On 28 March 2025, China’s State Administration for Market Regulation (“SAMR”) announced on its official website that it would conduct an antitrust review of the transaction between CK Hutchison Holdings Limited (“CK Hutchison”) and BlackRock Inc (“BlackRock”), Global Infrastructure Partners and Terminal Investment Limited (“Til”) (“BlackRock-TiL Consortium”) for 43 ports of Hutchison Port Holdings (“HPH”) (“Ports Transaction”). Since then, China has moved from the initial concern stage to the active judicial review stage for the Ports Transaction. This article focuses on the judicial review the Ports Transaction may face, including antitrust, securities, and national security reviews.
BlackRock is the world’s largest asset management company, with over US$11.6 trillion in assets under management. It has a “political-business revolving door” phenomenon with the US government. Chinese companies in which more than 5% of shares are held by BlackRock include Alibaba, JD.com, Baidu, BYD, PICC, SMIC, PetroChina, COSCO Shipping, Aluminum Corporation of China, Tsinghua Insurance, etc. Til is a subsidiary of Swiss shipping giant Mediterranean Shipping (MSC), the world’s second largest container terminal operator, holding 70% of the equity in the Ports Transaction. CK Hutchison is a company registered in the Cayman Islands and listed on the Hong Kong Stock Exchange. Ports are one of the core businesses of its subsidiary, Hutchison Ports. According to the annual results released by CK Hutchison on 20 March, as of 31 December 2024, it has interests in a total of 295 operating berths in 53 ports in 24 countries, including a 90% stake in Panama Ports Corporation (“Panama Ports”). Panama Ports owns and operates the second and fifth largest ports in Panama, the Port of Balboa and the Port of Cristobal. The Panama Canal is one of the most important shipping waterways in the world and is the “artery” of shipping trade between Asia and the United States. The main commodities passing through the canal include automobiles, petroleum products, grains, coal, and coke. At the end of 2024, during his campaign for the US presidency, Trump said he would not hesitate to use force to “retake” the Panama Canal. On 20 January 2025, Panama was mentioned six times in his inaugural speech.
The Securities and Futures Ordinance of Hong Kong stipulates that listed companies involved in major asset transactions must fulfill their information disclosure obligations to ensure transaction transparency. By the regulations, on 4 March 2025, CK Hutchison announced the in-principle agreement on the Ports Transaction. According to the announcement, the BlackRock-Til consortium will acquire all the shares of Panama Ports held by HPH for US$22.8 billion (“Panama Transaction”), and 80% effective control interests held by CK Hutchison in its subsidiaries and related companies, including 199 berths owned, operated and developed by it in 43 ports in 23 countries other than China, together with all HPH’s management resources, operating businesses, container terminal systems, information technology and other systems, and other assets involved in the control and operation of the relevant ports. The two parties have agreed in principle on the revenue distribution, basic and key terms of the Ports Transaction. The Panama transaction is subject to confirmation by the Panamanian government, and the relevant documents will be signed on or before 2 April 2025. Due to the decision of China’s antitrust review and public pressure, on 28 March, CK Hutchison announced that it would postpone the signing of the final agreement for the Ports Transaction. According to the agreement, the transaction entered a 145-day buffer period, and the two parties need to renegotiate or adjust the transaction structure before 23 July this year. If the final agreement is not signed after the deadline, CK Hutchison shall pay a penalty of 20% of the transaction price, namely US$4.56 billion. Moreover, the United States is likely to take punitive measures against CK Hutchison. If the agreement continues to be implemented, the Black-Rock-Til Consortium will control about 100 terminals around the world and become one of the largest port operators. China may take countermeasures through CK Hutchison's total assets in Hong Kong and mainland China, which are as high as trillions of Hong Kong dollars.
The news published by the SAMR on 28 March showed that the Anti-Monopoly Department II of the SAMR will review the Ports Transaction to “protect fair market competition and safeguard the public interest of society”. The Anti-Monopoly Law of China stipulates that its scope of application includes overseas concentrations that have an exclusionary or restrictive effect on domestic market competition and concentrations that do not meet the reporting standards but have or may have the effect of excluding or restricting competition. The Anti-Monopoly Department II is responsible for investigating and handling cases of concentration that may exclude or restrict competition but do not meet the reporting standards. This indirectly indicates that the operators of the Ports Transaction did not take the initiative to report before 28 March. This case should be an investigation initiated by the SAMR. During the investigation, the concentrated operators should submit relevant agreements and disclose relevant details of the transaction. Usually, the preliminary investigation period is within 30 days from the date of receipt of the documents and materials submitted by the operator that meet the requirements. If further review is required, the review shall be completed within 90 days from the date of decision (60 days may be extended in special circumstances), and a decision on whether to prohibit the concentration shall be made. Factors to be considered in the review of concentration include the market share of the operators involved in the concentration in the relevant market and their control over the market, the market concentration of the relevant market, and the impact of the concentration of operators on market entry, technological progress, consumers, other relevant operators and national economic development. Concentrations that are determined to have or may have the effect of excluding or restricting competition will be prohibited from implementation, or additional restrictive conditions will be imposed. Otherwise, a fine of less than 10% of the sales in the previous year will be imposed.
According to the provisions of the Law of the Hong Kong Special Administrative Region on Safeguarding National Security, the central government bears fundamental responsibility for national security affairs related to Hong Kong. The National Security Law of China is China’s core legal tool for dealing with global risks. Its broad scope of review and strong binding force enable the government to take the initiative in dealing with strategic asset transactions. According to the National Security Law, the scope of national security covers the well-being of the people, sustainable economic and social development, and other major national interests that are relatively free from danger and internal and external threats. It stipulates that its key protection areas involve critical infrastructure and network information security. The Panama Canal carries 21% of China’s global merchant ship cargo volume, and the port’s intelligent system may involve logistics data security. If the BlackRock-Til consortium controls the ports at both ends of the canal, it may impose additional fees or restrict passage on Chinese cargo ships, threatening the “Belt and Road” logistics channel. Trump once threatened to impose a special fee of at least US$500,000 on all Chinese ships entering US ports. Therefore, this transaction may trigger a security review due to critical infrastructure and or supply chain security. The security review is conducted by a joint meeting of the National Development and Reform Commission, the Ministry of Commerce, the Ministry of State Security, etc., to assess the impact of the transaction on national security. The general review must be completed within 60 days, and the special review can be extended to 105 days. The security review of this transaction should focus on assessing its threat to the security of shipping networks and supply chains. The review result may be to determine that it harms national security, directly reject the transaction, require local storage of port data, or introduce Chinese companies to hold joint shares.
In conclusion, in the Ports Transaction, the Anti-Monopoly Law and the National Security Law should be the ultimate basis for blocking the port transaction, but it is also necessary to balance international business rules and foreign investment confidence.
BlackRock is the world’s largest asset management company, with over US$11.6 trillion in assets under management. It has a “political-business revolving door” phenomenon with the US government. Chinese companies in which more than 5% of shares are held by BlackRock include Alibaba, JD.com, Baidu, BYD, PICC, SMIC, PetroChina, COSCO Shipping, Aluminum Corporation of China, Tsinghua Insurance, etc. Til is a subsidiary of Swiss shipping giant Mediterranean Shipping (MSC), the world’s second largest container terminal operator, holding 70% of the equity in the Ports Transaction. CK Hutchison is a company registered in the Cayman Islands and listed on the Hong Kong Stock Exchange. Ports are one of the core businesses of its subsidiary, Hutchison Ports. According to the annual results released by CK Hutchison on 20 March, as of 31 December 2024, it has interests in a total of 295 operating berths in 53 ports in 24 countries, including a 90% stake in Panama Ports Corporation (“Panama Ports”). Panama Ports owns and operates the second and fifth largest ports in Panama, the Port of Balboa and the Port of Cristobal. The Panama Canal is one of the most important shipping waterways in the world and is the “artery” of shipping trade between Asia and the United States. The main commodities passing through the canal include automobiles, petroleum products, grains, coal, and coke. At the end of 2024, during his campaign for the US presidency, Trump said he would not hesitate to use force to “retake” the Panama Canal. On 20 January 2025, Panama was mentioned six times in his inaugural speech.
The Securities and Futures Ordinance of Hong Kong stipulates that listed companies involved in major asset transactions must fulfill their information disclosure obligations to ensure transaction transparency. By the regulations, on 4 March 2025, CK Hutchison announced the in-principle agreement on the Ports Transaction. According to the announcement, the BlackRock-Til consortium will acquire all the shares of Panama Ports held by HPH for US$22.8 billion (“Panama Transaction”), and 80% effective control interests held by CK Hutchison in its subsidiaries and related companies, including 199 berths owned, operated and developed by it in 43 ports in 23 countries other than China, together with all HPH’s management resources, operating businesses, container terminal systems, information technology and other systems, and other assets involved in the control and operation of the relevant ports. The two parties have agreed in principle on the revenue distribution, basic and key terms of the Ports Transaction. The Panama transaction is subject to confirmation by the Panamanian government, and the relevant documents will be signed on or before 2 April 2025. Due to the decision of China’s antitrust review and public pressure, on 28 March, CK Hutchison announced that it would postpone the signing of the final agreement for the Ports Transaction. According to the agreement, the transaction entered a 145-day buffer period, and the two parties need to renegotiate or adjust the transaction structure before 23 July this year. If the final agreement is not signed after the deadline, CK Hutchison shall pay a penalty of 20% of the transaction price, namely US$4.56 billion. Moreover, the United States is likely to take punitive measures against CK Hutchison. If the agreement continues to be implemented, the Black-Rock-Til Consortium will control about 100 terminals around the world and become one of the largest port operators. China may take countermeasures through CK Hutchison's total assets in Hong Kong and mainland China, which are as high as trillions of Hong Kong dollars.
The news published by the SAMR on 28 March showed that the Anti-Monopoly Department II of the SAMR will review the Ports Transaction to “protect fair market competition and safeguard the public interest of society”. The Anti-Monopoly Law of China stipulates that its scope of application includes overseas concentrations that have an exclusionary or restrictive effect on domestic market competition and concentrations that do not meet the reporting standards but have or may have the effect of excluding or restricting competition. The Anti-Monopoly Department II is responsible for investigating and handling cases of concentration that may exclude or restrict competition but do not meet the reporting standards. This indirectly indicates that the operators of the Ports Transaction did not take the initiative to report before 28 March. This case should be an investigation initiated by the SAMR. During the investigation, the concentrated operators should submit relevant agreements and disclose relevant details of the transaction. Usually, the preliminary investigation period is within 30 days from the date of receipt of the documents and materials submitted by the operator that meet the requirements. If further review is required, the review shall be completed within 90 days from the date of decision (60 days may be extended in special circumstances), and a decision on whether to prohibit the concentration shall be made. Factors to be considered in the review of concentration include the market share of the operators involved in the concentration in the relevant market and their control over the market, the market concentration of the relevant market, and the impact of the concentration of operators on market entry, technological progress, consumers, other relevant operators and national economic development. Concentrations that are determined to have or may have the effect of excluding or restricting competition will be prohibited from implementation, or additional restrictive conditions will be imposed. Otherwise, a fine of less than 10% of the sales in the previous year will be imposed.
According to the provisions of the Law of the Hong Kong Special Administrative Region on Safeguarding National Security, the central government bears fundamental responsibility for national security affairs related to Hong Kong. The National Security Law of China is China’s core legal tool for dealing with global risks. Its broad scope of review and strong binding force enable the government to take the initiative in dealing with strategic asset transactions. According to the National Security Law, the scope of national security covers the well-being of the people, sustainable economic and social development, and other major national interests that are relatively free from danger and internal and external threats. It stipulates that its key protection areas involve critical infrastructure and network information security. The Panama Canal carries 21% of China’s global merchant ship cargo volume, and the port’s intelligent system may involve logistics data security. If the BlackRock-Til consortium controls the ports at both ends of the canal, it may impose additional fees or restrict passage on Chinese cargo ships, threatening the “Belt and Road” logistics channel. Trump once threatened to impose a special fee of at least US$500,000 on all Chinese ships entering US ports. Therefore, this transaction may trigger a security review due to critical infrastructure and or supply chain security. The security review is conducted by a joint meeting of the National Development and Reform Commission, the Ministry of Commerce, the Ministry of State Security, etc., to assess the impact of the transaction on national security. The general review must be completed within 60 days, and the special review can be extended to 105 days. The security review of this transaction should focus on assessing its threat to the security of shipping networks and supply chains. The review result may be to determine that it harms national security, directly reject the transaction, require local storage of port data, or introduce Chinese companies to hold joint shares.
In conclusion, in the Ports Transaction, the Anti-Monopoly Law and the National Security Law should be the ultimate basis for blocking the port transaction, but it is also necessary to balance international business rules and foreign investment confidence.