The main person in charge of the antimonopoly Bureau answered reporters’ questions on the punishment of Ali Yuewen Fengchao

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The main person in charge of the antimonopoly Bureau of the General Administration of market supervision answered questions on the punishment of three cases of failing to declare according to law in Alibaba’s acquisition of Yintai commerce, Tencent’s holding enterprise Yuewen’s acquisition of Xinli media, and Fengchao’s network acquisition of China Post Zhidi
Today, the General Administration of Market Supervision announced that Alibaba Investment Co., Ltd. (hereinafter referred to as Alibaba investment) acquired the equity of Yintai commercial (Group) Co., Ltd. (hereinafter referred to as Yintai commerce), Yuewen group (hereinafter referred to as Yuewen) acquired the equity of Xinli media Holding Co., Ltd. (hereinafter referred to as Xinli media), and Shenzhen Fengchao Network Technology Co., Ltd. (hereinafter referred to as fengchao.com) Luo) the decision on administrative punishment for purchasing the equity of China Post intelligent delivery technology Co., Ltd. for failing to declare the illegal implementation of centralized cases according to law. The main person in charge of the antimonopoly Bureau of the State Administration of market supervision accepted an interview with the reporter.
Question 1. A few days ago, the General Administration of the people’s Republic of China issued the “guidelines on anti monopoly in the field of platform economy”, which has aroused widespread concern and discussion in the society. What are the main considerations in imposing administrative penalties on these three cases?
A: in recent years, China’s online economy has developed vigorously, and new formats and models have emerged in endlessly, which have become a new driving force for economic growth and played an important role in promoting high-quality economic development and meeting the people’s needs for a better life. However, at the same time, the online economy shows a trend of higher and higher market concentration. Market resources accelerate to concentrate on the head platform. The reflection and report on the platform monopoly problem are increasing day by day, which shows that there are some competition risks and hidden dangers in the development of online economy.
One of the problems is that some Internet platform enterprises have not declared concentration of business operators according to law. According to the antimonopoly law and the provisions of the State Council on the declaration standards for concentration of business operators, the concentration meeting the declaration standards shall be reported to the State Administration of market supervision in advance, and those without declaration shall not be concentrated. At present, we have received some complaints and reports, reflecting that some Internet platform enterprises’ turnover has reached the declaration standard, but before the implementation of centralization, they have not reported to the anti-monopoly law enforcement agencies according to law, which is suspected of violating the relevant provisions of the anti-monopoly law. After receiving the report, the anti-monopoly law enforcement agency shall verify according to law, and investigate and deal with the suspected cases of illegal concentration of business operators without reporting according to law. The open cases are three of them.
Through the publication of the decision on administrative punishment of the above cases, we hope that the operators will realize that the anti-monopoly law is applicable to all subjects and treat domestic and foreign capital, state-owned and private enterprises, large and medium-sized enterprises, Internet enterprises and traditional enterprises equally and equally. The purpose is to ensure that all kinds of market entities participate in market competition fairly and create a fair competition business Business environment. Although the competition in the field of platform economy presents some new characteristics, the Internet industry is not outside the anti-monopoly law. All enterprises should strictly abide by the anti-monopoly laws and regulations and maintain fair market competition. Only in this way can we ensure the healthy development of the whole industry.
As a matter of fact, it is one of the important contents to strengthen the anti-monopoly law enforcement and market supervision to investigate and deal with the cases of illegal implementation concentration according to law, which is of great significance to protect fair market competition, safeguard the legitimate rights and interests of consumers, and create a business environment with international competitiveness. Since the establishment of the General Administration of market supervision, it has adhered to the principle of performing its duties and duties according to law, continuously strengthened the investigation and treatment of centralized cases of illegal implementation, and improved the transparency of law enforcement. Since 2020, the General Administration of market supervision has published 11 decisions on administrative penalties for failing to declare cases of illegal concentration of business operators according to law. Through the interpretation of the cases, the awareness and recognition of fair competition awareness of all sectors of the society are further enhanced, the awareness of anti-monopoly compliance of market subjects and the consciousness of maintaining fair competition in the market are enhanced, and a good social atmosphere is created.
Question 2. Can you introduce the basic situation of the investigation of these three cases?
A: the three enterprises punished this time include Alibaba investment, Yuewen and Fengchao network. Alibaba investment is the main entity of Alibaba group to carry out investment and merger, Yuewen is a holding subsidiary of Tencent, and Fengchao network is an affiliated company of SF. All three enterprises have great influence in the industry, and the transactions involve different industries, such as department store retail, film and television production and distribution, express terminal delivery service, etc. The basic information of the case is as follows:
First, Alibaba invested in the acquisition of Yintai commercial equity. From March 2014 to June 2017, Alibaba invested three times to acquire 73.79% equity of Yintai commerce, becoming the controlling shareholder of Yintai commerce. In February 2018, Alibaba’s investment shareholding ratio further increased. Alibaba Group Holding Co., Ltd., the parent company of Alibaba Investment Co., Ltd., is mainly engaged in China’s online sales platform business composed of tmall, Taobao and juhuasuan, global and Chinese wholesale trade platform business and global retail market business. Yintai commercial (Group) Co., Ltd. is mainly engaged in the operation and management of department stores and shopping centers in China.
Second, Tencent’s subordinate enterprise Yuewen’s acquisition of shares in Xinli media. In August 2018, Yuewen, a holding subsidiary of Tencent, signed an agreement with Xinli media to acquire 100% equity of Xinli media, and completed the delivery in October of that year. Reading is mainly engaged in reading service, copyright commercialization, writer training and brokerage. Xinli media is mainly engaged in TV series production, film production, network drama production, global program distribution, entertainment marketing and artist brokerage.
The third is Fengchao network’s acquisition of shares in China Post zhidu. In May 2020, Fengchao network acquired 100% equity of China Post smart delivery by stock exchange, and completed the delivery in the same month. Both Fengchao network and China Post smart delivery are engaged in the intelligent express box business in the express terminal delivery service, respectively operating the “Fengchao” and “express easy” brand intelligent express boxes.

From the investigation of the cases, the illegal facts of the three cases are relatively clear. After the acquisition, Alibaba investment, Yuewen and Fengchao network respectively obtained control rights, which belong to the concentration of business operators stipulated in Article 20 of the anti monopoly law. The turnover of the operators participating in the concentration obviously meets the declaration standard stipulated in Article 3 of the provisions of the State Council on the declaration standards for concentration of business operators. Before the implementation of the concentration, they did not declare the concentration of business operators according to law. In the case investigation, we comprehensively evaluated the impact of concentration on the market competition, not only investigated the competition situation and development trend of the target company’s relevant market, but also investigated the possible impact of the business association between the purchaser and the target company and the characteristics of the platform. The evaluation concluded that none of the above three cases had the effect of excluding or restricting competition.
In the process of investigation, we required the investigated operators to submit relevant documents and materials in accordance with the anti monopoly law and relevant supporting provisions. In the process of investigation, we carefully reviewed the documents and materials provided by the informant and the operator under investigation, and at the same time, we also solicited the opinions of relevant parties and carried out expert argumentation according to the specific situation of the case. The investigation shows that the above three cases all constitute the concentration of business operators who have not declared illegal implementation according to law, but have no effect of excluding and restricting competition. Alibaba investment, Yuewen and Fengchao network have the obligation to declare, but they have not declared according to law. Therefore, the market supervision administration has decided to impose an administrative penalty of RMB 500000 on Alibaba investment, Yuewen and Fengchao respectively.
Question 3. Previously, the draft of the guidance on anti monopoly in the field of platform economy issued by the General Administration of market supervision specifically stipulated the concentration of operators involving the framework of agreement control. Did the three cases involve the protocol control framework?
A: the three cases announced this time all involve the situation of agreement control structure, including the situation that the operator under investigation has the agreement control structure, and the situation that the target company controls the domestic operation entity through agreement. This is also the first time that the General Administration of market supervision has imposed administrative punishment on the illegal concentration of enterprises involving agreement control structure, which is of great significance for regulating the concentration behavior of enterprises involving agreement control structure.
In the first half of this year, the State Administration of market supervision has examined and approved the cases of declaration of concentration of business operators involving the agreement control structure without conditions – the case of the newly established joint venture between Mingcha zhegang and Huansheng information, and is reviewing the cases involving the agreement control structure such as the merger of Guangzhou Huya Technology Co., Ltd. and Wuhan douyu Yule Network Technology Co., Ltd. At the “double 11” administrative guidance meeting on regulating online economic order, the market supervision administration also made it clear that the concentration of business operators involving the agreement control structure is also applicable to the anti-monopoly law, and should declare and accept the anti-monopoly examination according to law. There are also relevant provisions in the draft of anti monopoly guidelines on the field of platform economy. The reason why this issue has been emphasized many times is not to say that the concentration involving the agreement control structure before this need not be declared, but to further clarify and restate the requirements for the declaration of concentration in accordance with the law. Because in practice, some enterprises still hold a wait-and-see attitude, and even some enterprises do not take the initiative to declare after being reminded. It is believed that through the investigation and punishment of these cases, operators can more clearly realize that the agreement control structure is not the reason for Internet enterprises to evade the centralized supervision of operators. No matter what type of enterprise, whether the operator under investigation, the target company or the actual controller of the relevant enterprise has an agreement control structure, they should declare the concentration of business operators according to law, and the illegal implementation of concentration will be subject to corresponding administrative punishment.
Question 4. We have noticed that in these three cases, the investigated enterprises were fined 500000 yuan. What factors were considered? Compared with the scale of these enterprises, the fine amount is not high, can the punishment have deterrent effect?
A: Article 48 of the antimonopoly law stipulates that “if an operator violates the provisions of this law to implement concentration, the antimonopoly law enforcement agency of the State Council shall order it to stop the concentration, dispose of its shares or assets within a time limit, transfer its business within a time limit and take other necessary measures to restore it to the state before concentration, and may be fined less than 500000 yuan” in Article 49 of the anti monopoly law When determining the nature of the violation, the duration of the fine and other factors stipulated in Article 47 of this law, the nature and duration of the penalty shall be taken into account.
When the antimonopoly Bureau of the General Administration of market supervision makes a decision on administrative penalty, it mainly considers two aspects. On the one hand, according to the anti-monopoly law, the way to deal with it includes returning to the state before concentration and a fine of less than 500000 yuan. Recovery to the state before concentration will have a great impact on the development of enterprises and economic operation. From the situation of centralized law enforcement in China and the experience of foreign law enforcement, it is generally applicable only when the transaction has the effect of eliminating and restricting competition. The investigation shows that the three cases do not have the effect of excluding and restricting competition, so the operators are not required to return to the state before concentration. On the other hand, we also notice that investment and M & A is an important means for the development and growth of Internet enterprises. The above-mentioned enterprises have great influence in the industry, have a large number of investment and merger transactions, have professional legal team, should be familiar with the centralized declaration system of operators, but failed to take the initiative to declare, the impact is relatively bad, so they decided to give top punishment within the scope of the law, hoping to achieve the purpose of investigating and dealing with a number of cases and regulating an industry.
Although the amount of fines is relatively low, the penalties of the above three cases can release signals to the society to strengthen anti-monopoly supervision in the Internet field, eliminate the fluke and wait-and-see mentality of some enterprises, and produce corresponding deterrent effect. Through the investigation and treatment of the cases that have not been declared according to law, it can also promote enterprises to declare concentration of operators according to law, prevent enterprises from forming monopoly by means of merger and acquisition, or kill potential competitors by purchasing small and medium-sized enterprises, hinder innovation, and promote the healthy development of the whole industry.

Of course, compared with other jurisdictions, the amount of fines for illegal concentration of business operators in China is indeed low and its deterrent power is limited. In the process of revising the antimonopoly law, many experts, scholars, lawyers and enterprises have put forward opinions and suggestions. The General Administration of market supervision has also conducted in-depth research and demonstration on the problems of illegal implementation of centralized fines, which are reflected in the revised draft of the anti-monopoly law.
Q5. Some Internet enterprises have carried out a large number of merger and acquisition transactions in recent years. Why are these three transactions investigated and handled? Will other transactions be investigated and punished?
A: Recently, the State Administration of market supervision has received some tips on Internet enterprises suspected of failing to declare illegal concentration of business operators according to law. There are many enterprises involved, a wide range of industries and a long time span. We are stepping up to verify the relevant reporting clues and investigate and deal with the trade fairs suspected of failing to declare illegal concentration according to law. Meanwhile, at the “double 11” administrative guidance meeting on regulating online economic order, the General Administration of market supervision has asked the relevant enterprises to sort out the suspected cases of illegal concentration of business operators by themselves, hoping to find and deal with the cases of illegal implementation of the concentration of business operators through the self inspection of enterprises. Of course, in the process of reporting verification and self-examination, some enterprises can actively cooperate, and some enterprises do not realize the importance of anti-monopoly compliance and ignore or cover up the verification and investigation work, which affects the investigation work.
This public punishment of these three operators hopes to guide and educate them to carry out production and operation in accordance with the regulations, and report to the General Administration of market supervision in advance in accordance with the law, so as to avoid the illegal concentration of operators without reporting according to law, and reduce the risk of violation of laws and regulations.
At the same time, it should be noted that compared with the traditional industries, the business model of the Internet industry is changeable, and the transaction structure and competitive ecology are very complex, which brings new challenges to the anti-monopoly law enforcement. The specific situations of suspected cases of failing to declare according to law are different. In the process of investigation, it is necessary to investigate the suspected illegal facts according to the case situation, accurately grasp the rules and characteristics of industry competition, and comprehensively analyze and evaluate the impact of transactions on market competition and industry development, so as to make a decision on handling according to law.
Q6. In terms of anti-monopoly supervision in the Internet field, what other work has the General Administration of market supervision carried out?
A: fair competition is an important prerequisite for the sustained and healthy development of the Internet industry. It is under the stimulation of market competition that Internet platform enterprises continue to promote innovation in technology and business model, and realize their own development and growth while adding new impetus to economic development, promoting high-quality economic development and meeting the needs of the people for a better life. In order to realize the sustainable and healthy development of the industry, we must create a fair competition market environment, and continuously stimulate the innovation vitality and development power of enterprises.
The General Administration of market supervision attaches great importance to strengthening anti-monopoly supervision in the Internet field, improving market competition rules, protecting fair competition in the Internet market, supporting the sustained and healthy development of online economy, and safeguarding the legitimate rights and interests of consumers. The General Administration of market supervision actively promotes the revision of the anti monopoly law. At the same time, three rules and regulations have been issued, including the Interim Provisions on anti monopoly agreement, the Interim Provisions on Prohibition of abusing market dominance, and the Interim Provisions on the review of concentration of business operators. Five guidelines, including the anti-monopoly compliance guide for operators, have been formulated to refine the anti-monopoly legal system, and to make targeted provisions on the legal application of Internet and other new economic formats according to the characteristics of the industry Internet platform enterprises should strictly abide by it. At present, the General Administration of the people’s Republic of China is formulating the anti-monopoly guidelines in the field of platform economy, which has completed the public consultation and is in the process of revision according to the opinions. Through the development of guidelines, we can enhance the operability and predictability of the anti-monopoly legal system, and ensure the orderly competition.
At the same time, in view of the prominent platform monopoly problems reflected in various aspects, the General Administration of the people’s Republic of China has continued to strengthen anti-monopoly supervision, focusing on preventing and curbing monopoly behaviors through anti-monopoly law enforcement, urging enterprises to operate in accordance with the law and protecting fair market competition.
Recently, there has been a high degree of social concern about platform monopoly. What suggestions do you have for the platform enterprises to operate in compliance with the law?
A: Although the competition in the field of platform economy presents some new characteristics, such as multilateral market, dynamic competition, cross-border competition and network effect, the traditional anti-monopoly legal rules are still applicable. I have repeatedly stressed that platforms are not outside the anti-monopoly law. Internet platform enterprises should strictly abide by anti-monopoly laws and regulations and maintain fair market competition. Here, I would like to make the following suggestions:
First, it is not allowed to engage in monopoly activities prohibited by the anti monopoly law. The General Administration of market supervision will strengthen the anti-monopoly supervision in the field of Internet in accordance with the law, and promptly investigate and deal with the monopoly behaviors violating the anti-monopoly law. Internet platform enterprises should, in accordance with the provisions of the anti monopoly law, sort out their own business behaviors, immediately stop any monopoly agreement that may exclude restrictions on market competition, infringe upon the legitimate rights and interests of consumers, and abuse of market dominant position, put forward practical and feasible rectification measures, and timely report the rectification situation to the market regulatory administration.
The second is to declare the concentration of business operators according to law. Internet platform enterprises should strictly abide by the provisions of the “anti monopoly law” and declare the concentration of operators that meet the declaration standards according to law. Once again, I have made it clear that the concentration involving the agreement control structure, whether the buyer or the acquired party involves the agreement control structure, belongs to the scope of anti-monopoly review of concentration of undertakings. Before implementation, it should be declared according to law, and no concentration shall be implemented without approval of declaration. The State Administration of market supervision will review according to law to prevent enterprises from forming monopoly by means of merger and acquisition, or by purchasing small and medium-sized enterprises to stifle potential competitors and hinder innovation. It will strengthen law enforcement, strictly investigate and deal with acts of failing to declare and illegally implement concentration of business operators according to law, maintain a good market competition pattern and continuously stimulate enterprises’ innovation motivation. Internet platform enterprises should systematically sort out the previous concentration behaviors of operators, take the initiative to report the relevant situation to the General Administration of market supervision, and actively cooperate with the investigation work.

Third, strengthen the anti-monopoly compliance management. Any enterprise should respect and abide by the law, and Internet platform enterprises are no exception. In accordance with the requirements of the guide to antitrust compliance for operators, we should earnestly strengthen the anti-monopoly compliance work, establish and improve the anti-monopoly compliance management system, clarify the anti-monopoly compliance management department, seriously study the anti-monopoly laws and regulations, strengthen the anti-monopoly training for employees, regularly carry out anti-monopoly compliance self-examination, and establish internal incentive and reward and punishment measures within the enterprise to ensure that the enterprise and its employees have a good command of anti-monopoly compliance Act in accordance with the law. We can communicate with the State Administration of market supervision on Relevant Issues in compliance management, and we will actively provide guidance and services for enterprises.
Fourth, we should fully cooperate with the anti-monopoly investigation and examination of the General Administration of market supervision. The anti monopoly law clearly stipulates that the operators, interested parties or other relevant units or individuals under investigation shall cooperate with the anti-monopoly law enforcement agencies to perform their duties according to law, and shall not refuse or hinder the investigation of the anti-monopoly law enforcement agencies. Internet platform enterprises should actively cooperate with the law enforcement work of the General Administration of market supervision, comprehensively, accurately and truthfully explain the situation and provide documents. For those who refuse or obstruct the investigation and examination of law enforcement agencies, the State Administration of market supervision will deal with them in accordance with the law and publicly expose them to the public.