Several leading Chinese internet companies, including Tencent, Alibaba, ride-hailing company Didi Chuxing, and e-commerce giant Suning, were each fined CNY500,000 per breach of the Anti-monopoly Law. The State Administration for Market Regulation (SAMR) said the companies breached the “concentrations of undertakings” provision under the Anti-monopoly Law in a total of 22 equity investment and joint venture deals. The companies and their counterparts were fined for failing to complete a documentation process before finalizing the deals and for non-compliance. Multiple subsidiaries of Didi were among the penalized parties. The fines serve as a reminder to internet companies to comply with their legal obligations on their own initiative, noted Li Junhui, Professor at the China University of Political Science and Law.
The 22 cases, which involved new retail, e-commerce, logistics, fintech, ride-hailing and charging piles for new-energy vehicles (NEVs), started in March and April this year. For example, Didi subsidiary Xiaoju Kuaizhi and BAIC Mobility Co, a subsidiary of Beijing Automotive Industry Holding Co (BAIC Group), failed to report to the SAMR about their joint venture before the company obtained a business license on May 17, 2018, which violated Article 21 of the Anti-monopoly Law and constituted an illegal concentration of business operators.
“Continuing the supervision of monopolies in the platform economy is not closely related to the removal of Didi Chuxing's app for data security. But Didi is of course in the spotlight as it is the most recent and high-profile example,” Wang Peng, Assistant Professor at the Gaoling School of Artificial Intelligence at Renmin University of China, told the Global Times. Many of the fined companies are listed on overseas stock markets. Chen Da, Executive Director of Anlan Capital, said that the fine is insignificant for such giant companies and investors generally welcome such gentle reminders to keep the companies on the right track. Nonetheless, the ruling could result in some short-term jitters in investor sentiment, Chen said. China has been ramping up a crackdown on digital platform companies, as the digital economy accounts for a growing percentage of the whole economy and poses some serious risks. The digital economy accounted for 36.2% of the nation's GDP as of 2019, the Global Times reports.
Meanwhile, Fan Yifei, Deputy Governor of the People's Bank of China (PBOC), said that antitrust measures against Ant Group would also be taken against other payment firms and that more regulatory actions against disorderly conduct in the payment market will come “sooner rather than later.” Ant was required to rectify its anti-competitive behavior in the payments business and give consumers more options. It was also ordered to break up its data monopoly, and to collect and use personal information in line with the principles of “lawfulness, minimum, and necessity”.
The Cybersecurity Administration of China (CAC) also published a draft revision of rules stating that all internet product and service providers that collect data of more than a million users must file for review and approval before seeking an IPO abroad. Considering the scope of the Chinese market, this means that almost all platforms operating in China which aspire to sell shares abroad need to go through a cybersecurity review. The rules make protecting users' data and ensuring China's information security a “premise” for Chinese companies seeking IPOs abroad. Any of 13 agencies that suspects a risk to national security can initiate a cybersecurity review. The CAC is seeking public comments on the draft revision till July 25 and it was not immediately clear when the rules will come into effect. So far this year, 37 Chinese companies have been listed in the U.S., raising a combined USD12.9 billion.
