In December 2020, the State Administration of Market Regulation (“SAMR”) opened an investigation into Alibaba Group Holding Limited (“Alibaba”) for abusing its dominant market position in accordance with the Anti-Monopoly Law, and it was found that Alibaba has a dominant position in the online retail platform service market within China. Since 2015, Alibaba has abused its dominant position by imposing "two-for-one" requirements on merchants on the platform, prohibiting them from opening stores or participating in promotional activities on other competing platforms, and adopting various incentives and penalties to ensure the implementation of the "two-for-one" requirements through market forces, platform rules and technical means such as data and algorithms.
Alibaba's conduct constitutes as an abuse of dominant position under Article 17(1)(4) of the Anti-Monopoly Law, which prohibits "requiring their trading counterparts to make transactions exclusively with themselves or with the undertakings designated by them without justifiable reasons". In accordance with the provisions of Articles 47 and 49 of the Anti-Monopoly Law and considering the nature, extent and duration of Alibaba's illegal conduct, the SAMR issued a decision on 10 April 2021, ordering Alibaba to stop its illegal conduct and imposed a fine of RMB 18.228 billion, 4% of its 2019 domestic revenue. At the same time, Alibaba is required to carry out ‘comprehensive rectifications’ including strengthening internal controls and compliance managements, upholding fair competition, protect the legitimate rights and interests of merchants and consumers within the platform, and submit a self-regulation reports to the SAMR for three consecutive years.