E-commerce companies JD.com, Alibaba, and Vipshop were each fined 500,000 yuan ($76,500) by China’s market watchdog following new anti-monopolistic restrictions of November.
Last month, Beijing proposed new rules including prohibiting the exclusive sales strategy prohibiting merchants from selling on several online marketplaces. The crackdown took place amid China’s largest annual sales event, Singles’ Day, also called “Double Eleven.”
Now, the State Administration for Market Regulation (SAMR) has imposed the maximum fine on China’s three U.S.-listed online retailers, as reported by Caixin Global. The watchdog said it reacted to consumer complaints that sellers raised their prices before offering the traditional annual discounts in the shopping festival.
All three companies traded in the red by midday Thursday. Alibaba (NYSE: BABA; HKEX: 9988) slipped 2% to $233.20 per American depositary share, JD.com (Nasdaq: JD; HKEX: 9618) tumbled 3% to $86.83, and Vipshop Holdings Ltd. (NYSE: VIPS) was down 1%, at $27.52 per share.
For Alibaba, the fine was another in a slew of setbacks. Beijing has targeted the conglomerate since its founder Jack Ma criticized China’s leaders for stifling innovation at a public speech in October. Soon after, the government launched the scrutiny of Alibaba’s affiliate controlled by Ma, Ant Group, causing a suspension of its IPO, expected to be the world’s all-time biggest.
Now, Ant Group is dealing with an entire shakeup. The fintech giant may be forced to divest some of its most profitable businesses. As Reuters reported today, Beijing is scrutinizing Ant’s equity investments, specifically in tech and fintech, for potential unfair competition practices. The China Securities Regulatory Commission (CSRC) is leading the probe. Reuters said, citing a source, that the company has already begun looking for buyers for its holdings.
Earlier this month, SAMR imposed the same maximum fine of 500,000 yuan on Alibaba, a subsidiary of Tencent Holdings (OTC: TCEHY; HKEX: 0700), and SF Express-owned Hive Box for failing to meet regulatory requirements in acquisitions.
“The fines of the three cases are a signal to society that anti-monopoly supervision in the Internet field will be strengthened,” the SAMR said at the time.
The stock drop today followed the gains of Tuesday and Wednesday for e-commerce giants.