SUBSCRIBE

CATEGORIES

Alibaba says to lower entry barriers after record antitrust fine, shares rally

imageStock Markets48 minutes ago (Apr 11, 2021 10:05PM ET)

(C) Reuters. Alibaba’s 11.11 Singles’ Day global shopping festival

SHANGHAI (Reuters) -Alibaba 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 (NYSE:BABA) Group Holdings Ltd , 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 (NASDAQ:QCOM), 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 (NASDAQ:GOOGL) Inc’s Google and Facebook Inc (NASDAQ:FB).

($1 = 6.5522 Chinese yuan)

Alibaba says to lower entry barriers after record antitrust fine, shares rally

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.