Meituan food delivery company rallied after a $ 543.3 million antitrust fine. According to CNBC, the unexpectedly small amount of foreclosure helped push the tech giant’s stock upward.
“The penalty for Meituan was actually lower than expected,” explained Ken Wong, Asia portfolio specialist at Eastspring Investment. On October 8, China’s State Market Regulatory Administration (SAMR) ruled that Meituan had abused its dominant position in the Chinese online food delivery market. According to the regulator, the company forced sellers to sign exclusive agreements and applied punitive measures to those who did not. In addition to the fine, SAMR also ordered the tech giant to rectify the situation.
During trading on the Hong Kong stock exchange, shares rose not only in Meituan, but also in other Chinese companies, which also suffered from the restrictive measures of the authorities. Tencent closed the day with a 2.95 percent gain, while Alibaba rose nearly 8 percent.
Jefferies analysts said the completion of the antitrust investigation would have a positive impact on the company’s growth. “Meituan is communicating with the authorities and modernizing its business operations,” the experts said. The penalty was 3 percent of Meituan’s 2020 income. Antitrust sanctions were also imposed on Alibaba in April and totaled a record $ 2.8 billion – about 4 percent of 2019 revenue.
Over the past year, China has introduced more and more restrictive measures against its largest technology companies. For example, the government banned enterprises from going to IPO (initial public offering of shares) on foreign exchanges if the activities of companies involve working with large amounts of personal data. The authorities have also pledged to continue to impose new restrictions to curb monopolies and keep user information safe.