Alibaba shares soar after record fine

Alibaba shares rose sharply on Monday after the e-commerce group founded by billionaire Jack Ma said a record fine of $ 2.8 billion over the weekend marked the end of an antitrust investigation into the society.

Executives told an analyst conference that while regulators are still surveying China’s broader tech industry on past mergers and acquisitions, they are unaware of any more specific investigation into Alibaba’s activities. . The company’s Hong Kong-listed shares rose 7.8% after the remarks.

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

Chinese market regulators slapped the fine on Alibaba, representing 4% of its national revenues in 2019, for anti-competitive practices against merchants using its e-commerce platform.

While the amount was a record for the country’s previously light regulators, it was below the maximum 10% penalty possible under the regulations.

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

Ma did only one brief public appearance since October, when he gave a speech at a forum in Shanghai that many said offended Chinese regulators. The authorities also Posted regulations restricting online lending, one of Ant Group’s former growth poles.

Regulators first ad their investigation of Alibaba at the end of December, lowering its shares by 13% in the period up to last week.

As Saturday’s fine marked the end of the investigation, the group will have to comply with a rectification”, As well as facing a close scrutiny of past mergers and acquisitions.

In December, Alibaba received a nominal fine for failing to seek regulatory approval for past transactions, ending a period in which foreign listed companies had been de facto exempt from such approvals.

Alibaba and Chinese social media rival Tencent are among The biggest negotiators in Asia, investing in hundreds of start-ups each year.

In its ruling on Alibaba’s anti-competitive practices, China’s State Administration of Market Regulation said the company forced traders to list exclusively on its purchasing platforms, a practice known as “choosing one of the two”. On Monday, Alibaba said it would spend “billions of dollars” on initiatives to improve the experience for traders.

“We don’t need exclusivity agreements to retain our merchants,” said Alibaba CEO Daniel Zhang. He said the company would reduce costs for merchants operating on its platform, for example by offering certain services for free.

Zhang added that the group would not appeal the decision. This marked a contrast to Alibaba’s more assertive stance toward regulators six years ago, when it fought back against government criticism of counterfeit goods. On Saturday, Alibaba praised regulators as having “thoughtful” expectations for the internet industry.

China’s emboldened antitrust regulators have opened a frenzy of actions against tech companies, releasing guidelines to cover the industry in March.

But global investors are expected to conclude from the antitrust push that regulators have backed Alibaba’s business model, legally coining the term “platform economy,” Tsai said.

“Our business model is fully affirmed by regulators as being good for the country’s economy and for promoting innovation,” Tsai said, adding that the company was aligned with the government’s policy of digitize the economy.

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