China’s anti-trust regulators are investigating the Didi-Uber deal

Tech Crunch

China has opened an investigation to determine whether Didi’s Chuxing’s impending acquisition of Uber China violates national anti-trust laws.

The development — which was first reported by the Wall Street Journal — was confirmed by Didi. “We are in communication with the authorities,” a spokesperson told TechCrunch.

At this point there is no indication when the probe, which was triggered by feedback, will be completed.

The Journal reports that there have already been two meetings between regulators and Didi, which did not apply for an anti-trust review because it believed that the value of the deal did not cross the minimum threshold.

The deal was announced on August 1, and it will see Didi — the ride-hailing leader in China — fully acquire Uber’s business unit in China. Uber will be given a 5.89 percent stake in the newly merged entity, with preferential equity that is equal to a 17.7 percent economic interest in Didi Chuxing. Existing Uber China investors, which include China’s dominant search firm Baidu, will get 2.3 percent of the new business. In addition, Didi will invest $1 billion into Uber and each CEO will take a board seat with the other company.

“Uber and Didi Chuxing are investing billions of dollars in China, and both companies have yet to turn a profit there,” Uber CEO Travis Kalanick said in a statement at the time of the deal. “Getting to profitability is the only way to build a sustainable business that can best serve Chinese riders, drivers and cities over the long term.”

Featured Image: Julien GONG Min /Flickr UNDER A CC BY 2.0 LICENSE

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