China has launched an antitrust investigation into Alibaba Group and will summon the tech giant’s Ant Group affiliate to meet in coming days, regulators said, in the latest blow for Jack Ma’s e-commerce and fintech empire.

The probe is part of an accelerating crackdown on monopolistic behaviour in China’s booming internet space. It follows China’s dramatic suspension last month of Ant’s planned $37 billion initial public offering, which had been on track to be the world’s largest, just two days before shares were due to begin trading in Shanghai and Hong Kong.

In a strongly worded editorial, the ruling Communist Party’s People’s Daily said that if “monopoly is tolerated, and companies are allowed to expand in a disorderly and barbarian manner, the industry won’t develop in a healthy, and sustainable way”.

Regulators have warned Alibaba about the so-called “choosing one from two” practice under which merchants are required to sign exclusive cooperation pacts preventing them from offering products on rival platforms.

The State Administration for Market Regulation (SAMR) said in a statement that it had launched a probe into the practice.

Financial regulators will also meet with Alibaba’s Ant Group fintech affiliate in the coming days, according to a separate statement by the People’s Bank of China, casting another cloud over a potential revival of the share sale.

The meeting would “guide Ant Group to implement financial supervision, fair competition and protect the legitimate rights and interests of consumers,” the statement said.

Ant said it had received a notice from regulators and would “comply with all regulatory requirements”.

Alibaba said it would cooperate with the investigation and that its operations remained normal.

China also warned internet giants this month that it would not tolerate monopolistic practices and to brace for increased scrutiny, as it slapped fines and announced probes into mergers involving Alibaba and Tencent Holdings.

Source- Reuters

Country- China