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Tencent, Alibaba and Didi, among others, have been fined by antitrust regulators for failing to disclose past mergers and acquisitions. Photo: AFP

Tencent, Alibaba and Didi fined by China antitrust watchdog for unreported merger deals as early as 2011

  • China’s State Administration for Market Regulation announced 28 cases involving merger deals that were not reported for antitrust reviews
  • Offenders, which also include Bilibili and Weibo, have been fined nearly US$75,000 for each case, some dating back as early as a decade ago

China’s antitrust watchdog on Sunday announced it had punished Tencent Holdings, Alibaba Group Holding and Didi Global, among others, for failing to report past merger deals for anti-monopoly reviews.

The list of 28 offending cases included 12 involving social media and video gaming giant Tencent, five involving e-commerce giant Alibaba, and four involving ride-hailing platform operator Didi and its subsidiaries.

Each case led to a fine of 500,000 yuan (US$74,600) – the maximum amount that the State Administration for Market Regulation (SAMR) can levy, according to the country’s antitrust law.

Alibaba owns the South China Morning Post.

Regulators said Alibaba filed to report five deals, including its takeover of video hosting service Youku Tudou in 2015. Photo: AP Photo

Authorities made the punishment decisions between March 31 and May 18, according to documents published by the SAMR.

China’s Anti-Monopoly Law, which came into effect in 2008, stipulates that a merger deal has to go through regulatory reviews if the agreement has potential monopoly implications. The requirement was originally designed to prevent foreign companies from using mergers and acquisitions to dominate the Chinese market.

In December 2011, the Ministry of Commerce, which is in charge of foreign trade and investment, published regulations stipulating the punishment for anyone who breaks the law. It came into effect in February 2012.

For years, the ministry had mainly targeted merger deals involving foreign firms that could have major impact on the Chinese market. Japanese imaging equipment giant Canon, for instance, was fined 300,000 yuan in January 2017, days before it announced a takeover of Toshiba Medical Systems Corp.

However, after the authority for anti-monopoly reviews was transferred to the SAMR in 2018 during a government reshuffle, the regulator started to look into merger deals involving Chinese businesses.

Since the end of 2020, the SAMR has used the antitrust law to push forward Beijing’s campaign to clip the wings of Chinese Big Tech companies, imposing various fines for unreported merger deals from the past.

In one deal involving Tencent, disclosed by authorities on Sunday, the Shenzhen-based tech giant was fined for failing to declare the acquisition of a 20 per cent stake in Okaybuy (China) Holding, a shoe-selling website, in March 2011, before the Ministry of Commerce published its regulation on the punishment for such offences.

Regulators also fined Alibaba for failing to submit for review its investment in Yicai Media Group, a financial media outlet backed by a Shanghai-based state-owned broadcasting group. The deal was made in 2015, when the authority for antitrust reviews still belonged to the Ministry of Commerce.

Draft antitrust rules could increase scrutiny of China’s Big Tech

In a statement on Sunday, the SAMR, which oversees the antitrust bureau, said all offences involved “past deals that should have been reported but were not”. The regulator also said it was accelerating its process of reviewing old deals to “help companies move forward with a lighter load”.

The SAMR last year launched a hiring spree that could grow the antitrust bureau by as much as a third. In November, the antitrust body was renamed the State Anti-monopoly Bureau and elevated to vice-ministerial status, which gave the organisation a bigger budget and more manpower.

Sunday’s disclosed cases also included three involving video site Bilibili, one involving social media operator Weibo, one involving health tech company Ping An Good Doctor and Japanese conglomerate SoftBank, and one involving private equity firm Citic Capital.

Authorities did not order the companies to undo any of the deals, including Alibaba’s takeover of video hosting service Youku Tudou in 2015.

Tencent, Alibaba, Didi, Bilibili, Weibo, Ping An Good Doctor and Citic Capital did not immediately respond to requests for comment. A SoftBank representative declined to comment.

Companies punished later this year could face larger fines. The updated Anti-Monopoly Law, slated to come into effect on August 1, increased the maximum fine for undeclared merger deals to 5 million yuan – 10 times the current amount.