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The Wall Street Journal reports today that China’s antitrust regulators are “withholding the necessary go-ahead for mergers involving American companies as the technology war with Washington escalates.” China’s State Administration for Market Regulation (SAMR) has advised companies seeking merger approval to “make products sold in other countries available in China to counter tightening U.S. export controls on China. ‘, the report said.
“Chinese regulators have recently delayed merger reviews of a number of proposed acquisitions by U.S. companies, including Intel’s $5.2 billion acquisition of Israel-based Tower Semiconductor Ltd. It includes the $3.8 billion acquisition of silicon by maker MaxLinear Inc., Taiwan’s Motion Technology, according to people close to the process,” the WSJ wrote.
Microsoft’s $68.7 billion acquisition of Activision Blizzard “is under Beijing’s lengthy merger scrutiny.” That’s because China last year “rejected the two companies’ requests to submit the deal under a streamlined and expedited process,” he said in the WSJ report. The deal between Microsoft and Activision is also facing antitrust investigations in the UK and EU.
Activision told the WSJ, “We respect the thorough process by which Chinese regulators consider our transaction.
Broadcom’s $61 billion deal for VMware, announced in May 2022, is still pending Chinese review. The WSJ wrote, “In February, the two companies extended his deadline for closing the deal to May 26, which he said could be extended further.” The companies now say they hope to complete the merger by the end of October.
China hasn’t always had a strong merger review system, but it has “consolidated all antitrust issues under SAMR and increased its staff,” the WSJ noted. While outright denial has rarely been, it has resorted to delaying or withholding approval until demands are met, often focused on benefiting Chinese companies at the expense of foreign competitors. is placed.”
Merger review is a ‘subtle’ alternative to corporate bans
China’s demand for access to certain products “couldn’t allow U.S. companies to do so because Washington enacted laws that limited their ability to sell to China and restricted them from expanding certain types of production there.” It could put you in an impossible position,” the WSJ report said.
Companies that operate internationally and wish to complete a merger often require approval from authorities in multiple countries. “For multinationals, it doesn’t take long for a merger to trigger a Chinese antitrust review. The merger must be approved by Beijing,” the WSJ noted.
The WSJ also notes that Chinese officials are said to “view merger reviews as a relatively sophisticated and low-cost way to put pressure on foreign companies and, in turn, their governments.” are doing. This strategy is an alternative to banning foreign companies from selling in China, although China blocks sales in some circumstances.
As Reuters reported in mid-February, China “placed parts of Lockheed Martin and Raytheon Technologies on its ‘Unreliable Companies List’ over arms sales to Taiwan, banning imports and exports linked to China.” ”. The Lockheed Martin and Raytheon bans were called “symbolic measures” by the White House because neither company sells defense products to China.
The U.S. has added a number of Chinese companies to an entity list that severely restricts access to U.S. products and parts, citing concerns about China-based companies’ ties to the Chinese government and the Chinese Communist Party. Targets include Chinese supercomputing companies Huawei, ZTE, drone maker DJI, chip maker his SMIC, and memory chip maker his YMTC.
Another new US rule says chip makers must agree not to expand production capacity in China for 10 years if they receive funding from the $39 billion federal fund. Internet service providers receiving Universal Service Subsidies are prohibited from using Huawei and ZTE telecommunications equipment in federally funded broadband projects.
And, of course, there is ongoing debate in Washington over whether to ban TikTok, which is already disallowed on government devices. China has already blocked online access to large web platforms such as YouTube and Wikipedia.
