The domestic corporate sector has been in a tizzy with the beginning of imposing heavy fines on big companies in China. With this action, the message has been that even the big companies who violate the rules of the market will not be spared anymore. Through these actions, the Chinese government has also given the message that it has complete control over the market. Only assuming this, a company will have to do business in China. Recently the biggest action has been on Alibaba Group. company was fined $ 2.8 billion. Significantly, Alibaba is the largest e-commerce company in the world. Its founder Jack Ma has been considered an icon in China. In a detailed order of 12 thousand words in the case of Alibaba, China’s State Administration for Market Regulation (SAMR) has also given the definition of the market.
Zhai Wei, executive director of the Competition Act Center at East China University of Political Science and Law in Shanghai, told Hong Kong newspaper South China Morning Post – “This is a decision that would be considered a milestone.” In future cases it will be used as reference material. There has not been a case in China before that in terms of monopoly defines what behavior of a company would be considered to abuse its dominant position. ‘
The fine that Alibaba received is four per cent of its total revenue in 2019. Under China’s antitrust (anti-monopoly) law, fines of up to ten percent can be imposed. In this sense, Alibaba was fined lightly. Experts say that this case will also be studied in Europe and America. It is because of this that the United States and European countries are facing problems of monopoly in the digital market of companies like Amazon, Apple, Facebook and Google. The Alibaba company accepted SAMR’s decision. He had the right to appeal against it, but has decided to pay the fine.
China’s regulatory bodies are also closely monitoring other tech companies in the country. Especially the companies that caused financial instability in the country during the Corona epidemic, have now been targeted. Now they are being told their limits. In the case of Alibaba, the regulator has decided that the entire online retail platform service market falls under the definition of a single market. Therefore, the regulator did not accept Alibaba’s plea that Business to Consumer (sales directly to consumers) and Sales to Shoppers (sales to merchants and individuals) be treated as separate markets. Since Alibaba’s share in this entire market is more than 50 per cent, monopoly was considered.
Allegations on Alibaba were also proved that in the name of an exclusive deal, it forced the traders to sell only on its platform. The effect of this decision will be that such behavior will now be considered illegal. Due to this, other Chinese companies will have to be cautious. Associate Professor Harry Gao at Singapore Management University has said that now these companies will have to create a system of constantly checking their behavior within themselves.
In 2015, Qualcomm was fined for almost similar charges in China before Alibaba. But that action was then deemed a step taken against a company. While many companies are now under investigation. Analysts say that now a new attempt is being made to apply the rules in the market. Bloomberg analysts Wey-Cern Ling and Tiffany Tam have written in an analysis that the decision has led to uncertainty. From that perspective, the fine imposed on Alibaba is only a small price.