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Didi is under state investigation of monopoly
Beijing is investigating the merger between Didi Chuxing and Uber China regarding potential monopoly charges. This is likely to allow new comers to join the game, and foster legislation progress in the industry.
“We are now carefully looking into the case according to related law and regulation… Ride hailing is a new industry…which shows complicated and fast-changing competition,” Wu Zhenguo, head of China’s Anti-monopoly Bureau said during the State Council Information Office’s meeting with media (in Chinese) on November 16.
Wu added that China’s Anti-monopoly Law, which has been implemented for ten years, treats all parties equally regardless of nationalities and market status.
Criticism on the merger deal’s being monopoly has long been haunting the ride-hailing market in China, but there has been little substantial investigation.
On August 1, 2016, Didi formally announced their acquisition of Uber China. The deal lifted Didi’s total value to around $36 billion, but soon got the company into legal trouble for having “failed to declare the transaction.” Beijing then announced that this would activate anti-monopoly investigation.
After two years, in September, 2018, as no legal progress has been made, the Ministry of Transportation openly pointed out that the merger could be a monopoly. According to data cited by Yicai (in Chinese) in September, Didi Chuxing, after the merger, was dominating the ride-hailing market with more than 90% market share. As a result, Didi responded that the company welcomes more players to join the competition, as Didi alone cannot satisfactorily serve the huge market.
A possible reason for a delayed investigation, said lawyers close to the Anti-monopoly Bureau (in Chinese), could be the absence of proper legal definition of ride-hailing in China, which could help clarify nature of the services, and then accurately allow existing legal frameworks to come up with fair and lawful judgement.
Didi has not given any immediate response to TechNode’s inquiry by the publication of the article.