Chinese Merger Between DouYu and Huya Rejected

Chinese merger of Tencent financialy backed streaming technology companies rejected and blocked.

China’s State Administration for Market regulator has blocked and rejected a merger between DouYu and Huya backed by Tencent.

The reason behind the blockage and rejection of this merger is due to the anti-competitive edge which Tencent could achieve in China’s game streaming market.

DouYu and Huya are both game streaming platforms, the merger is backed by Tencent which would see Tencent growing its influence in the game streaming market.

According to some sources, Tencent failed to get permission from the State Administration of Market Regulations (SAMR). SAMR requirements demanded Tencent to give up its exclusive rights which Tencent failed to meet. Moreover, Tencent also withdrew the antitrust review application for the merger of DouYu and Huya. This withdrawal of application results in a wait of 180 days for the refiling application process according to the instructions given by SAMR.

Tencent’s plan to merge both these companies surfaced last year. Tencent has a majority stake in Huya and owns 38% shares in rival platform DouYu. With this merger, Tencent would have owned a lion’s share of 67% in the newly built after merger game streaming company. Moreover, this merger would have resulted in a consolidation of more than 80% of all game streaming markets in China.

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This would have meant that Tencent would have gotten hold of this chunk in the Chinese game streaming market. Thus comes the anti-competitive factor in this merger.

If things had gone according to the plans, this merger would have been completed during the first half of 2021. However, now China’s State Administration for Market Regulation has stepped in and rejected the merger altogether.

With anti-competitive and anti-trust lawsuits running rampant against big techs in the US and other parts of the world, Chinese authorities are also catching up.