The State Administration for Market Regulation Announces Administrative Penalty Decisions on Alibaba, Tencent and Other Enterprises for Failing to Report Lawful and Illegal Implementation of Operator Concentration Cases

According to the “Anti-Monopoly Law of the People’s Republic of China” (hereinafter referred to as the “Anti-Monopoly Law”) and the “Interim Provisions on the Review of Concentration of Business Operators”, this machine is on April 12, 2021. Investment) to acquire the equity of Youku Tudou Inc. (hereinafter referred to as Youku Tudou) is suspected of failing to declare the illegal implementation of the concentration of business operators in accordance with the law.

1. Basic situation

(1) The parties to the transaction.

Acquirer: Ali Investment. It was incorporated in the British Virgin Islands in 2000, and the ultimate controller is Alibaba Group Holding Co., Ltd. (hereinafter referred to as Alibaba). Alibaba’s main businesses include online retail platform services, retail and wholesale commerce, logistics services, cloud computing, digital media and entertainment, and innovative businesses. The global turnover in 2015 is (omitted) RMB (the same currency is used below), and the domestic turnover in China is (omitted).

Acquired: Youku Tudou. It was incorporated in the Cayman Islands in 2005 and listed on the New York Stock Exchange in 2010. It is mainly engaged in the business of Internet long video platforms through “Youku” and “Tudou” platforms. In 2015, both global and domestic turnover were (omitted).

(2) Transaction overview.

This transaction is an equity acquisition. On November 6, 2015, Ali Investment signed the “M&A Agreement” with Youku Tudou through its Ali YK and its affiliated entities to acquire the entire equity of Youku Tudou at US$27.60 per American Depositary Share (ADS) in cash. On April 5, 2016, the transaction completed the equity change registration.

2. Facts and reasons for the violation

(1) This case constitutes a concentration of business operators that has not been declared and illegally implemented in accordance with the law.

Article 20 of the Anti-Monopoly Law stipulates that “Concentration of business operators refers to the following situations: (1) business operators merge; (2) business operators obtain control over other business operators by acquiring equity or assets; (3) An operator obtains control over other operators through contracts or other means or can exert decisive influence over other operators.” The acquisition of 100% equity of Youku Tudou by Alibaba Investment is a concentration of operators stipulated in Article 20 of the Anti-Monopoly Law.

In 2015, Ali Investment’s global turnover was (omitted), and its domestic turnover was (omitted); Youku Tudou’s global and China’s domestic turnover were both (omitted), reaching the third place in the “Regulations of the State Council on the Declaration Standards for Concentration of Business Operators”. The reporting standards stipulated in Article 10 belong to the circumstances that should be reported.

Article 21 of the Anti-Monopoly Law stipulates that “Where the concentration of business operators meets the reporting standards prescribed by the State Council, the business operators shall declare to the anti-monopoly law enforcement agency of the State Council in advance, and the concentration shall not be implemented if the declaration is not made.” On April 5, 2016, the above-mentioned transaction completed the equity change registration, and before that, it was not declared according to law, which violated Article 21 of the Anti-Monopoly Law and constituted a concentration of business operators that was not declared according to law and illegally implemented.

(2) This case does not have the effect of excluding or restricting competition.

This agency has evaluated the impact of Ali Investment’s acquisition of Youku Tudou’s equity on market competition, and the evaluation believes that the concentration of operators will not have the effect of eliminating or restricting competition.

3. Basis and Decision of Administrative Penalty

Article 48 of the “Anti-Monopoly Law” stipulates that “Where a business operator conducts concentration in violation of the provisions of this Law, the anti-monopoly law enforcement agency of the State Council shall order it to stop the concentration, dispose of shares or assets within a time limit, transfer business within a time limit, and take other necessary measures to restore the concentration to concentration. In the previous state, a fine of not more than 500,000 yuan may be imposed.” Article 49 of the “Anti-Monopoly Law” stipulates that “for the fines stipulated in Articles 46, 47 and 48 of this Law, the anti-monopoly law enforcement agency shall take into account the amount of the illegal act when determining the specific amount of the fine. factors such as nature, extent and duration”.

In accordance with the above provisions, based on the investigation and evaluation conclusions, this agency has decided to impose an administrative penalty of RMB 500,000 on Ali Investment.

Article 67 of the “Administrative Penalty Law” stipulates that “the administrative organ that makes the fine decision shall be separated from the organ that collects the fine. The administrative organ making the administrative penalty decision and its law enforcement officers shall not collect the fine on their own. The party concerned shall pay the fine at the designated bank or through the electronic payment system within 15 days from the date of receipt of the administrative penalty decision. The bank shall accept the fine and pay the fine. Fines are turned over directly to the state treasury.”

The party concerned shall, within 15 days from the date of receipt of this administrative penalty decision, bring the payment code to the 15 central government non-tax revenue collection agency banks (ICBC, Nong, China, Jian, Jiao, CITIC, Everbright, China Merchants, Postal Service). You can pay the fine at any bank outlet or online banking of Chuan, Huaxia, Ping An, Industrial, Minsheng, Guangfa, Zheshang). Payment code: (omitted). If the fine is not paid by the due date, according to the provisions of Article 72 of the Administrative Penalty Law, the agency will impose a daily fine of 3% of the fine amount, and apply to the people’s court for enforcement according to law.

If the party concerned is not satisfied with the above-mentioned administrative penalty decision, it may apply to the State Administration for Market Regulation for administrative reconsideration within 60 days from the date of receipt of this administrative penalty decision; or within six months from the date of receipt of this administrative penalty decision , file an administrative lawsuit with the people’s court in accordance with the law. During the period of administrative reconsideration or administrative litigation, the implementation of this administrative penalty decision shall not be suspended.