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SAN FRANCISCO: Microsoft's attempted hostile takeover of Yahoo may encounter an unexpected hurdle in August when a new anti-monopoly law takes effect in China, extending its economic influence far beyond its borders.
The law is intended to strengthen an existing set of antitrust regulations the Chinese established in 1993. It would make China a third sphere of regulatory influence, matching the power of the European Union and the United States, according to legal specialists in the United States and in China who have studied it.
Formally enacted by the National People's Congress last year to take effect Aug. 1, the measure gives Chinese regulators authority to examine foreign mergers when they involve acquisitions of Chinese companies or foreign companies investing in Chinese companies' operations. Beijing could also consider national security issues, according to a report by Xinhua, the official Chinese news agency.
The law could give China influence in Microsoft's efforts to buy Yahoo because in August 2005, Yahoo, a premier search portal, invested $1 billion for a 40 percent stake in Alibaba.com, the largest e-commerce company in China. Alibaba officials have said that they believe that a Microsoft takeover of Yahoo would set in motion a buyback provision, making it possible for them to gain independence from Microsoft.
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