Beijing has imposed a RMB 3 million fine on the operator of Chinese flash sale online retailer Vipshop.com for unfair competition.
Why it matters: Coupled with a RMB 500,000 penalty for irregular pricing dealt out in December, regulation pressure is rising as Tencent-backed Vipshop’s share prices reach historical highs after doubling over 2020.
- How the government addresses Vipshop, a major Chinese e-commerce player, could signal what’s ahead in the ongoing anti-monopoly investigation of its bigger peer, Alibaba.
Details: China’s State Administration for Market Regulation, the country’s antitrust watchdog, announced Monday it will fine Vipshop RMB 3 million (around $464,000) for unfair competition.
- In order to gain a competitive advantage, Vipshop had developed and utilized a system to obtain information about brands that sell through its and competitor’s platforms from August to December last year, according to the announcement.
- The data collected were referenced for monopolistic practices such as pressuring brands or merchants to only sell on its platform, a practice called “forced exclusivity.” It would throttle traffic, block, or even remove from the platform products from merchants that sell on multiple platforms, and boost traffic to sellers that sold exclusively on Vipshop.
- The company confirmed the news in a Weibo post, saying that it did not object to the facts in the ruling, and that it will comply and “rectify and reform” to maintain market order.
Context: China has stepped up regulation of internet giants over the past few months.
- In December, Beijing issued antitrust-related fines for three acquisition deals involving Alibaba, Tencent-backed China Literature, and an SF Express subsidiary. Each of the companies was fined about RMB 500,000.
- China’s market regulator fined JD.com, Alibaba’s Tmall, and Vipshop RMB 500,000 each for irregular pricing in the same month.
- Vipshop is reportedly considering a secondary listing in Hong Kong. The Beijing-based company went public on the New York Stock Exchange in 2012, raising a total of $71.5 million.