Sino-Singapore Jingwei Client, December 14th, within the same day, Alibaba Investment Co., Ltd. (hereinafter referred to as "Alibaba Investment"), China Reading Group, Shenzhen Fengchao Network Technology Co., Ltd. (hereinafter referred to as "Fengchao") 3 companies Enterprises were fined together.

  On the 14th, the Anti-Monopoly Bureau of the State Administration for Market Regulation issued a notice stating that in accordance with the provisions of the Anti-Monopoly Law, the State Administration for Market Regulation has invested in Alibaba’s investment in the acquisition of shares in Yintai Commercial (Group) Co., Ltd. Lai media holding Limited (hereinafter referred to as the "new media Lai") shares, the acquisition of HSBC nest Post delivery Chi Technology Co., Ltd. (hereinafter referred to as "Post Chi delivery") options, and other three cases of

undeclared illegal concentration of undertakings according to law

case An investigation was conducted and a penalty decision was made on December 14, 2020 in accordance with Articles 48 and 49 of the Anti-Monopoly Law, and Alibaba, China Reading Group and Fengchao were fined 500,000 yuan each.

  Source: Antitrust Bureau of the State Administration for Market Regulation

Basic situation of the case

  One is the case of

Alibaba's investment in acquiring equity in Yintai Commercial

.

From March 2014 to June 2017, Alibaba Investment acquired 73.79% of Yintai Commercial's shares three times and became the controlling shareholder of Yintai Commercial.

In February 2018, Alibaba's investment holding ratio further increased.

Alibaba Group Holding Co., Ltd., the parent company invested by Alibaba, 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.

  The second is the

acquisition of the equity of Xinli Media by the Reading Group, a subsidiary

of

Tencent

.

In August 2018, China Literature Group, a subsidiary of Tencent Holdings, signed an agreement with Xinli Media and others to acquire 100% of the shares of Xinli Media, and the delivery was completed in October of that year.

Reading Group is mainly engaged in reading services, copyright commercialization, writer training and brokerage.

Xinli Media is mainly engaged in TV drama production, film production, web drama production, global program distribution, entertainment marketing and artist brokerage.

  The third is

Fengchao's acquisition of equity in China Post Express

.

In May 2020, Fengchao acquired 100% of China Post Smart Delivery through a share swap and completed the delivery that month.

Fengchao and China Post Express are both engaged in the smart courier box business in the end-of-express delivery service, operating smart courier boxes under the brands of "Fengchao" and "Express Express" respectively.

The Internet industry is not outside the anti-monopoly law!

  In response to a reporter’s question, the principal of the Anti-Monopoly Bureau of the State Administration for Market Regulation pointed out that judging from the investigation of the case, the illegal facts of the three cases are relatively clear.

The three transactions are all equity acquisitions. After the completion of the acquisition, Alibaba Investment, Wenwen and Fengchao Network obtained control rights, and they belonged to the concentration of business operators stipulated in Article 20 of the Anti-Monopoly Law.

The turnover of the business operators participating in the concentration has obviously reached the reporting standard stipulated in Article 3 of the "Provisions of the State Council on the Standards for Declaration of Business Operator Concentration".

Before the implementation of the concentration, there was no declaration of concentration of undertakings according to law.

In the investigation of the case, a comprehensive assessment of the impact of concentration on market competition was conducted, including the competitive situation and development trend of the relevant market where the target company is located, as well as the business relationship between the acquirer and the target company and the possible impact of platform characteristics , The assessment concluded that none of the above three cases had the effect of eliminating or restricting competition.

  The above-mentioned person in charge emphasized that although competition in the field of platform economy presents some new features, the

Internet industry is not outside the anti-monopoly law. All companies should strictly abide by anti-monopoly laws and regulations and maintain fair market competition. Only in this way can we ensure that the entire The healthy development of the industry

.

Does it involve protocol control architecture (VIE architecture)?

  According to reports, the three cases announced this time all involve agreement control structures. Among them, there are situations where the under investigation has agreement control structures, and there are also situations where the target company controls domestic operating entities through agreements.

This is also the first time that the State Administration of Market Supervision has imposed administrative penalties

on the

illegal implementation of concentration by enterprises involving agreement control structures

, which is of great significance for regulating the concentration of operators in enterprises involving agreement control structures. 

  In the first half of this year, the State Administration for Market Supervision has reviewed and unconditionally approved the case of undertaking concentration declaration involving the agreement control structure-Mingcha Zhegang and Huansheng Information New Joint Venture Case, and

is reviewing Guangzhou Huya Technology Co., Ltd. and Wuhan

Douyuyu

in accordance with the law. The merger of Le Network Technology Co., Ltd. and other cases involving centralized declaration of business operators involving agreement control structures

.

At the "Double Eleven" Administrative Guidance Committee for Standardizing Online Economic Order, the State Administration for Market Regulation also clarified that the concentration of business operators involved in the agreement control structure is also applicable to the "Anti-Monopoly Law" and should be declared and subject to anti-monopoly review in accordance with the law.

There are also relevant provisions in the "Guidelines for Antitrust in the Field of Platform Economy" for comments.

  The person in charge stated that the

reason for repeatedly emphasizing this issue is not to say that the concentration of business operators involved in the agreement control structure does not need to be declared before, but to further clarify and reiterate the requirements for the declaration of concentration of business operators carried out in accordance with the law

.

Because in practice, some companies still hold a wait-and-see attitude, and even some companies still do not take the initiative to declare after being reminded.

I believe that through the investigation and punishment of these several cases, operators can more clearly realize that the protocol control structure is not a reason for Internet companies to avoid centralized supervision of operators.

Regardless of the type of enterprise, whether the investigated operator, the target company or the actual controller of the relevant enterprise has an agreement control structure, it should declare the concentration of operators in accordance with the law, and the illegal implementation of the concentration will be subject to corresponding administrative penalties.

Can 500,000 yuan produce a deterrent effect?

  In all three cases, the company under investigation was fined 500,000 yuan. What factors were mainly considered?

Compared with the scale of these companies, the fines are not high. Can the penalties have a deterrent effect?

  In this regard, the person in charge introduced that when the Anti-Monopoly Bureau of the State Administration for Market Regulation made an administrative penalty decision, it mainly considered two aspects:

  On the one hand, according to the provisions of the Anti-Monopoly Law, the handling methods include restoring to the state before the concentration and a fine of less than 500,000 yuan.

Restoring to the state before concentration will have a greater impact on enterprise development and economic operation. From the perspective of my country's illegal implementation of centralized law enforcement and the experience of foreign law enforcement, it is generally only applicable when transactions have the effect of eliminating or restricting competition.

The investigation showed that these three cases did not have the effect of eliminating or restricting competition. Therefore, there was no requirement for operators to return to their pre-concentration state

.

  On the other hand, we have also noticed that investment in mergers and acquisitions is an important means for Internet companies to develop and grow.

The above-mentioned companies have greater influence in the industry, many investment mergers and acquisitions, and have a professional legal team. They should be familiar with the operator concentration declaration system, but they failed to actively declare and the impact is relatively severe. Therefore, they decided

to be within the scope of the law The highest penalty is to achieve the purpose of investigating a batch of cases and regulating an industry

.

  The person in charge said that

although the fines are relatively low, the penalties in the above three cases can signal to the society to strengthen anti-monopoly supervision in the Internet field, dispel the chances and wait-and-see psychology that some companies may have, and produce a corresponding deterrent effect.

By investigating cases that have not been declared in accordance with the law, it can also encourage companies to declare operator concentration in accordance with the law, prevent companies from forming monopolies through mergers and acquisitions, or stifle potential competitors through acquisitions of small and medium-sized enterprises, hinder innovation, and promote the healthy development of the entire industry.

  Of course, compared with other jurisdictions, my country’s current fines for illegal implementation of the concentration of business operators are indeed low, and deterrence is limited.

During the revision of the Anti-Monopoly Law, many experts, scholars, lawyers, companies, etc. have put forward their opinions and suggestions. The State Administration of Market Supervision has also conducted in-depth studies and demonstrated issues such as the amount of centralized fines for illegal implementation. This is reflected in the revised draft.

Will other transactions be investigated and punished?

  Some Internet companies have carried out a large number of M&A transactions in recent years. Why are these three transactions investigated and handled? Will other transactions be investigated and punished?

  According to the above-mentioned person in charge, the State Administration for Market Regulation has recently received some clues involving Internet companies suspected of failing to declare illegal implementation of operator concentration. There are many companies involved, the industry is relatively wide, and the time span is long. We are stepping up to verify the relevant clues. Among them, the transactions suspected of failing to declare the illegal implementation of the concentration will be investigated and handled in accordance with the law.

At the same time, at the "Double Eleven" Administrative Guidance Meeting for Regulating Online Economic Order, the State Administration of Market Supervision has requested relevant companies to sort out the suspected illegal implementation of the concentration of operators on their own, hoping to find and deal with the illegal implementation as soon as possible through the company's self-examination Cases of concentration of business operators.

Of course, in the process of report verification and self-inspection requirements, some companies were able to actively cooperate, and some companies did not realize the importance of anti-monopoly compliance, and ignored or covered up the verification and investigation work, which affected the development of the investigation work. .

  "This public punishment of these three operators is hoped to guide and educate the operators to carry out production and operation in accordance with laws and regulations, and to report to the State Administration of Market Supervision in advance in accordance with the law, so as to avoid the occurrence of undeclared and illegal operator concentration behaviors and reduce the risk of violations of laws and regulations." The person in charge said.

  It also emphasized that, at the same time, it should be noted that compared with traditional industries, the business model of the Internet industry is changeable, and the transaction structure and competition ecology are very complex, which brings new challenges to anti-monopoly law enforcement.

The specific circumstances of suspected cases that have not been declared in accordance with the law are different. During the investigation process, it is also necessary to investigate the suspected illegal facts according to the individual case, accurately grasp the laws and characteristics of industry competition, and comprehensively analyze and evaluate the impact of transactions on market competition and industry development. Make a processing decision.

(Zhongxin Jingwei APP)