An antitrust investigation against Alibaba Group has been launched by Chinese regulators and will summon executives from the group’s Ant Group in the coming days, the regulators said on Thursday.
This is a further action taken against the company founded by the billionaire entrepreneur Jack Ma and his e-commerce giant and fintech company.
This latest announcement by the regulators is being viewed as an extension of the actions being taken by Chinese authorities against monopolistic behaviour of Chinese companies over the internet space.
Last month, just two days before share trading of the company was due to begin in Shanghai and Hong Kong, regulators also dramatically suspended a planned $37 billion initial public offering by Ant which was touted to be the largest ever listing in terms of value in the world.
If "monopoly is tolerated, and companies are allowed to expand in a disorderly and barbarian manner, the industry won't develop in a healthy, and sustainable way", said an editorial in the ruling Communist Party's People's Daily.
There was a slump in Alibaba’s shares after the new of the investigation broke.
A warning against its so-called "choosing one from two" practice of Alibaba was issued by the Chinese regulators under which the company forced merchants to agree to and sign exclusive cooperation agreement which does not allow the merchants from offering their products on any rival e-commerce platform.
It had launched a probe into the practice, the State Administration for Market Regulation (SAMR) said in a statement on Thursday.
In a separate statement, the People's Bank of China on Thursday said that Alibaba's Ant Group fintech affiliate will be summoned by the financial regulators for a meeting in the coming days which has put a huge question mark over th e resumption of the listing of Ant.
The statement said that the meeting would "guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers".
Acknowledging receiving of a notice from regulators, Ant said that it would "comply with all regulatory requirements". Alibaba too also assured its cooperation with the investigation and added that there has been no impact of the news on the normal operations of the company.
A close watch on the developments in the incident will be kept by global markets and they will try to assess whether the actions against Alibaba are "politically motivated or genuine impartial law enforcement", and whether only private companies are on the target of regulators and not state owned monopolies, said Fred Hu, chairman of Primavera Capital Group, an Ant investor.
"It would be a tragedy if the antitrust law should be seen as 'targeting' successful private tech companies only," he said.
Draft rules aimed at preventing monopolistic behaviour by internet firms were issued by China last month. That was China’s first major move to impose anti-competitive regulations on the sector.
Earli3er this month, a warning to internet giants was also issued by China in which is said that monopolistic practices would not be tolerated and companies engaging in such practices should be ready to face scrutiny.
(Source:www.businessworld.in)
This is a further action taken against the company founded by the billionaire entrepreneur Jack Ma and his e-commerce giant and fintech company.
This latest announcement by the regulators is being viewed as an extension of the actions being taken by Chinese authorities against monopolistic behaviour of Chinese companies over the internet space.
Last month, just two days before share trading of the company was due to begin in Shanghai and Hong Kong, regulators also dramatically suspended a planned $37 billion initial public offering by Ant which was touted to be the largest ever listing in terms of value in the world.
If "monopoly is tolerated, and companies are allowed to expand in a disorderly and barbarian manner, the industry won't develop in a healthy, and sustainable way", said an editorial in the ruling Communist Party's People's Daily.
There was a slump in Alibaba’s shares after the new of the investigation broke.
A warning against its so-called "choosing one from two" practice of Alibaba was issued by the Chinese regulators under which the company forced merchants to agree to and sign exclusive cooperation agreement which does not allow the merchants from offering their products on any rival e-commerce platform.
It had launched a probe into the practice, the State Administration for Market Regulation (SAMR) said in a statement on Thursday.
In a separate statement, the People's Bank of China on Thursday said that Alibaba's Ant Group fintech affiliate will be summoned by the financial regulators for a meeting in the coming days which has put a huge question mark over th e resumption of the listing of Ant.
The statement said that the meeting would "guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers".
Acknowledging receiving of a notice from regulators, Ant said that it would "comply with all regulatory requirements". Alibaba too also assured its cooperation with the investigation and added that there has been no impact of the news on the normal operations of the company.
A close watch on the developments in the incident will be kept by global markets and they will try to assess whether the actions against Alibaba are "politically motivated or genuine impartial law enforcement", and whether only private companies are on the target of regulators and not state owned monopolies, said Fred Hu, chairman of Primavera Capital Group, an Ant investor.
"It would be a tragedy if the antitrust law should be seen as 'targeting' successful private tech companies only," he said.
Draft rules aimed at preventing monopolistic behaviour by internet firms were issued by China last month. That was China’s first major move to impose anti-competitive regulations on the sector.
Earli3er this month, a warning to internet giants was also issued by China in which is said that monopolistic practices would not be tolerated and companies engaging in such practices should be ready to face scrutiny.
(Source:www.businessworld.in)
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