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 have been estimated by information agency MobTech to have an 80 p.c slice of a market price greater than $3 billion and rising quick.

Tencent is Huya’s largest shareholder with 36.9 p.c and in addition owns over a 3rd of DouYu, with each corporations listed within the United States, 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 online game stay streaming business can 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 comply with skilled players.

Tencent stated in an announcement it “will abide by the decision, comply with all regulatory requirements, operate in accordance with applicable laws and regulations, and fulfill our social responsibilities.”

The deal termination comes amid an ongoing crackdown on Chinese tech corporations from the federal government. Earlier this 12 months, the anti-monopoly regulator positioned a document $2.75 billion nice 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 printed concurrently with the announcement, Zhang Chenying, a member of the state council’s anti-trust committee, argued the deal would forestall truthful competitors.

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

“Considering factors such as revenue, active users, livestreaming resources and other key indices, we can expect that a merger would eliminate or restrict fair competition.”

© Thomson Reuters 2021