China is expected to tighten its anti trust reins around its technology giants, with its heavy fines being just the beginning. This arrives just after regulators also announced a probe into deals with major brands like Alibaba and Tencent.
Earlier this week, China’s market regulator announced that it would be raising its scrutiny on notable transactions, especially ones backed by internet giants. As per a Reuters report, the regulator is also looking into making “an example” of a 3.5 billion US Dollars plan for search engine Sogou Inc to be taken private by shareholder, Tencent Holdings. The information arrives from two sources close to the matter.
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A third source added that the regulator is also targeting a bid by private-equity firm MBK Partners to buy China’s top online car rental firm. The source believes that the move arrives to address the concern of competition as MBK already owns the industry’s second car rental brand. The State Administration of Market Regulation (SAMR) is planning a a thorough review of the Sogou Tencent transaction, which could even translate to the deal missing its July 2021 completion deadline.
According to one of the sources, “The deal now faces big uncertainty and there’s a big chance that it may not close as planned.” Notably, Internet search is a sensitive issue in China, with SAMR taking special consideration that Tencent is already one of the market leaders in various online sectors and fields that it operates its business in. As per Jiaming Zhang, a senior associate at law firm Allen & Overy, “all these recent developments seem to suggest that SAMR is ready to open a new chapter for its enforcement actions in the internet sector.”
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