SAMR Investigates Alibaba for Alleged Monopolistic Behavior

(Source:Yahoo Finance)

E-commerce giant Alibaba is under investigation for alleged monopolistic practices, according to a notice posted on the official website of the State Administration for Market Regulation (SAMR) on Dec. 24.

Notice posted on the SAMR website. (Source: SAMR)

Regulators have stated that Alibaba Group will be investigated for suspected monopolistic behavior, including what is referred to as “picking one out of two”, due to relevant litigations concerning the anti-trust law.

“Picking one out of two”, as specifically pointed out by the administration, refers to exclusive dealing, both a behavior and a business strategy that makes brands choose between rival e-commerce platforms.

Such competition forces brands to make tough decisions and choose between platforms to establish business and gain traffic. In order to avoid such restrictions, firms have reportedly come up with various solutions, including using different product descriptions and pictures, as well as putting up brand names in Chinese on one platform and English ones on another.

Exclusive dealing has been a long-standing problem and a legal sore point in the e-commerce industry. Meituan and Ele.me, two of China’s food delivery giants, have been involved in a lawsuit where they were accused of malicious competition and threatening business owners in order to push them to operate on an exclusive platform.

Lately, anti-monopoly regulations concerning e-commerce companies have been increasingly tightened, making Alibaba one of the first companies to deal with charges. Previously, Alibaba had been fined 500,000 yuan for violating anti-monopoly laws, when the company’s investment unit failed to declare cases of illegal undertaking concentration. The case saw the company failing to legally declare to authorities the procedure it had followed after it completed the share purchase of Intime Retail Group.

SEE ALSO: Alibaba Ranks Second on Fortune’s Change the World List for 2020

Ant Group, whose IPOs have been halted, will meet with the regulators “in the coming days”, Chinese state media Xinhua reported. “Fair competition and protection of legitimate rights and interest of customers” has been announced as one of the topics of the talk.