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China’s anti-trust regulator reviewed Hong Kong’s CK Hutchison’s sales of two ports on the Panama Canal to a consortium led by BlackRock, saying it would increase uncertainty regarding geopolitical-sensitive transactions.
The planned sales are part of a $22.8 billion deal at 43 ports around the world, sparking criticism from China, with CK Hutchison already being warned to “rethink” about selling to US investors BlackRock and groups that include global infrastructure partners.
China’s state administration for market regulation published a comment on its website on Friday, saying it was aware of the transaction and “will review it according to the law to protect fair competition in the market and protect the public interest.”
The comments said they were responding to questions about the Panama Port trade from Beijing-backed newspaper Ta Kung Pao in Hong Kong. Comments came from officials in the anti-Monopoly division of SAMR.
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Beijing’s move follows earlier commentary at Takunpao this month, and calls the sale a “selling all Chinese” and a “spinless and globel” move.
It is not clear whether Chinese regulators intend to review the entire transaction or limit the focus to Panama ports.
The two Panama ports account for only a small percentage of the trade value, including ports in Europe, Southeast Asia and the Middle East, said the two familiar with the issue.
However, SAMR has been gathering information since last week and preparing to launch the probe, said another person familiar with the regulator’s work. The regulators were assessing whether sales would violate regulations or limit competition in China’s domestic transport and international freight trade markets, the person added.
Two people familiar with the issue say that at least one industry expert has consulted SAMR to tackle the case. Experts have proposed that regulators impose conditions on purchases by BlackRock-led consortiums to avoid weakening the competitiveness of Chinese shipping companies and freight owners, people added.
“As a general rule” contracts will be announced in early March and are expected to be officially signed by April 2nd. However, this has become delayed, according to two people familiar with the issue.
Consultations between the BlackRock-led group and CK Hutchison told people who are familiar with FT earlier this week. Both sides were preparing for a potential SAMR review, one of the people added.
CK Hutchison, ruled by Hong Kong’s wealthiest man, Li Ka Sing and his family, is increasingly being captured between Beijing and Washington in the Port of Panama, as President Donald Trump advocated China’s influence on the canal and the United States said it would “recover it.”
It is rare for Chinese state agencies to consider transactions involving Hong Kong-based companies. CK Hutchison’s holding company is incorporated in the Cayman Islands, and the ports of Chinese conglomerates have been excluded from sales.
“Is this a warning shot to others, or are you about to give up this deal?” said someone familiar with the deal.
“On paper, SAMR is reviewing how the deal will affect China’s shipping industry under its anti-exclusive mission.
“We’re accused of the IMF,” said Josh Lipsky, senior director of the Geo Economic Centre at Atlantic Council and a former IMF advisor. “The risk is very high for everyone involved.”
CK Hutchison has also been scrutinized by Panama Auditor Anel Flores. He said this week that his office is working “difficult” to complete an audit of the group’s two Port of Panama concessions in the coming days.
The audit examines whether CK Hutchison complies with the terms of the 25-year port concession, originally signed in 1997 and extended for another 25 years in 2021.
BlackRock declined to comment. CK Hutchison and Samr did not immediately respond to requests for comment.
Additional Reports by Michael Stott of Santiago
