Beijing extends its anti-monopoly campaign with new rules and a $500,000 fine

February 8, 2021, 7:27 AM UTC

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China’s State Administration for Market Regulation (SAMR) fined Chinese e-commerce company Vipshop $464,000 over unfair competition acts, SAMR said on Monday.

The regulator previously penalized Vipshop in late December, when it fined the New York Stock Exchange–listed firm $76,500 for conducting manipulative pricing. After that fine, the watchdog announced in mid-January that it was investigating Vipshop for “unfair competition behavior.”

The SAMR fined Vipshop on Monday for anticompetitive behavior, accusing Vipshop of developing and using an information-gathering system that helped it influence consumer choices on the buying platform and block sales of certain brands.

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Guangzhou-based Vipshop runs VIP.com, an online discount retailer, and debuted on the NYSE in 2012. Vipshop has a current market capitalization of around $22 billion. The company said it accepted the SAMR’s claims and would strengthen its compliance with regulations, according to Reuters.

The SAMR’s fines and probe of Vipshop are part of a raft of new regulations aimed at cracking down on the monopolistic practices of Chinese tech companies, especially online retailers. Apart from Vipshop, the SAMR launched an antitrust investigation into Alibaba in December and also slapped Alibaba’s biggest rival, JD.com, with a $76,500 fine later that month.

The Monday Vipshop fine also came one day after the SAMR published new anti-monopoly guidelines targeting China’s tech platforms that aim to “stop monopolistic behaviors” and “protect fair competition in the market.” The new rules restrict price fixing and the use of algorithms and data to manipulate the market, and bar companies from forcing merchants to choose between platforms to sell their goods.

The spate of regulations and probes into China’s e-commerce players coincides with recent scrutiny of the platforms after consumer complaints about price hikes and public backlash over the companies’ treatment of their workers.

The tech platform crackdown isn’t limited to China’s e-commerce sector. Online payment platforms Alipay and WeChat Pay, which are owned by fintech firm Ant Group and tech titan Tencent, respectively, are also covered by the Sunday guidelines.

Ant Group, an Alibaba affiliate, is facing a significant overhaul of its business, with financial authorities placing new regulations on it that will dent profitability and growth and reportedly reclassify it as a financial holding company, which could cause its valuation to drop as much as 49%, according to analyst estimates.

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