China regulator blocks Tencent’s $5.3 billion video games merger

Hong Kong | Shanghai | Beijing: China’s market regulator on Saturday stated it might block Tencent Holdings Ltd.’s plan to merge the nation’s prime two videogame streaming websites, Huya and DouYu, on antitrust grounds.

Tencent first introduced plans to merge Huya and DouYu final 12 months in a tie-up designed to streamline its stakes within the corporations, which had been estimated by information agency MobTech to have an 80% slice of a market value greater than $3 billion and rising quick.

Tencent is Huya’s largest shareholder with 36.9% stake and likewise owns over a 3rd of DouYu, with each corporations listed in the USA, and price a mixed $5.3 billion in market worth.

Reuters first reported the State Administration of Market Regulation (SAMR) plan to dam the deal on Monday, which got here after the regulator reviewed further concessions proposed by Tencent for the merger.

SAMR stated Huya and DouYu’s mixed market share within the videogame live-streaming trade could be greater than 70% and their merger would strengthen Tencent’s dominance on this market, given Tencent already has over 40% market share within the on-line video games operations phase.

Huya and DouYu are ranked No. 1 and No. 2, respectively, as China‘s hottest online game streaming websites, the place customers flock to look at e-sports tournaments and comply with skilled avid gamers.

Tencent stated in a press release it “will abide by the choice, adjust to all regulatory necessities, function in accordance with relevant legal guidelines and rules, and fulfill our social obligations.”

The deal termination comes amid an ongoing crackdown on Chinese language tech corporations from the federal government. Earlier this 12 months, the anti-monopoly regulator positioned a document $2.75 billion effective on e-commerce large Alibaba for partaking in anti-competitive behaviour.

Huya and DouYu didn’t instantly reply to requests for touch upon the SAMR resolution.

In a memo from SAMR revealed concurrently with the announcement, Zhang Chenying, a member of the state council’s anti-trust committee, argued the deal would stop honest competitors.

“If Huya and DouYu are to merge, the unique joint management of Douyu will grow to be Tencent’s full management of a merged entity,” Zhang wrote.

“Contemplating elements reminiscent of income, energetic customers, livestreaming sources and different key indices, we are able to count on {that a} merger would get rid of or prohibit honest competitors.”