On April 10, the State Administration of Market Supervision imposed administrative penalties on Alibaba’s “choice of two” monopoly in the domestic online retail platform service market.
The State Administration of Market Supervision ordered Alibaba Group to stop illegal activities and imposed a fine of 4% of its domestic sales of 455.712 billion yuan in 2019, totaling 18.228 billion yuan. This is equivalent to about one week of net profit of Alibaba in Q3 of fiscal year 2021. But this is also the largest fine ever made by China’s anti-monopoly authorities.
In addition to fines, in accordance with the “Administrative Punishment Law” that adheres to the principle of combining punishment and education, the State Administration for Market Regulation also issued an “Administrative Guidance Letter” to Alibaba Group, requiring it to strictly implement the main responsibility of platform enterprises, strengthen internal control compliance management, and carry out comprehensive rectifications in maintaining fair competition and protecting the legitimate rights and interests of businesses and consumers on the platform, and submitted self-examination and compliance reports to the State Administration for Market Regulation for three consecutive years.
Prior to this, in December 2020, the State Administration for Market Regulation initiated an investigation into Alibaba Group’s abuse of its dominant market position in the online retail platform service market in China. After investigation, Alibaba Group has a dominant position in the domestic online retail platform service market in China. Since 2015, Alibaba Group has abused its dominant position in the market and has imposed “choose one out of two” requirements on merchants on the platform, prohibiting merchants on the platform from opening stores or participating in promotional activities on other competitive platforms, and using market forces, platform rules and data , Algorithms and other technical means, adopt a variety of reward and punishment measures to ensure the implementation of the “two-choice-one” requirement, maintain and strengthen its own market power, and gain an unfair competitive advantage.
The investigation shows that Alibaba Group’s “choice of two” behaviors have eliminated and restricted competition in the online retail platform service market in China, hindered the free circulation of commodity services and resource elements, affected the innovation and development of the platform economy, and infringed on the business of the merchants on the platform.