China Regulator Probes Competition Claims Against Alibaba

  • Agency accepts request to examine Singles' Day tactics: JD
  • Spat comes as both prepare for pivotal sales event next week

China’s commerce regulator will investigate accusations by Inc. that Alibaba Group Holding Ltd. is unfairly pressuring merchants to shun competing platforms, JD said, ratcheting up a battle between the nation’s two biggest online retailers.

The State Administration for Industry & Commerce accepted JD’s request to look into Alibaba’s attempts to lock in merchants ahead of the crucial “Singles’ Day” promotion next week, JD said in an online post Thursday. China’s second-largest Web retailer has accused its larger rival of forcing merchants to choose between the two, which it said hampers competition and violates regulations.

The agency has directed its branch in the eastern province of Zhejiang, where Alibaba is based, to investigate further and handle the complaint as needed, JD said. A call to the SAIC’s market department went unanswered.

Alibaba said it “vigorously” denies the accusation by JD.

“They are the ones who have violated business rules time and time again,” Alibaba said in an e-mailed statement. “We win merchants and customers because we offer them a superior shopping experience on our marketplaces.”

Singles’ Day on Nov. 11 has morphed into China’s biggest excuse to shop, when e-commerce operators flood the Internet with bargains to drive a shopping binge that dwarfs the U.S. Black Friday and Cyber Monday events. It has become a crucial contest between the country’s biggest e-commerce companies.

Both firms expend major resources and effort to secure merchant partners for the promotion. Alibaba alone has invested $4.6 billion for a stake in a brick-and-mortar domestic retailer, in part to challenge JD’s strength in consumer electronics.  

Alibaba, which started Singles’ Day in 2009, began replicating its success overseas last year, seeing sales spikes led by Russia. Last year more than 57.1 billion yuan ($9 billion) of transactions were conducted through its platform during the promotion, more than the combined total of all U.S. merchants on Cyber Monday.

The company has a checkered history with the regulator. Earlier this year, the Chinese agency published a white paper that said the company wasn’t doing enough to discourage the proliferation of fake goods on its sites. Alibaba denounced the report publicly and the paper was swiftly withdrawn.

(An earlier version of this story corrected the name of the U.S. sales event in the fourth paragraph.)

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