China’s top court demands greater scrutiny to prevent monopolies

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China’s top court has demanded more scrutiny is needed to crack down on monopolies and unfair competition.

The Supreme People’s Court stated that extensive work needs to be done to determine and verify whether a business is engaging in monopolistic practices, regulate data collection and use, and protect consumers’ rights and interests in the digital sector, according to a report by China’s state-run People’s Daily.

The court also urged the need to ensure entities have access to equal resources and a unified procedure is in place that promotes fair competitions, the media outlet reported.

The demand by the Supreme People’s Court comes as China’s antitrust watchdog continues its probe into tech giant Alibaba Group over alleged anti-competitive practices.

The State Administration of Market Regulation is claiming Alibaba has been involved in monopolistic conduct such as “forced exclusivity” by requiring e-commerce merchants to pick only one platform as their exclusive distribution channel, according to the South China Morning Post.

In a statement, Alibaba said it would “actively cooperate with the regulators on the investigation”, adding that the “company business operations will remain normal”.

As the investigation continues to unfold, the Chinese government is reportedly considering nationalising Alibaba Group and the company’s financial services arm Ant Group.

“Based on tip-offs received by the State Administration for Market Regulation in recent days, the administration will be investigating Alibaba … for suspected monopolistic activities,” International Business Times quoted the Chinese government as saying.

Ant Group, the owner of Alipay, has also been summoned by China’s central bank to meet with financial regulators to discuss the company’s regulatory compliance, the South China Morning Post said.

“Ant Group received a meeting notice from regulators. We will seriously study and strictly comply with all regulatory requirements and commit full efforts to fulfil all related work,” Ant Group said in a statement.

The crackdown on Alibaba Group’s operations by Chinese regulators follow founder Jack Ma’s frank speech he gave during the Bund summit in Shanghai in October where he criticised the country’s overbearing regulation and the state’s dominance over the banking system. 

“Good innovation can coexist with regulations, but not regulations in the old-fashioned way. We cannot manage an airport the way we manage a train station, nor can we manage the future the way we manage the past,” Ma said, according to a transcript

He continued saying: “We must do away with the ‘pawnshop’ mentality within the financial industry today. We must rely on credit system development … I have found that the pawnshop mentality is a serious problem in China and has affected a lot of entrepreneurs. This becomes extremely serious when entrepreneurs have to pledge all their assets. They are under huge pressure, and what they do becomes distorted.”

On Saturday, during the first Chinese People’s Police Day, China’s top security chief Guo Shengkun called on agencies to better familiarise themselves with emerging technologies and businesses — such as live-streaming, online loans, and the sharing economy — and promote legislation and rules to increase their ability to identify and control the risks, and ensure online platforms are developing in line with laws and regulations, People’s Daily said.

At the same time, Reuters has reported that China plans to introduce new requirements that would see tech giants including Ant Group, Tencent, and JD.com share consumer credit data with regulators to prevent excessive borrowing and fraud.

The plan, if implemented, would see digital platforms feed data to credit agencies, which are run or backed by People’s Bank of China, before the shared data is distributed more widely to banks and other lenders to help adequately assess borrowing risks. 

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