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Exclusive: China launches antitrust probe into Tencent-backed property broker KE - sources

Berita 24 English -  According to two people familiar with the matter, China's market regulator has launched an investigation into alleg...

Berita 24 English - According to two people familiar with the matter, China's market regulator has launched an investigation into alleged anti-competitive behaviour by KE Holdings, the country's largest housing broker and a subsidiary of Tencent Holdings.

This is the latest investigation into China's large so-called "platform" companies that connect sellers and buyers, several of which have been accused of consumer exploitation by regulators.

KE Holdings, which operates the Chinese housing platforms Lianjia and Beike, was warned last month, along with dozens of other internet companies, against any abuse of market dominance and instructed to conduct self-inspections.

SAMR has been investigating formally in recent weeks whether KE Holdings forces real estate developers to list housing information exclusively on its platforms, including Lianjia and Beike, a practice known as "choose one from two," according to the people, who requested anonymity due to the nature of the information.

The investigation has not been made public. It is unknown when the transaction will conclude or what it may entail for KE Holdings.

KE Holdings did not respond to a request for comment. SAMR did not respond immediately to a request for comment.

SAMR levied a record $2.8 billion fine against Alibaba Group last month after determining that the e-commerce giant had been preventing its merchants from using alternative online e-commerce platforms since 2015.

Tencent is also under fire, with SAMR reportedly preparing to fine the gaming and social media behemoth at least $1.5 billion, Reuters reported in April. SAMR also announced a probe into Tencent-backed food delivery giant Meituan last month.

SAMR has been stationing inspectors in 17 companies that operate platforms, including KE Holdings, since late April, one of the sources said. The move is intended to increase the efficiency of antitrust inspections.

Tianjin, formerly known as Beijing Homelink Real Estate Brokerage, was founded 20 years ago by KE Holdings, which also counts SoftBank Group Corp among its major investors.

It grew to become one of China's largest bricks-and-mortar property agents. It later established Beike as a separate online housing platform that connects buyers and sellers, renters, and landlords and provides home financing.

It went public in August in New York, and after a strong year, the shares are down 15% so far in 2021. Nonetheless, it is worth approximately $62 billion on the open market.

Along with the antitrust investigation, KE Holdings is facing uncertainty following the death of its 50-year-old founder and chairman, Zuo Hui, due to illness last week. This week, co-founder Peng Yongdong was appointed chairman.

According to TF Securities, its primary revenue sources are existing home and new home transactions, with market shares of 26% and 35% of gross transaction volume in 2020, respectively, a relatively high proportion in China's fragmented housing market. KE Holdings reported stellar first-quarter financial results last week, with net revenue increasing 191 per cent year over year, aided by China's robust property market, which quickly recovered from the coronavirus crisis last year.

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