HONG KONG • China's market regulator said yesterday that it would block Tencent Holdings' plan to merge the country's top two video game streaming sites, Huya and DouYu, on antitrust grounds.

Tencent first announced plans to merge Huya and DouYu last year in a tie-up designed to streamline its stakes in the firms, which were estimated by data firm MobTech to have an 80 per cent slice of a market worth more than US$3 billion (S$4 billion) and growing fast.

Tencent is Huya's biggest shareholder, with a 36.9 per cent stake, and also owns more than a third of DouYu, with both companies listed in the United States and worth a combined US$5.3 billion in market value.

Reuters last Monday first reported that the State Administration for Market Regulation (SAMR) planned to block the deal, which came after the regulator reviewed additional concessions proposed by Tencent for the merger.

SAMR said Huya and DouYu's combined market share in the video game live streaming industry would be over 70 per cent and their merger would strengthen Tencent's dominance in this market, given that it already has over 40 per cent market share in the online games operations segment.

Huya and DouYu are ranked No. 1 and No. 2, respectively, as China's most popular video game streaming sites, where users flock to watch e-sports tournaments and follow professional gamers.

Tencent said in a statement it "will abide by the decision, comply with all regulatory requirements, operate in accordance with applicable laws and regulations, and fulfil our social responsibilities".

The deal termination comes amid an ongoing crackdown on Chinese tech companies by the government. Earlier this year, the country's anti-monopoly regulator placed a record US$2.75 billion fine on e-commerce giant Alibaba for engaging in anti-competitive behaviour.

REUTERS