The State Administration for Market Regulation (SAMR) has ended its antitrust review of Alibaba Group Holding and given the company full recognition after fining the e-commerce giant USD2.8 billion in 2021, giving a big nod of approval to the Jack Ma-founded business empire just days before its Hong Kong stock is expected to be made available to mainland investors. SAMR praised Alibaba for its compliance with the antitrust authority, putting an official end to more than three years of regulatory scrutiny that has hung over one of China’s largest tech firms. The approval comes at a time when Chinese authorities are trying to boost confidence in the private sector. Alibaba, which runs the Taobao and Tmall online markets, is often seen as a proxy for Chinese consumer spending and economic vitality.
“From the inspection and evaluation, Alibaba Group has completely stopped the monopolistic behavior of ‘picking one from two’,” the regulator said in a statement on its website. It added that the “rectification work” at Alibaba has achieved good results. The “picking one from two” tactic, in which online merchants are forced to choose only one e-commerce platform as their exclusive distribution channel, is defined as monopolistic behavior. “Alibaba is a representative private enterprise in China, and this announcement is a timely boost to market confidence,” said Yuanpu Huang, Partner at industry consulting firm EqualOcean. He added that while the domestic e-commerce market has reached maturity, Alibaba’s ability to regain momentum will largely depend on its future investments in its overseas business, given its status as a company with significant international influence.
Alibaba switched its status to a dual-primary listing on the Hong Kong stock exchange on August 28, paving the way for it to sell shares to mainland China’s 220 million stock investors. The end of the regulatory oversight can remove obstacles for mainland investors to buy shares of the company, which have been listed in New York since 2014 and in Hong Kong since 2019. “This is a relatively positive signal after its completion of dual primary listings, and I believe the company will have the opportunity to be included in the Hong Kong Stock Connect in September,” said Kenny Ng, Strategist at Everbright Securities International. “The announcement will be good for the expectation from southbound capital and its share price.”
In April 2021, the regulator imposed a record penalty of CNY18.2 billion on the company – equal to 4% of Alibaba’s 2019 revenue – after a months-long anti-monopoly investigation that started in December 2020. The antitrust investigation on Alibaba was part of a broader regulatory crackdown against Chinese Big Tech firms that started in late 2020, out of concern that the country’s major internet platforms were becoming too large and powerful. In a statement in response to the SAMR announcement, the Hangzhou-based company vowed to “focus on innovation and adhere to compliance” in the future, as well as “increase investment in science and technology, promote the healthy development of the platform economy, and create more value for society”, the South China Morning Post reports.
