriers and business costs faced by merchants on its platforms, Zhang told an online conference for media and analysts.

Lower Entry Barriers After Record Antitrust Fine: Alibaba As Shares Rally

China on Saturday imposed a record 18 billion yuan ($2.75 billion) fine on Alibaba.



Alibaba Group CEO Daniel Zhang said on Monday he does not expect any material impact from the change of exclusivity arrangement imposed by China’s regulators, after an anti-trust probe found the firm had abused its dominant market position.

Alibaba, China’s largest e-commerce company, will introduce measures to lower entry barriers and business costs faced by merchants on its platforms, Zhang told an online conference for media and analysts.

China on Saturday imposed a record 18 billion yuan ($2.75 billion) fine on Alibaba amid a crackdown on technology conglomerates, signalling a new era after years of laissez-faire approach.

The e-commerce giant has come under intense scrutiny since billionaire founder Jack Ma’s public criticism of the Chinese regulatory system in October.

Hong Kong shares of the company were up 4.2% in the opening trade on Monday.

“Now the penalty is determined, the market’s uncertainty about Alibaba will be reduced,” Everbright Sun Hung Kai analyst Kenny Ng said. “Alibaba’s stock price has lagged behind the overall emerging economy stocks for some time in the past. The implementation of this penalty is expected to allow Alibaba’s stock price to regain market attention.”

The State Administration for Market Regulation (SAMR) said it had determined Alibaba, which is also listed in New York, had prevented its merchants from using other online e-commerce platforms.

The practice, which the SAMR has previously spelt out as illegal, violates China’s antimonopoly law by hindering the free circulation of goods and infringing on the business interests of merchants, the regulator said.

Alibaba and its peers remain under review for mergers and acquisitions from the market regulator, Vice Chairman Joe Tsai told the briefing, adding he was not aware of any other anti-monopoly-related investigations.

The impact of the regulator’s fine on Alibaba will be reflected in the group’s net income in the March quarter, Chief Financial Officer Maggie Wu said.

Aside from imposing the fine, among the highest ever antitrust penalties globally, the SAMR ordered Alibaba to make “thorough rectifications” to strengthen internal compliance and protect consumer rights.

Alibaba said it accepted the penalty and “will ensure its compliance with determination”.

The fine is more than double the $975 million paid in China by Qualcomm, the world’s biggest supplier of mobile phone chips, in 2015 for anticompetitive practices.

The penalty on Alibaba also comes against the backdrop of regulators globally, including in the United States and Europe, carrying out tougher antitrust reviews of tech giants such as Alphabet Inc’s Google and Facebook Inc.

(Except for the headline, this story has not been edited by our staff and is published from a syndicated feed.)

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