China Opens Probe in Alibaba & Minmetals Steel E-Commerce Venture
Chinese media reported China's market regulator State Administration for Market Regulation is investigating a joint venture between e-commerce giant Alibaba Group and Minmetals Development, amid a broad antitrust clampdown on internet firms. Minmetals said that it received a notice from the State Administration for Market Regulation in recent days about an investigation into the joint venture formed in 2015, in which Alibaba transferred its 44% stake to an unrelated firm in 2019, which the regulator suspects may constitute an illegal concentration of market power under the Anti-Monopoly Law. Minmetals said “According to its preliminary understanding, the company's e-commerce cooperation did not involve any violation of the anti-monopoly law, and there was no damage to the interests of customers, consumers, and investments. We will actively cooperate with the investigation conducted by the market regulator and fulfil the obligation of information disclosure.”
Minmetals added that it does not expect the regulator's investigation will have an adverse material impact on its business operations.
China issued antitrust guidelines on the country's platform economy in February, signalling strengthened antitrust enforcement against monopolistic behaviours in the country's internet platform sector. According to China's Ministry of Commerce, the undertakings concerned shall file a prior notification with the State Council when a concentration of undertakings reaches the following criteria
The combined worldwide turnover of all the undertakings concerned in the preceding financial year is more than 10 billion yuan
The combined nationwide turnover within China of all the undertakings concerned in the preceding financial year is more than 2 billion yuan, and the nationwide turnover within China of each of at least two of the undertakings concerned in the preceding financial year is more than 400 million yuan.
In December 2015, subsidiaries of China Minmetals and Alibaba jointly announced their cooperation to build an e-commerce platform for steel. In 2014, Alibaba's total turnover settled at 52.5 billion yuan while Minmetals Development reached 134.56 billion yuan.
The investigation follows the record USD 2.75 billion anti-monopoly fine imposed on Alibaba earlier this month for an exclusive dealing agreement. State Administration for Market Regulation has earlier fined 12 companies, including internet giants Tencent and Baidu in March for violating anti-monopoly law in making deals.
State backed Minmetals E-Commerce was founded in May 2012 to share information more efficiently to trade metals. Alibaba had joined the metal marketplace's funders in May 2016 by paying CNY 317 million in cash. In March 2020, Alibaba Group Holding's investment entity Hangzhou Ali Venture Capital has gotten rid of its 44% stake. Ali Venture Capital sold its stake to E-Commodities Beijing Supply Chain Management. The deal price was not disclosed, nor the reason behind the move.