(Yicai Global) July 26 -- Tencent Holding’s shares closed at a 12-month low today after China’s market regulator ordered the internet behemoth to relinquish its exclusive music copyrights to restore market competition.

Amid a wider sell-off in tech stocks in Hong Kong, Tencent [HKG:0700] ended down 7.7 percent at HKD480.20 (USD74.02), the lowest closing price since last July, after earlier falling as much as 7.9 percent. The benchmark Hang Seng Index lost 4.1 percent.

Shenzhen-based Tencent and its affiliates, which include Tencent Music Entertainment, must end their exclusive rights with record labels within 30 days and pay a fine of CNY500,000 (USD77,140), the State Administration for Market Regulation said in a statement on July 24 following an official investigation into Tencent’s takeover of China Music in 2016.

Following the takeover, Tencent exclusively owns more than 80 percent of the music library, enabling it to reach more exclusive copyright deals with upstream owners, secure better terms than rivals, erect barriers to market access and limit competition, the SAMR said.

Doing away with exclusive music licensing deals can push market players to innovate and improve their services from just irrationally seizing copyrights, Meng Yanbei, a professor at the Law School of Renmin University of China and member of the Expert Advisory Group of the State Council’s Anti-Monopoly Committee, said yesterday.

In pre-market trading in New York, shares of Tencent Music [NYSE:TME], the business created by the acquisition of China Music, were down 16 percent as of 4.24 a.m. local time. On July 23 they fell 6.9 percent to USD10.78 each.

Tencent and its associates must submit a rectification plan to the SAMR within 10 days and report to the watchdog about how they have performed in terms of their obligations for the next three years.

Editors: Tang Shihua, Futura Costaglione