China’s top market regulator, the state administration for market regulation (SAMR), has imposed fines on technology giants, Alibaba, Tencent as well as a range of other firms for failing to comply with the anti-monopoly rules concerning the disclosure of its transactions.
The SAMR disclosed that companies that were fined, were found to have not declared the concentration of business operators as per legal requirements. The state administration for market regulation (SAMR), recently released a list of 28 deals that violated the anti-monopoly rules.
Five (5) involved units of Alibaba, including a 2021 purchase of equity in its subsidiary, the Youku Tudou streaming platform. Also Chinese multinational technology company, Tencent was involved in 12 of the transactions on SAMR’s list.
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What Is The Chinese Anti-Monopoly Law About?
The Chinese anti-monopoly law was made to beef up antitrust penalties in an explicit push for control over the digital sector in the country. The anti-monopoly law aims to safeguard China against anti-competitive activities.
It prohibits monopolistic conduct under the anti-monopoly law in China, individuals and companies are entitled to bring private actions against undertakings that have engaged in monopolistic conduct. The anti-monopoly law also prohibits “monopoly agreement”.
These are defined as agreements, decisions, or other concerted practices between business operators that have the purpose or effect of eliminating or restricting competition. In the year 2021, China’s President Xi Jinping reviewed and approved measures to fight monopolies in the country.
He stressed on the importance of strengthening the anti-monopoly regulations, a move that has already cost tech giants hundreds of billions of dollars in market value over the past year.
Putting these laws and regulations into practice was an intrinsic requirement for improving the socialist market economic system, as it would create a level playing field for businesses. This law is disclosed to highly benefit consumers and promote “High-quality development and common prosperity, citing a broader drive by the Xi Jinping administration to narrow China’s wealth gap.
Therefore, in a bid to enforce the laws aforementioned, Chinese authorities had to take aim at some of the nation’s largest tech companies such as Alibaba, Tencent, and the likes, citing unease with their rapid growth and influence.
Earlier in January, the SAMR fined a number of companies including Alibaba, Bilibili, and Tencent for failing to properly report over a dozen deals, issuing a fine of 500,000 Yuan per case.
Such fines are said to be the maximum under the country’s existing anti-monopoly law. These laws continue to crack down on monopolistic behavior by companies in the country, most especially companies abusing their dominant market position.
Such law was created to foster a fair, predictable, and transparent market environment for business operations. China on its anti-monopoly law revealed that it will continue to formulate and implement competition rules compatible with the socialist market economy to improve a unified, open, and orderly market system.
These anti-monopoly laws reveal that the Chinese government is hell-bent on maintaining a socialist market economy, a system that has been predicted to be the heart of the nation’s economic transformation.