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by osnium123 643 days ago
China will block this deal from ever happening.
2 comments

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

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.
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.

> 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.

Same way China blocked Intel from acquiring Tower Semiconductor.
Chinese regulators have a say because both companies do business in China.
Like how UK blocked Microsoft's purchase of Blizzard.
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.

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.

What would motivate this
What’s bad for US semiconductor manufacturing (I.e. a poor and cash starved Intel) buys China more time to catch up to frontier fab tech. If Qualcomm buys Intel, the optimistic scenario (for the US) is a stronger domestic player.
> stronger domestic player

Is it though? Qualcomm is more likely to just strip Intel for parts than to turn it around and we'll just end up with more market concentration and less competition.

I did say “the optimistic scenario”, not “the only/likely scenario”
If that were true they’d denial-of-service every possible merger
Geopolitically you can't ixnay everything, you've got to pick your battles.
Yes. This would also give more volume for the existing Intel factories.
"So, why is Qualcomm under so much pressure? China is one significant reason. China is one of their critical worldwide markets and both the US and China governments seem to be increasing pressure on various US companies, including Apple, Qualcomm and Google."

https://www.rcrwireless.com/20230911/uncategorized/kagan-how...

From some perspective, governments of the big markets are like gangsters…