BEIJING (Reuters) — A Chinese antitrust regulator said on Friday pricing tactics in the nation’s e-commerce sector will be probed to ensure a “fair” market, likely putting new scrutiny on companies such as Alibaba Group Holding Ltd. and JD.com Inc.
The comments come just two weeks after another government regulator, the State Administration for Industry and Commerce (SAIC), accused Alibaba of failing to clean up what it called illegal business deals on the e-commerce titan’s platforms. However, the regulator later retracted its report.
The National Development and Reform Commission (NDRC) said in a statement on its Web site that it would “organize and develop special inspections into the online retail sector’s pricing behavior”.
This will include cracking down on activity like falsely inflating goods’ prices before dropping them again as a fake special offer, the statement from the agency’s pricing supervision and antitrust bureau said.
The NDRC said it would also focus on pricing around holidays, which are often used by Chinese e-commerce firms and their merchants to drop prices and shift huge quantities of goods. The statement did not name any firms regarding the inspection.
The annual Singles’ Day, which falls in November, is the world’s largest online shopping event. Alibaba alone said last November it saw over $9 billion in transactions cross its online shopping platforms within 24 hours.
But the festival has also been the subject of other regulators’ scrutiny.
Last November, Chinese media reported that the SAIC took aim at 10 of China’s biggest e-commerce firms over pricing issues similar to those the NDRC has said it will probe.
An Alibaba spokeswoman said by email the firm welcomes measures to help it achieve “a fair and equitable marketplace for buyers and sellers”.
A JD.com spokesman said by email: “JD.com prides itself on providing the best customer experience in China, from authentic products to fully transparent pricing on sales events.
“We support efforts to make it easier for consumers to be confident in the level of discounts and quality of goods they are receiving.”
The NDRC has emerged as one of the foremost players in China’s high-profile antitrust investigations into businesses from auto parts makers and milk powder producers to drugs firms and tech companies like Qualcomm Inc.
Friday’s statement is the latest sign that the NDRC’s antitrust division could continue to expand the scope of its enforcement.
On Monday, Qualcomm said it had agreed to pay a fine of $975 million, the largest in China’s corporate history, ending a 14-month NDRC investigation into anti-competitive practices.
Separately on Friday, Alibaba Group Holding Ltd. executive chairman Jack Ma urged employees to relax about U.S. lawsuits against the firm over possible failure to disclose information to investors, in a letter to staff posted on his official microblog on Friday.
A series of lawsuits have been filed in the United States after an unusually public fracas with a Chinese regulator last month over the issue of fakes being sold on Alibaba’s Web sites.
“As for the lawsuits that came about from recent events, I ask that Alibaba employees be at ease,” Ma said in his annual letter, sent out before Lunar New Year.
“The group will attach high importance to these, and we will uphold the principles of objectivity, transparency and honesty to handle this.”
Since the beginning of the year, Alibaba has faced a number of setbacks, with shares down 16.2 percent. Last month’s third-quarter results failed to impress investors after revenue growth missed expectations, initially wiping off more than $25 billion from the e-commerce titan’s market value.
Last month, the State Administration for Industry and Commerce (SAIC) said in a now-retracted ‘white paper’ that it had met with Alibaba before the firm’s blockbuster New York listing to discuss the issue of fakes sold on its platform, but had withheld publishing any report so as not to affect the initial public offering in September.
Shares fell 4.4 percent the day the SAIC report was published, spurring U.S. law firms to file lawsuits alleging Alibaba failed to disclose risk factors to investors and thus harming their investments.
“We are monitoring the lawsuits triggered by the so-called ‘White Paper’ and the related events,” said an Alibaba spokeswoman by email on Friday.
“We have always been transparent in our corporate governance and daily business operations, and make our best efforts to protect the interest of each and every shareholder. We will vigorously defend ourselves and our business practices.”
In his letter to Alibaba employees, Ma said the lawsuits were an inevitable result of going public, as well as being a Chinese company.
“Almost every large multinational company runs into these kinds of challenges – IBM, Microsoft, Wal-Mart,” Ma said.