China's State Administration for Market Regulation Photo: VCG

China's top market regulator, the State Administration for Market Regulation (SAMR), issued on Tuesday an announcement granting conditional approval, with restrictive conditions, to Tencent for its acquisition of equity in online audio-sharing platform Ximalaya. 

This case is of great significance for safeguarding fair competition in China's online audio-streaming platform market and online music platform market, preventing "involution-style" competition in the platform sector, and promoting innovation and the healthy development of the platform economy, said the SAMR.

After review, the SAMR determined that the transaction may have the effect of eliminating or restricting competition in China's online audio-streaming platform market and online music platform market. To effectively mitigate the potential adverse impact of this concentration of undertakings, the decision requires Tencent, Ximalaya, and the post-concentration entity to fulfill five restrictive commitments.

According to the SAMR, the parties shall not increase service prices on online audio-streaming platforms, lower service levels, or attach unreasonable trading conditions; nor shall they reduce the proportion of free content and popular free content. They are prohibited from entering into new exclusive licensing agreements with copyright owners for online audio content and must terminate existing exclusive licensing arrangements within the prescribed period. 

Additionally, they shall not bundle online audio or music-streaming platforms with automobile manufacturers or hinder carmakers from purchasing competing products. Finally, they must not restrict hosts from joining multiple online audio platforms or distributing their copyrighted works on other platforms, said the SAMR.

After assessment, the SAMR believes that the proposed commitment plan can effectively reduce the competitive concerns caused by this concentration, protect the legitimate rights and interests of multiple parties including consumers, copyright holders, hosts, and automobile manufacturers, and safeguard the fair competition order in the relevant markets. 

The SAMR will strictly supervise and urge the transaction parties to effectively fulfill the restrictive commitments, fully leverage the ex-ante preventive role of its merger review, in order to earnestly maintain fair competition in China's online audio-streaming platform market and online music platform market, protect the legitimate rights and interests of business entities and consumers, prevent "involution-style" competition in the platform sector, thus promoting win-win development among platform enterprises, operators within the platforms, and workers, it said.


Global Times