• New York Times, Friday, March 28, 2008 12:01 PM

Microsoft's Yahoo takeover attempt may have hit a new, unexpected roadblock: according to The New York Times, a Chinese antimonopoly law that goes into effect on Aug. 1 would give Chinese regulators the authority to examine foreign mergers when they involve Chinese companies or foreign businesses investing in Chinese companies. Yahoo, with its 40 percent stake in Chinese e-commerce giant Alibaba, certainly fits that bill--although Alibaba executives claim that a Yahoo takeover would trigger a buyback provision enabling the firm to gain independence from Microsoft.

Even so, the law effectively makes China the third major regulatory body for mergers with global implications. Legal specialists tell the Times that the government would examine Microsoft-Yahoo from both an antimonopoly and a national security standpoint. Nathan G. Bush, an antitrust law specialist, says the law marks Beijing "as another regulatory capital contending for influence with Brussels and Washington."

The question of Internet governance is still a murky one. "I don't think anyone has worked through the issue of where an Internet merger should be reviewed, given that it truly is a World Wide Web," said Andrew I. Gavil, a law professor at Howard University. Indeed, because of its global implications, dozens of jurisdictions could claim the right to review a Microsoft-Yahoo merger.

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