China’s approval of Cisco-Acacia deal conditional on fair competition but also an olive branch to Joe Biden
- China’s antitrust watchdog approves long-awaited deal but companies must honour existing contracts with Chinese customers and ensure fair competition
- In the context of US-China tech war, analysts said the timing of regulatory approval could be seen as a positive signal to the new US administration
US telecoms conglomerate Cisco Systems this week received the green light from China’s top regulator to acquire optical components maker Acacia Communications provided the two companies ensure fair competition, and analysts say approval could be an early olive branch to the Biden administration.
Approval from the State Administration for Market Regulation (SAMR) was the deal’s final hurdle, although China’s antitrust watchdog stipulated that the two US companies must honour existing contracts with Chinese customers and keep commercial terms unchanged for the next five years.
China’s regulator had been reviewing the deal since October 2019 amid a widening tech war between China and the US, which has seen restrictions placed on the export of cutting edge US-origin technology to many of China’s leading tech firms, such as Huawei Technologies.
“It looked like the deal would not go ahead just a couple of weeks ago,” said Paul Haswell, partner at Pinsent Masons law firm. “SAMR seems to be taking a more proactive and decisive role in its antitrust investigations, as evidenced by the Alibaba investigation … the deal has also been playing out against the backdrop of the US-China trade war, and just as we have seen increased scrutiny of Chinese acquisitions of Western companies, the same applies in reverse.”
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In the context of the tech war, analysts said the timing of regulatory approval could be seen as a positive signal to the new US administration.