Tencent Holdings has been told to halt its exclusive music licensing deals with labels within 30 days.
The online and streaming giant has also been fined 500,000 yuan (£55,885) by China’s competition authorities.
Tencent controls more than 80% of China's exclusive music streaming rights following the 2016 acquisition of China Music Corporation. At the weekend, the State Administration of Market Regulation (SAMR) said the firm was in breach of the country's anti-monopoly rules.
Tencent Music Entertainment must now relinquish its exclusive music rights within the next 30 days, as well as its high prepayments and other copyright fees for music content.
“[This case] shows that when a merger deal has been completed and cannot be separated, the Chinese authorities can still intervene to restore the market to a status of relatively fair competition,” said You Yunting, senior partner at Shanghai Debund Law Firm Offices.
Universal Music, Sony Music and Warner Music all have deals with Tencent providing the Chinese giant's streaming platforms access to thousands of catalogues.
Tencent can retain exclusive deals with independent artists, as they expire after three years.