Chinese antitrust regulator Tencent blocks $ 5.3 billion in video game mergers Reuters

HONG KONG (Reuters) – Chinese market regulator on Saturday said it would block Tencent Holdings (OTC 🙂 Ltd from the country’s two main video game websites, Huya (NYSE 🙂 and DouYu, over antitrust.

Tencent last year announced plans to merge Huya and DouYu in a deal designed to ease its stakes in companies, as the data company MobTech estimated it had a market share of more than $ 3 billion and 80% of the fast-growing market.

Tencent is Huya’s largest shareholder with 36.9% and owns more than a third of DouYu, which owns two U.S.-listed companies, and has a market value of $ 5.3 billion.

Reuters first reported on Monday that the agreement to block the deal came from the State Market Regulation Administration (SAMR) after regulators examined additional concessions proposed by Tencent to merge.

SAMR said that Huya and DouYu would have a combined market share in the live video game industry of over 70% and that their merger would strengthen Tencent’s dominance in this market, with Tencent already having a 40% market share online. in the gaming operations segment.

Huya and DouYu are No. 1 and No. 2, respectively, as they are the most popular streaming video game streaming sites in China, where users go to watch e-sports tournaments and follow professional players.

Tencent said in a statement that “it will comply with the decision, comply with all regulatory requirements, operate in accordance with applicable laws and regulations, and meet our social responsibilities.”

The agreement came to an end amid continued government repression of Chinese technology companies. Earlier this year, an antitrust regulator fined the e-commerce giant $ 2.75 billion Alibaba (NYSE 🙂 for conducting anti-competitive conduct.

Huya and DouYu did not immediately respond to requests for comment on the SAMR decision.

In a note to the SAMR released along with the announcement, Zhang Chenying, a member of the antitrust committee of the state council, argued that the agreement would prevent fair competition.

“If Huya and DouYu are merged, Douyu’s original joint control will become the full control of the entity merged by Tencent,” Zhang wrote.

“Given factors such as revenue, active users, live play resources and other key indices, we can expect that merging would eliminate or limit fair competition.”