Tencent and Alibaba penalised by the Chinese authority for failing to report acquisitions

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Several Chinese tech companies have been fined for violating China's anti-monopoly law including Tencent, Alibaba and Bilibili, as these companies failed to report about many of their deals with other companies. China's State Administration for Market Regulation (SAMR) said on its website that it had imposed nine fines on Tencent. The penalty was equivalent to ¥4.5 million.

According to state media Global Times, most of the fines involved Tencent's acquisition of smaller companies, according to filings published on the tech company's website. For example, the SAMR imposed a ¥500,000 fine on the company for its failure at reporting its acquisition of an online wine retailing company based in Guangxi. Additionally, it was also fined another ¥500,000 for not reporting its acquisition of a Beijing-based delivery company from anti-monopoly regulators.

China's anti-monopoly law said that the authority can place penalties of up to ¥500,000 on companies per deal, meaning that in this latest round of regulation, Tencent was given the heaviest penalty in every case. Moreover, Tencent has also raised US$3 billion by selling 14.5 million shares at the price of US$208 each in Singapore tech conglomerate Sea, which owns eCommerce firm Shopee, according to a report from Reuters. This will see Tencent's stake in Sea will reduce to 18.7% from 21.3%. However, the company still plans to retain the substantial majority of its stake in Sea for the long term.

Last year, Tencent divested US$16.4 billion of its stake in JD.com amid pressure from the Chinese authority. Tencent invested in JD.com in 2014. It said it was the right time for the divestment as the eCommerce company could self-finance its growth.

Meanwhile, Bilibili was also given a ¥500,000 fine for not reporting the acquisition of mobile picture editing software company Versa to the authority. The same report from Global Times said Bilibili signed a contract with Versa in early 2020 to hold a 14.71% stake in the firm. Subsidiary of Alibaba Group Alibaba (China) Network Technology received a fine of ¥500,000 for failing to report its acquisition of supermarket company Xingli too.

The state media explained that the latest round of penalties came amid the country's new stricter regulations targeting domestic online platforms in addition to cracking down on monopolistic behaviour. Previously, Alibaba was given a fine a US$2.8 billion antitrust fine imposed by the SAMR.

The regulator said in a statement that since 2015, the Group "has abused its dominant position in the market" and imposed a "Choose one out of two" requirement for its merchants. It also claimed that this has prohibited Alibaba's merchants from opening stores or participating in promotional activities on other rival platforms.

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