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MOFCOM Launches Antitrust Investigation into Didi-Uber Deal

Date:09-23 14:56 Source:China Business News Authour:Hu Hongyi

To date the Ministry has conducted two interviews with Didi representatives and demanded an explanation about its business, and the reasons why Didi didn't declare the deal, as well as supporting documents and materials. MOFCOM’s position is very clear – since you have ignored me, I will investigate you for monopoly, and don’t say you weren’t warned… At a previous event, the Ministry did say that Didi must declare its merger with Uber according to the antimonopoly law and other legal statutes.

The Didi-Uber deal had not been properly declared to MOFCOM and would be subject to an antitrust investigation.

MOFCOM Launches Antitrust Investigation into Didi-Uber Deal

On the morning of September 2nd, Shen Danyang, Spokesperson of the Ministry of Commerce (MOFCOM), said at a MOFCOM press conference that the Didi-Uber deal had not been properly declared to MOFCOM and would be subject to an antitrust investigation. To date the Ministry has conducted two interviews with Didi representatives and demanded an explanation about its business, and the reasons why Didi didn't declare the deal, as well as supporting documents and materials.

MOFCOM’s position is very clear – since you have ignored me, I will investigate you for monopoly, and don’t say you weren’t warned… At a previous event, the Ministry did say that Didi must declare its merger with Uber according to the antimonopoly law and other legal statutes.

This declaration by MOFCOM is not groundless. According to the Provisions of the State Council on Thresholds for Prior Notification of Concentrations of Undertakings promulgated in 2008, where a concentration of undertakings reaches any of the following thresholds, the undertaking(s) concerned shall file a prior notification: (1) the combined worldwide turnover of all the undertakings concerned in the preceding financial year is more than RMB 10 billion Yuan, and the nationwide turnover within China of each of at least two of the undertakings concerned in the preceding financial year is more than RMB 400 million Yuan; or (2) the combined nationwide turnover within China of all the undertakings concerned in the preceding financial year is more than RMB 2 billion Yuan, and the nationwide turnover within China of each of at least two of the undertakings concerned in the preceding financial year is more than RMB 400 million Yuan.

Two industry leaders merge into one industry giant

I will refrain from making a judgment on whether these two combined will create a monopoly, but I can show you some of the fundamental analysis.

Judged from their current market shares and order quantities, Didi and Uber are dominant in the Chinese ride-hailing market.

Didi finally acquired Uber China after denying it for almost half a month

I don’t know how you feel about these data. Let me just help you review the whole story of how these two ‘enemies’ became partners.

A month ago, Didi Chuxing announced a strategic agreement with Uber under which Didi Chuxing will acquire all the assets of Uber China - including its brand, business operations and data.

It is reported that after signing the strategic agreement, Didi Chuxing and Uber will obtain minority equity interest in each other. Uber will receive 5.89% of the combined company which is equal to a 17.7% economic interest in Didi Chuxing. Other Chinese shareholders of Uber China will receive a 2.3% economic interest in Didi Chuxing. At the same time, Cheng Wei, Founder and Chairman of Didi Chuxing, will join the board of Uber. Travis Kalanick, Founder of Uber, will join the board of Didi Chuxing.

As a result, Didi will become the only company in which Tencent, Alibaba and Baidu are all shareholders, and turn into a super giant of transportation network service in China.

According to details disclosed by Bloomberg, Uber China is merging with Didi Chuxing. The merged entity is worth around $35 billion, and Uber China will still represent a 20 percent stake in the new company. Sources also say that Didi will make a $1 billion investment in Uber’s main business, with a valuation of $68 billion.


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