Alibaba shares rise after $ 2.8 billion antitrust fine

The signage is seen at the Alibaba Group headquarters during the company’s 11/11 Singles Day global shopping festival in Hangzhou, Zhejiang province, China, on November 11, 2020.

Aly Song | Reuters

GUANGZHOU, China – Alibaba’s shares in Hong Kong rose 8% on Monday after Chinese regulators fined the company 18.23 billion yuan ($ 2.8 billion) as a result of an antitrust investigation.

“Despite the record amount of the fine, we believe this should remove a large excess of BABA and shift the market’s focus back to fundamentals,” Morgan Stanley wrote in a note Sunday, the day after the bill was issued. penalty fee.

Chinese regulators opened an antitrust investigation into Alibaba in December. The main focus was on a practice that forces merchants to list their products on one of the two ecommerce platforms, rather than choosing both.

The State Administration of Market Regulation of China (SAMR) said on Saturday that this practice stifles competition in China’s online retail market and “infringes on the businesses of merchants on the platforms and the legitimate rights and interests of consumers.” .

Alibaba CEO Daniel Zhang said he does not expect a material impact on the company from the change to this exclusivity agreement.

Zhang also said that Alibaba will introduce new measures to reduce entry barriers and costs for businesses and merchants on the platform. The company will also continue to expand into smaller Chinese cities and rural areas, the CEO added.

China’s tech companies have grown largely unhindered into giants. But Beijing is increasingly concerned about the power of these companies.

We are pleased that we were able to put this matter behind us.

Joe tsai

Executive Vice President, Alibaba

Regulatory scrutiny has focused on the empire of Alibaba founder Jack Ma after the billionaire made some comments in October that seemed critical of China’s financial regulator.

Not long after, regulators shut down what would have been a record-breaking initial public offering from Ant Group, the fintech giant that Ma founded.

Joe Tsai, Alibaba’s executive vice president, said Monday that he is unaware of further investigations into the antitrust law.

“We are pleased to be able to put this matter behind us,” Tsai said.

But Tsai said that Alibaba and its peers are subject to consultations from regulators on mergers, acquisitions and strategic investments as part of a review process.

In addition to the fine, which equates to about 4% of the company’s revenue in 2019, regulators said that Alibaba will have to submit self-examination and compliance reports to SAMR for three years.

CNBC’s Christine Wang contributed to this report.


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