4 ms·

How exactly would a foreign power block two US companies from merging when it has no significant stock holding in either?

osnium123 2y ago
Chinese regulators have a say because both companies do business in China.
onepointsixC 2y ago
Same way China blocked Intel from acquiring Tower Semiconductor.
- wahern 2y ago
  TIL: https://www.reuters.com/technology/intel-walk-away-54-bln-acquisition-tower-semiconductor-sources-2023-08-16/ https://www.reuters.com/technology/intel-walk-away-54-bln-ac...
mlyle 2y ago
Same way Europe exercises outsized antitrust influence in the US: threatening to fine US entities, and if necessary deny them access to the European market. It would be tricky, though, because my sense is that China still needs Intel/Qualcomm more than they need China. At the same time, it would be pretty deadly to be denied access to that market and your products subject to excess tariffs if imported by others.
- shortsunblack 2y ago
  To the poster, Europe does not exercise outsized antitrust influence in the US. Many of these companies have their tax residency in the EU. There is no need to "deny" anything. If the company gets fined and it refuses to pay the fine, EU seizes the money in one of many bank accounts in Europe.
  - mlyle 2y ago
    Europe absolutely exercises significant antitrust influence upon US firms. In practice, yes, as you point out: US firms must have assets in Europe to compete effectively. But even if they didn't, Europe could deny access to the European market. So there is no reason to try and minimize surface in Europe. e.g. Apple has to comply with European antitrust rulings about app store access, even if Apple were to just sell their product to third party distributors in Europe and not have any presence in Europe.
    - overstay8930 2y ago
      > Europe could deny access to the European market Not really, Apple would just get customers the same way they’re sold in any other part of the world that doesn’t officially have iPhones (i.e. Russia), the EU doesn’t have the authority to seize shipments purely based on a violation of the DMA.
ivewonyoung 2y ago
Like how UK blocked Microsoft's purchase of Blizzard.
sidkshatriya 2y ago
Major markets like EU and China often do have a major influence on mergers even though the companies merging could be based in the US and most shareholding could be US. I think it goes like this: The major market regulator could say directly/indirectly: Hey you can merge in the US ... but good luck operating in our geography in a frictionless manner if we are against your merger. As a regulator we can make life hell for you if you don't obey our anticompetitive laws. Since you derive a high percentage of your revenue/profits you must listen to us ! It all depends on the percentage of sales in the foreign geography. With EU/China it can be quite high -- especially for tech companies. So yes, foreign powers can and often do block companies from merging.
- ASalazarMX 2y ago
  And I think it ends like this: CEO to board: We want to acquire $LESSER_COMPANY, but China opposes. We can go through, but we'll lose easy access to that market, and in net terms our valuation will drop. Board: Forget it.

osnium123 2y ago

Chinese regulators have a say because both companies do business in China.

onepointsixC 2y ago

Same way China blocked Intel from acquiring Tower Semiconductor.

wahern 2y ago
TIL: https://www.reuters.com/technology/intel-walk-away-54-bln-acquisition-tower-semiconductor-sources-2023-08-16/ https://www.reuters.com/technology/intel-walk-away-54-bln-ac...

mlyle 2y ago

Same way Europe exercises outsized antitrust influence in the US: threatening to fine US entities, and if necessary deny them access to the European market. It would be tricky, though, because my sense is that China still needs Intel/Qualcomm more than they need China. At the same time, it would be pretty deadly to be denied access to that market and your products subject to excess tariffs if imported by others.

shortsunblack 2y ago
To the poster, Europe does not exercise outsized antitrust influence in the US. Many of these companies have their tax residency in the EU. There is no need to "deny" anything. If the company gets fined and it refuses to pay the fine, EU seizes the money in one of many bank accounts in Europe.
- mlyle 2y ago
  Europe absolutely exercises significant antitrust influence upon US firms. In practice, yes, as you point out: US firms must have assets in Europe to compete effectively. But even if they didn't, Europe could deny access to the European market. So there is no reason to try and minimize surface in Europe. e.g. Apple has to comply with European antitrust rulings about app store access, even if Apple were to just sell their product to third party distributors in Europe and not have any presence in Europe.
  - overstay8930 2y ago
    > Europe could deny access to the European market Not really, Apple would just get customers the same way they’re sold in any other part of the world that doesn’t officially have iPhones (i.e. Russia), the EU doesn’t have the authority to seize shipments purely based on a violation of the DMA.

ivewonyoung 2y ago

Like how UK blocked Microsoft's purchase of Blizzard.

sidkshatriya 2y ago

Major markets like EU and China often do have a major influence on mergers even though the companies merging could be based in the US and most shareholding could be US. I think it goes like this: The major market regulator could say directly/indirectly: Hey you can merge in the US ... but good luck operating in our geography in a frictionless manner if we are against your merger. As a regulator we can make life hell for you if you don't obey our anticompetitive laws. Since you derive a high percentage of your revenue/profits you must listen to us ! It all depends on the percentage of sales in the foreign geography. With EU/China it can be quite high -- especially for tech companies. So yes, foreign powers can and often do block companies from merging.

ASalazarMX 2y ago
And I think it ends like this: CEO to board: We want to acquire $LESSER_COMPANY, but China opposes. We can go through, but we'll lose easy access to that market, and in net terms our valuation will drop. Board: Forget it.