[Commentary] The Wave of CCP’s Antitrust Investigations and Fines

Author:MOS Writing Group – Casey

After Alibaba, tech companies Tencent and Meituan unsurprisingly jumped right onto the list of companies to be hit with huge anti-monopoly fines.

Not long ago on December 24,2020, Alibaba was put on notice by the CCP’s State Administration of Market Regulation (SAMR) “According to the report, the Alibaba Group Holding Co. Ltd. shall be investigated for suspected monopolistic conduct such as ‘picking one from the two (POFT)’ in accordance with the law”.         

Image Source: creaders.net

On April 10, 2021, the Market Supervision Bureau levied a fine of 18.228 billion yuan (~ USD$2.8 billion) against Alibaba for its “picking one from the two” monopoly practice.

The CCP’s record-making fine against Alibaba kicked off the country’s first major antitrust action to prevent technology giants from controlling the country’s domestic economy. Two weeks later, the CCP renewed the efforts by launching yet another major antitrust investigation – the target for this time, Meituan.

On April 26, the SAMR issued on its website, “the State Administration for Market Regulation initiated an investigation into Meituan’s ‘picking one from the two’ and other suspected monopolistic behaviors in accordance with the report”.

Image Source: sohu.com

For the last three years from 2018 to 2020, Meituan’s revenue was 65.2 billion, 97.5 billion and 114.8 billion yuan respectively. If the proofs for Meituan’s “picking one from the two” and other monopolistic behavior are substantiated, Meituan’s fines may range from 650 million yuan (65.2 billion yuan * 1%) to 11.5 billion yuan (114.8 billion yuan * 10%).

As a Chinese internet giant, Tencent stifles innovation in the social media field and formed a super-monopoly power. It also monopolizes social communications through the WeChat app, along with intimately cooperating with the CCP in order to gain full market control of the sector.

On April. 29, it was reported that the CCP will issue a huge fine against Tencent in an anti-monopoly investigation. Tencent faces penalties for anti-competitive behavior and improper reporting of past acquisitions and investments in antitrust reviews. According to the news, Tencent is facing a fine of at least US$1.54 billion from the Chinese authorities.

All these come at a time when some factions of the CCP are seeking to control China’s Internet giants. On one hand, this flags that the CCP is financially tight. The Party’s leader Xi Jinping’s intention of accelerating the “nationalization” of these Internet giants is obvious, which is aligned with implementing the ruling model of “totalitarian + technological control”, a scheme that has been in preparation by the CCP for decades.

References (in Chinese):

#1. Second target – Meituan: 反垄断第二枪,目标瞄准美团

#2. Meituan fined:反垄断利剑指向美团:罚款最高或至 115 亿元

#3. Tencent fined: 中国反垄断剑指腾讯 传巨额罚单仍需中央高层首肯

#4. Meituan under investigation for monopoly: 美团被“反垄断”调查

#5. CCP’s investigation into Meituan, and Tencent: 中共市监局对美团立案调查,腾讯还会远吗?

Proofread/Review: RD16 | Posted by: Xiaolunn

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