Alibaba shares rise after record fine for antitrust

Alibaba shares rose sharply on Monday after e-commerce group set up by billionaire Jack Ma said a record $ 2.8 billion fine over the weekend was the end of an antitrust inquiry into the company.

At a conference on analysts, executives said regulators were still investigating the broader technology industry in China over mergers and acquisitions in the past, but that they were no longer investigating Alibaba’s affairs. The company’s listed share in Hong Kong rose 7.8 percent.

“Apart from the merger, we are not aware of any other [antitrust issues]”” Alibaba executive vice president Joe Tsai said in a call to analysts. “We are pleased to be able to put this matter behind us,” he added.

China’s market regulators have shrunk Alibaba’s fine, worth 4 percent of its 2019 domestic revenue, due to competitive retaliation against merchants using its e-commerce platform.

Although the amount was a record for the country’s previously light regulators, it was less than the maximum 10 percent fine allowed under the regulations.

The antitrust investigation into Alibaba was just one of the problems that Ma faced. Alibaba’s planned $ 37 billion offer from sister payment company Ant Group was canceled at the last minute at the request of regulators in November.

Mom has only made one brief public appearance since October when he gave a speech at a forum in Shanghai that many people say offends China’s regulators. Authorities have also issued regulations restricting online lending, one of Ant Group’s former growth areas.

Regulators only announced their investigation into Alibaba in late December, dropping their shares by 13 percent in the period to last week.

While Saturday’s fine was the end of the investigation, the group will have to adhere to a “comprehensive redress” program, as well as the mergers and acquisitions of the past.

In December, Alibaba received a nominal fine for failing to seek approval of regulations for earlier transactions. It ended a period in which companies listed abroad were exempted from such approvals.

Alibaba and the Chinese competitor on social media, Tencent, are among the largest retailers in Asia and invest in hundreds of new businesses every year.

In its ruling on Alibaba’s antitrust practices, China’s state administration of market regulation said the company had forced retailers to list exclusively on its shopping platforms, a practice known as ‘choose one of two’. On Monday, Alibaba said it would spend ‘billions of dollars’ on initiatives to improve traders’ experiences.

“We do not need any exclusivity arrangements to retain our merchants,” said Alibaba CEO Daniel Zhang. He said the company would reduce costs for merchants working on its platform by, for example, offering some services for free.

Zhang added that the group will not appeal against the decision. This was in contrast to Alibaba’s more assertive attitude towards regulators six years ago when it fought back against the government’s criticism of counterfeit goods. On Saturday, Alibaba regulators praised that they have “thoughtful” expectations for the internet industry.

China’s incited antitrust regulators have unleashed a frenzy of actions against technology companies and unveiled guidelines to cover the sector in March.

But global investors must conclude from the antitrust inference that regulators supported Alibaba’s business model, which coined the term “platform economy” in law.

“Our business model is fully affirmed by regulators as good for the country’s economy and the promotion of innovation,” Tsai said, adding that the company is in line with government policies to digitize the economy.

Video: Why the Ant IPO was canceled

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