By Keith Zhai

China's antitrust regulator imposed a fine equivalent to $2.8 billion against Alibaba Group Holding Ltd. for abusing its dominant position over rivals and merchants on its e-commerce platforms, a record penalty in the country that comes amid a wave of scrutiny on the business empire of Alibaba founder Jack Ma.

China's State Administration for Market Regulation said Saturday in Beijing that Alibaba punished certain merchants who sold goods both on Alibaba and on rival platforms, a practice that it dubbed "er xuan yi" -- literally, "choose one out of two."

As part of the penalty, regulators will require that Alibaba carry out a comprehensive revamp of its operations and submit a "self-examination compliance report" within the next three years, they said. The 18.2 billion yuan fine is equivalent to 4% of the company's domestic annual sales, the regulator added. Under Chinese rules, antitrust fines are capped at 10% of a company's annual sales.

An Alibaba spokesperson didn't immediately respond to a request for comment.

The antimonopoly fine levied against Alibaba, which posted $72 billion in revenue for its most recent fiscal year that ended in March 2020, far surpassed previous Chinese regulatory penalties. In 2015, Qualcomm Inc. paid a fine of $975 million after a yearlong investigation into alleged violations of China's antimonopoly law.

Write to Keith Zhai at keith.zhai@wsj.com

(END) Dow Jones Newswires

04-09-21 2207ET