Uber may have given up its Chinese ride-sharing business and had it merge with rival Didi Chuxing, but that does not mean the merger will not be scrutinized and looked over with a fine-tooth comb by Chinese regulators, reports Bloomberg.
Back in July, Uber China agreed to a merger with Didi after Uber invested heavily into the Chinese ride-sharing market, only to have the investment continually blow up in its face. According to Uber CEO Travis Kalanick, the company lost over $1 billion each year in China, even though it continues to turn a profit in other markets.
Agreeing to the merger not only allows Didi to become the clear ride-sharing market leader in China — the deal will reportedly give Didi around 90 percent of the market — but also allows Uber to take further steps toward its eventual initial public offering (IPO), since the company no longer has to worry about damaging losses in China. However, the country’s Ministry of Commerce wants to make sure the merger does not reek of funny business, so the agency reportedly met with Didi and asked for “documents and other supporting material” regarding its deal with Uber.
The Ministry of Commerce also reportedly requested a deeper understanding of the ride-sharing business in order to become better acquainted with it.
Agency spokesperson Shen Danyang confirmed the investigation, saying that “the commerce ministry will continue to investigate this case in accordance with the law, to safeguard fair competition and consumers’ interests.” He did not say what specific areas the Ministry of Commerce is investigating, however.
The deal between Uber and Didi is likely to remain unscathed, since China has very little experience when it comes to ride-sharing regulation. Furthermore, according to Bloomberg, few probes in China have led to the nixing of a deal, so odds are that Didi and Uber will get what they want.
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