Chinese antitrust regulator blocks Tencent’s $5.3 bln video games merger

HONG KONG, July 10 (Reuters) – China’s market regulator on Saturday stated it will block Tencent Holdings Ltd’s (0700.HK) plan to merge the nation’s high two videogame streaming websites, Huya (HUYA.N) 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 companies, which have been estimated by knowledge 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% and in addition owns over a 3rd of DouYu, with each companies listed in the USA, and value a mixed $5.3 billion in market worth.

Reuters first reported the State Administration of Market Regulation (SAMR) plan to block 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 online game reside streaming trade can be over 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 players.

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 laws, and fulfill our social obligations.”

The deal termination comes amid an ongoing crackdown on Chinese language tech corporations from the federal government. Earlier this yr, the anti-monopoly regulator positioned a document $2.75 billion effective on e-commerce big Alibaba for participating 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 forestall honest competitors.

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

“Contemplating elements akin to income, energetic customers, livestreaming assets and different key indices, we will anticipate {that a} merger would remove or prohibit honest competitors.”

Reporting by Kane Wu in Hong Kong, Josh Horwitz in Shanghai and Cheng Leng in Beijing; Enhancing by Lincoln Feast.

Our Requirements: The Thomson Reuters Trust Principles.