A plan by Chinese internet giant Tencent to merge the country’s two largest gaming streaming platforms Huya and DouYu ran into headwinds, with the nation’s competition regulator prepared to block the move, Reuters reported.

The news agency wrote China’s State Administration of Market Regulation (SAMR) planned to officially reject the proposed tie-up after Tencent failed to offer sufficient concessions to resolve market dominance concerns.

Tencent announced the plan in October 2020, with SAMR commencing a review in December and expressing concerns the combined entity would have overwhelming market dominance, requiring the company to forfeit exclusive rights.

Reuters placed Tencent’s holding in Huya at 36.9 per cent and DouYu at more than “a third”. It reported each is listed in the US and cited data from MobTech placing their share of China’s streaming sector at 80 per cent.

The gaming company refiled its application last month after the regulator said the review process would take more than 180 days, Reuters wrote.

Tencent founder and CEO Pony Ma discussed compliance issues in a meeting with SAMR officials in March.

The move to reject the merger comes during rising scrutiny of China’s tech companies by domestic regulators.