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Internet giant Tencent Holdings was fined by China’s antitrust regulator for not reporting three mergers and acquisitions deals. Photo: AFP

Tencent, Didi Chuxing, other internet firms slapped with fine by antitrust authorities for failing to disclose deals

  • The State Administration for Market Regulation imposed a fine of US$77,243 each on Tencent, Didi and eight other internet firms
  • The regulator’s action marks a stepped-up effort to keep in check misconduct in the country’s internet sector
Regulation
Tencent Holdings, Didi Chuxing and eight other major internet companies have each been slapped with a fine by China’s antitrust regulator for failing to report the acquisition of smaller competitors and starting new joint ventures, in a move that intensifies Beijing’s crackdown on Big Tech.

The State Administration for Market Regulation (SAMR) imposed a fine of 500,000 yuan (US$77,243) on each of the 10 firms for breaching China’s anti-monopoly law, according to a statement from the regulator on Friday.

Tencent, which runs the world’s largest video games business by revenue and China’s biggest social media platform WeChat, was fined for not telling the government of three mergers and acquisitions deals, according to SAMR. It said those deals, however, were not found to have the effect of excluding or restricting competition.

In the case of Didi, China’s largest ride-hailing services provider, a subsidiary failed to seek approval for establishing new joint ventures, according to SAMR.

Representatives from Tencent and Didi did not immediately respond to requests for comment on Friday.

A subsidiary of ride-hailing services giant Didi Chuxing failed to seek government approval for establishing new joint ventures, according to China’s antitrust regulator. Photo: Handout
The regulator’s action marks a stepped-up effort to keep in check misconduct by the country’s major internet companies, following the record 18.2 billion yuan fine imposed on e-commerce giant Alibaba Group Holding early last month for monopolistic behaviour. Alibaba is the parent company of the South China Morning Post.

The redlined behaviour that authorities are focused on include forcing merchants to pick one platform, abusing dominant market position, making hostile bids to acquire top players in specific market segments, misusing big data to charge unfair pricing to certain clients, turning a blind eye to inferior-quality products, leaking customer data and evading tax payments.

Tightening antitrust regulations leads the 2021 agenda for SAMR, the head of the agency said in January. The State Council Antitrust Committee issued the final version of anti-monopoly guidelines earlier this year, creating an important tool for Beijing to crack down on monopolistic practices. 

China warns 34 tech firms against excess in antitrust crackdown

Based on antitrust guidelines updated in 2018, companies must seek approval for mergers and acquisitions involving firms with annual revenue of more than 10 billion yuan globally, or 2 billion yuan in China.

Shenzhen-based Tencent’s unreported deals cited by SAMR included its acquisition of a 68 per cent stake in Chinese online car-listing platform operator Bitauto Holdings in June last year. That followed Tencent’s 2018 purchase of a 13 per cent interest in Tuhu, a Chinese car maintenance service start-up.

Also in 2018, a Tencent subsidiary teamed up with Chinese conglomerate Dalian Wanda Group in a joint venture for online retail services. Both Tencent and Wanda were fined for failing to seek government approval for this venture.

Antitrust guidelines put the onus on regulators to prove Big Tech monopolies

Both Tencent and Didi were previously fined in March for failing to seek approvals from the government for non-disclosure of M&A deals or new joint ventures.
On Monday, China’s antitrust regulator announced the start of an investigation into Meituan, the country’s largest on-demand delivery service provider.


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