Chinese regulators fine big firms over anti-monopoly law

China fined 11 companies including technology giant Tencent on Friday, taking aim at their acquisitions and joint ventures as authorities target monopolistic practices.

The penalties come weeks after e-commerce giant Alibaba was hit with a $2.78 billion fine by China’s market watchdog when an investigation found it had been abusing its dominant market position.

Twelve tech firms, including giants Tencent, Baidu and ByteDance, also received smaller fines in March for allegedly flouting monopoly rules.

Regulators have in recent months ramped up scrutiny, particularly of the country’s high-flying tech firms, telling industry leaders to rectify anti-competitive behaviour.

Beijing has expressed concern over the reach of private companies into the public’s daily finances, with financial regulators summoning internet companies with fintech operations this week to warn them against unfair competition.

On Friday China’s market watchdog said it had identified nine cases that violated anti-monopoly regulations by creating an “unlawful concentration” of business operations.

The companies were fined 500,000 yuan ($77,259) each, said the State Administration for Market Regulation. But the regulator noted the violations did not eliminate or restrict competition.

In one case involving Tencent, the company was found to have failed to declare the acquisition of auto services firm Shanghai Lantu Information Technology.

Meanwhile, Chinese e-commerce giant Alibaba Group Holding has frozen pay for senior executives in 2021 and is instead giving junior staff bigger salary increases, sources said, in an effort to preserve its workforce amid a regulatory clampdown.

Hundreds of top-tier executives at Alibaba are not entitled to salary hikes this year, unless they performed extraordinarily, four sources familiar with the matter said.

The Hangzhou-based company, though, has offered considerable wage increases to junior staff, they said.

The pay moves mark a departure from the usual for Alibaba, which has been the focal point of China’s months-long crackdown on the mainland’s big and powerful technology companies on worries about their market dominance and ability to sway public opinion. Its management level executives, over the years, received on average a 5% to 10% pay rise annually and were also given stock incentives, one source said.

In a statement to Reuters, Alibaba did not directly comment on the pay freeze for executives, but said: “Talent is Alibaba Group’s most important asset. We have a robust and competitive compensation system that reflects our priorities in cultivating our next generation of talents.”

The sources declined to be named as they were not allowed to speak to media.

CHINA FACTORY GROWTH: China’s factory activity growth slowed and missed forecasts in April as supply bottlenecks and rising costs weighed on production and overseas demand lost momentum.

The country’s official manufacturing purchasing managers’ index (PMI) fell to 51.1 in April from 51.9 in March, data from the national Bureau of Statistics (NBS) showed on Friday.

It remained above the 50-point mark that separates growth from contraction on a monthly basis but was below the 51.7 expected in a Reuters poll of analysts.