The fines are a latest indication that Beijing is serious about reining in malpractice among China’s fast-growing internet giants. Tightening antitrust regulations leads the 2021 agenda for China’s top regulator, the head of the agency said in January. The State Council Antitrust Committee also issued the final version of anti-monopoly guidelines last month, creating an important tool for Beijing to crack down on monopolistic practices. 

Even though the fines were small given the size of the companies, the amount is the highest stipulated by the law, sending a signal that enforcement against internet monopolies is strengthening. 

China issues final version of anti-monopoly guidelines as Beijing moves to rein in Big Tech

Under China’s Anti-Monopoly Law there are three main categories: monopoly agreements reached between business operators; abuse of dominant market position by businesses; and concentration of business players that may have the effect of eliminating or restricting competition, mainly brought about by M&A deals.

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

In the Tencent case, it failed to seek approval for the acquisition of an 83.33 per cent stake – worth 1.65 billion yuan – in the F round financing of online education start-up Yuanfudao in 2018, according to the statement. Alibaba’s department store operator Intime Retail Group did not report its purchase of Shaanxi-based retailer Kaiyuan Retail for 3.36 billion yuan in 2018, while Didi’s joint venture with Softbank in Japan in the same year was not reported. 

In 2019, ByteDance-backed Beijing Liangzi Yuedong Technology set up a joint venture with media company Shanghai Dongfang Newspaper without disclosing it to the SAMR in advance. Baidu failed to seek approval before acquiring a 53 per cent stake in robotics company Ainemo Inc in 2020.

ByteDance said the joint venture with Shanghai Dongfang never became operational and was cancelled in January 2021.

In a statement issued Friday, a Tencent spokesperson said, “We will continue to adapt to changes in the regulatory environment, and will seek to ensure full compliance,”

Alibaba, JD.com, Meituan, Didi and Baidu did not immediately respond to requests for comment. 

Last December, SAMR announced an antitrust investigation into Alibaba, which was accused of alleged monopolistic conduct for forcing merchants to work with only one e-commerce platform.

In the same month the SAMR also fined Alibaba Investment, Tencent-backed e-book publisher China Literature and express locker system operator Shenzhen Hive Box Technology 500,000 yuan each for failing to disclose their acquisition deals. 

While the scale of the latest investigation is broader, involving 10 cases with a dozen companies fined, analysts do not think it will have a substantial impact on the businesses.

“Since the penalties only involve fines without overturning the deals, they may not be considered harsh,” said You Yunting, senior partner at Shanghai Debund Law Firm. “The penalties send a signal to the market that internet companies, including those operating under the VIE (variable interest entity) structure, need to gain approval from the SAMR to settle their transactions for M&A deals,” You said.

Separately, the People’s Bank of China, the country’s central bank, published draft regulations on the definition of a monopoly in the third-party payment service market, a move that could affect major players such as Alipay, owned by Alibaba affiliate Ant Group, and WeChat Pay, operated by Tencent.