On July 24, 2021, the State Administration of Market Supervision ("General Administration of Market Supervision") made an administrative penalty decision on Tencent Holdings Co., Ltd. ("Tencent") for violating the anti-monopoly law, required Tencent to take measures including canceling the signed exclusive agreement within 30 days to restore the relevant market competition. This is the first time the General Administration of Market Supervision ordered the implementers of concentration of business operators in the platform economy to take necessary measures to restore the market competition since the implementation of China's anti-monopoly law.

On July 12, 2016, Tencent acquired 61.64% equity of China Music Corporation (CMC) without declaration, and gained sole control over CMC. In December 2016, the integrated CMC was renamed Tencent Music Entertainment Group. On December 6, 2017, CMC completed the registration of equity change.

According to the General Administration of Market Supervision, Tencent's acquisition of control over CMC by acquiring equity or assets constitutes the "concentration of business operators" as stipulated in Article 20 of the Anti-Monopoly Law. Tencent's "concentration of business operators" not only violates the administrative supervision order of concentration of business operators specified in the Anti-Monopoly Law, but also has or may have the effect of excluding and restricting competition, which constitutes a monopolistic behavior as stipulated in Article 3 of the Anti-Monopoly Law. Therefore, the General Administration of Market Supervision punished Tencent according to Article 48 of the Anti-Monopoly Law.

First of all, Tencent's concentration behavior violates the administrative supervision order of concentration of business operators. According to the provisions of Article 21 of the Anti-Monopoly Law, if the concentration of business operators has attained the standards stipulated in Article 3 of the Provisions of the State Council on the Reporting Standards for Concentration of Business Operators, the operators shall make a declaration to the anti-monopoly law enforcement agencies in advance; where the declaration has not been made, such concentration shall not be implemented. Tencent's global turnover in 2015 was 102.863 billion yuan, and its domestic turnover in China was 96.251 billion yuan, which met the declaration standards stipulated in Article 3 of the Provisions of the State Council on Reporting Standards for Concentration of Business Operators, and it was necessary to declare before the implementation of this concentration of business operators. However, Tencent changed its equity without declaration, which violated the declaration supervision order specified in the Anti-Monopoly Law.

Secondly, Tencent's concentrated behavior has substantial monopoly effect. According to the provisions of the Anti-Monopoly Law and the Anti-Monopoly Guide on Platform Economy, considering the economic characteristics of the platform, on the basis of the statistical data of relevant third-party organizations, the industry analysis reports and the reply opinions of relevant parties such as industry authorities, the General Administration of Market Supervision defined the relevant market in this case as the online music broadcasting platform market in China, where both parties of the transaction overlap horizontally, and considered that this concentration has or may have the effect of excluding and restricting competition in the online music broadcasting platform market in China, for the reason that: 

(I). After concentration, entities have a higher market share in relevant markets. When concentration occurred in July 2016, Tencent and CMC had the top two market shares in terms of the number of monthly active users and the monthly usage time of users, with a total market share exceeding 80%. In 2016, the total sales amount of both parties in relevant markets accounted for about 70% of the total revenue of relevant markets. According to calculation by share of core resources of music copyright, Tencent and CMC own copyrights to 12.1 million and 8.21 million songs respectively, and possess the exclusive copyrights to 3.14 million and 1.3 million songs, and the market share of music libraries and exclusive resources exceeds 80%.

(II) The concentration has reduced the main competitors in relevant markets. According to the survey, before the transaction, both parties are in the top two in the market, with equal competitive strength and close competition with each other. According to statistics, 73.6% of users of Tencent's QQ Music have chosen KuGou Music and Kuwo Music under CMC as the alternative platforms, hence Tencent and CMC constitute close competitors. This concentration will reduce major competitors in relevant markets and further weaken market competition. 

In this administrative punishment, the General Administration of Market Supervision has taken the following four punishment measures: ordering Tencent and its affiliated companies to take measures to restore the relevant market competition, imposing a fine of 500,000 yuan, ordering them to declare the concentration of operators according to law, operating in compliance with laws and regulations, and establishing and perfecting a long-term mechanism for fair participation in market competition.

a business operator has violated the provisions of this Law in implementing concentration, the anti-monopoly enforcement agency of the State Council shall order the business operator to stop implementing concentration, to dispose of the shares or assets within a stipulated period or to transfer the business within a stipulated period and to adopt other necessary measures to reinstate the pre-concentration status; a fine of not more than RMB 500,000 may be imposed. However, according to several administrative penalties on concentration of business operators imposed by the General Administration of Market Supervision since 2020, if the concentration of business operators only violates the declaration procedures and does not produce monopoly consequences, the General Administration of Market Supervision will only impose fines. However, in this case, Tencent obtained a monopoly position in this transaction and excluded market competition, which substantially violated the Anti-Monopoly Law. Therefore, the General Administration of Market Supervision ordered Tencent and its affiliated companies to take measures to restore the relevant market competition. Specifically, the measures of "restoring the original status" in this punishment include: no exclusive music copyright agreement shall be reached, and all such agreements which had been reached must be dissolved within 30 days; the copyright party shall not be required to give conditions superior to competitors, and all such conditions which had been reached shall be canceled within 30 days; stop raising competitors' operating costs in disguised form, etc.