OP-ED: Alibaba fined for violating anti-monopoly law
FILE PHOTO: The Alibaba Group logo is seen during the company’s 11.11 Singles’ Day global shopping festival at its headquarters in Hangzhou, Zhejiang province, China November 11, 2020 Reuters
It may be safe to say that Alibaba will refrain from making the same mistake again and reorganizing its policies.
While things have not improved for businesses around the world due to the coronavirus, problems have worsened for tech giant Alibaba, which was recently fined by Chinese regulators in the amount of 18.2 billion yuan ($ 2.78 billion).
Since its establishment on June 28, 1999 in Hangzhou, Zhejiang, Alibaba has come a long way.
From the 31st largest public company in the world to the sixth largest global brand value, Alibaba has made its mark in the tech and retail world with its products, services, reliability and policies.
However, the Chinese market watchdog had its eyes on Alibaba from December of last year, not because Jack Ma’s bold statements against Chinese regulators have raised eyebrows since October, but because the dog guard suspected Alibaba of abusing its dominant position in the commerce market.
Later in the investigation, regulators found that Alibaba practiced a culture of “erxuanyi” which literally means “pick one out of two” when dealing with its merchants.
Essentially, this means that Alibaba has discouraged and / or prohibited its merchants from doing business with any other company or competitor in the market (with or without valid reason).
As a result, competition in the Chinese market has been restricted and China’s anti-monopoly law has been violated.
Article 1 of this anti-monopoly law states that the aim of the law is “to prevent and restrict monopoly behavior, protect fair competition in the market, improve economic efficiency, protect the interests of consumers and the public interest and promote the healthy development of the socialist market economy â.
Article 3 then describes monopoly behavior as: (i) monopoly agreements between companies; (ii) abuse of a dominant market position by companies; and / or (iii) a concentration of undertakings which eliminates or restricts competition or could eliminate or restrict competition.
Clearly, Chinese regulators have found Alibaba in violation of Article 3 (ii) of the Anti-Monopoly Law, which means that Alibaba has abused its dominant position in the market by “demanding that its counterparty it trades exclusively with it or that it trades exclusively with the designated airlines without a legitimate reason. â(in accordance with Article 17 (iv) of the Antimonopoly Law). Consequently, the imposition of the historic fine of 2, $ 8 billion might have been the right thing to do.
The laws of Bangladesh contain provisions similar to Section 16 of the Competition Act 2012 corroborating that “no enterprise shall abuse its dominant position” so as to “affect its competitors or consumers or the relevant market by his favor â.
Therefore, similar historic decisions can be made by the Bangladeshi courts if the occasion demands.
It should be noted that since the imposition of the fine, Alibaba has not denied any of the allegations; on the contrary, the company said it had “accepted the sanction with sincerity and would uphold it with determination”, but what actually happens remains to be seen in the months to come.
Many have taken the liberty of comparing this fine to that imposed by China on Qualcomm (the US chip giant) in 2015 by mentioning that the fine imposed on Alibaba is far higher than the fine of $ 975 million imposed on Qualcomm. six years ago.
However, regardless of the amount, it has been argued that this fine will not have a significant impact on Alibaba’s balance sheet as it only represents 4% of what the company did in 2019.
Additionally, Alibaba earned $ 12 billion in October, November and December 2020 alone, indicating that taking a $ 2.8 billion fine from the company will be similar to taking a bowl of ocean water.
However, the targeted impact of the fine goes far beyond Alibaba’s track record, as the main and colossal reason China has fined its tech giant is that it wants to balance the competition on the market and diminish any attempt to create a monopoly market.
By definition, monopoly is “a market structure characterized by a single seller, selling a single product in the market”.
Bangladesh’s 2012 Competition Law provides a similar definition which states that monopoly means “a situation in which a single person or firm takes control of the market for goods or services” (s.2 (o)).
Applying these definitions to the current situation, it can be said that if Alibaba traders are prohibited from trading with other companies, Alibaba will start selling unique products in the market, which will make it a unique seller, that is, a monopoly.
Undoubtedly, a monopolistic market will have great adverse effects on consumers and will create a wedge between the products needed and the products purchased (due to unfair prices).
Therefore, the fine imposed gave good judgment to anyone attempting to create a monopoly in the Chinese market and sufficiently warns Alibaba not to commit the same violation of the law again.
Fortunately, reports show that Alibaba has already learned a lesson from the sanction and that the fine has âserved to alert and catalyzeâ companies like Alibaba.
Additionally, Alibaba appreciated the regulators’ decision, saying, âIt reflects the thoughtful and prescriptive expectations of regulators regarding the development of our industry.
So, it can be safe to say that Alibaba will refrain from making the same mistake again and reorganizing its policies.
However, whether or not they aim to eliminate monopoly behavior from their actions, Alibaba is required to submit reports on its compliance for the next three years now.
So this means that Alibaba must be careful to reduce the anti-competitive nature of commerce and to put in place competitive and law-abiding policies.
Anyway, as the legendary and quick-witted Jack Ma puts it: “Today is difficult, tomorrow will be worse, but the day after tomorrow will be the sun” and maybe this house could work for Alibaba .
For now, however, Alibaba needs to be very careful with its trade policies, as all competitors pay close attention to every detail.
The author holds an LLM and an examiner of the International and Comparative Law Journal