Yahoo’s investment of $1 billion in Alibaba.com, China’s largest e-commerce portal may act as a powerful deterrent for Microsoft in its attempts to take over Yahoo. This unexpected hurdle may put a spoke on Microsoft due to an Anti-trust Law when becomes operational from August this year can extend its economic influence far beyond its borders.
The major objective of this enactment is to give more teeth to an existing set of anti-trust regulations established by China in 1993. In terms of its influence on the issues of anti-trust regulations, it is considered to be as powerful as that of U.S. and European Union anti-trust regulations. Under the Law, the Chinese regulators are empowered to examine foreign mergers in the acquisition of either Chinese companies or of Foreign companies which have invested in Chinese companies. It also vests with the Government the powers to examine the security related issues in such acquisitions.
The attempt of Microsoft would fall in the second category, viz, Foreign entities investing in Chinese companies which would enable China to intervene in the matter and make an attempt to stall the take over.
It is to be seen how Microsoft would overcome this hurdle when other issues are sorted out.
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