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Tencent’s $5.3-Billion Video Video games Merger Blocked by Chinese language Antitrust Regulator

China’s market regulator on Saturday stated it could 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 yr in a tie-up designed to streamline its stakes within the corporations, which have been estimated by information agency MobTech to have an 80 p.c slice of a market value greater than $Three billion and rising quick.

Tencent is Huya’s largest shareholder with 36.9 p.c and likewise owns over a 3rd of DouYu, with each corporations listed in america, and value a mixed $5.Three 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 extra concessions proposed by Tencent for the merger.

SAMR stated Huya and DouYu’s mixed market share within the online game stay streaming business could be over 70 p.c and their merger would strengthen Tencent’s dominance on this market, given Tencent already has over 40 p.c market share within the on-line video games operations section.

Huya and DouYu are ranked No. 1 and No. 2, respectively, as China’s hottest online game streaming websites, the place customers flock to observe e-sports tournaments and observe skilled players.

Tencent stated in an announcement 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 firms from the federal government. Earlier this yr, the anti-monopoly regulator positioned a document $2.75 billion positive 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 printed 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 turn into Tencent’s full management of a merged entity,” Zhang wrote.

“Contemplating components akin to income, lively customers, livestreaming sources and different key indices, we will count on {that a} merger would eradicate or prohibit honest competitors.”

© Thomson Reuters 2021


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