Hutchison ports deal: China regulator warns parties not to circumvent probe
State Administration for Market Regulation says it is ‘highly concerned about the relevant transaction’ following reports deal is to be split up
Mainland China’s market regulator has warned CK Hutchison Holdings and other parties involved in the controversial sale of the Hong Kong conglomerate’s overseas ports not to circumvent an ongoing antitrust probe into the deal, with some parts of the transaction reportedly set to be split up.
The warning from a spokesman for the State Administration for Market Regulation on Sunday followed a media question over a recent report that suggested the wealthy Italian Aponte shipping family was looking to carve out two Panama Canal ports from the US$23 billion deal.
The deal, which US investment firm BlackRock is leading, is still being reviewed by the market regulator.
“We are highly concerned about the relevant transaction and will review it in accordance with the law,” the spokesman said.
“The parties to the transaction shall not circumvent the review in any way and shall not implement the concentration [of business operators] before approval, otherwise they will bear the legal responsibility.”
Under Article 20 of the mainland’s Anti-Monopoly Law, “concentration” refers to the merger of business operators, acquiring control over another by acquiring their equity or assets, or an operator acquiring control or influence over others with a contract or other means.
The market regulator had earlier said it would launch an antitrust probe after the shock announcement by Hong Kong tycoon Li Ka-shing’s CK Hutchison over the sale of its 43 overseas ports in a US$23 billion deal to a BlackRock-led consortium. The conglomerate would receive US$19 billion in cash under the deal.
The two ports it operates at either end of the Panama Canal have drawn intense scrutiny from both Beijing and Washington, with the strategic waterway becoming a geopolitical flashpoint in the US-China rivalry.
It was reported earlier this month that tycoon Gianluigi Aponte and his son Diego Aponte had held discussions about moving forward with most of the deal while waiting for the ongoing disputes about the two Panama ports to be resolved.
While the report suggested that separating the Panama ports would require the parties to reach a new agreement, it also quoted BlackRock CEO Larry Fink as earlier saying the deal was being treated as a single transaction and that he was “optimistic” a solution could be found for the disputes.
The Post earlier reported that BlackRock aimed to take control of CK Hutchison’s two Panama facilities, while the Aponte family’s Terminal Investment Limited would have a majority stake in the others.
CK Hutchison declined to comment.
US President Donald Trump has repeatedly threatened to “take back” the canal, which the United States built and controlled for much of the 20th century before ceding it to Panama in 1999. The Panama Ports Company, a subsidiary of CK Hutchison, has operated two facilities, one at either end of the canal, since 1997.
Wilson Chan Wai-shun, co-founder and director of policy research at the Pagoda Institute think tank, described the market watchdog’s warning as a “rather neutral comment as any regulator will issue this kind of comment when there are reports or actions related to the deal they are currently investigating”.
“Of course, splitting the deal may have implications on the antitrust probe as now it involved two deals,” he said.
By issuing the warning, the market regulator could be putting pressure on the parties involved to avoid separating the deal “so as to prevent any unnecessary and unwanted consequences in the future”, Chan added.
Lau Siu-kai, a consultant at the semi-official Chinese Association of Hong Kong and Macau Studies think tank, said Beijing would not support any transaction that violated the country’s anti-monopoly laws.
He said Beijing was concerned about the deal’s impact on the Belt and Road Initiative – China’s plan to grow global trade – its shipbuilding industry and its shipping sector.
Some ports in the CK Hutchison deal are located in belt and road countries.