There may be trouble brewing for the Uber-Didi Chuxing deal announced Monday.See also the Financial Times, Aug. 2:
A Chinese regulator says the two ride-hailing giants failed to seek the necessary approval for Uber to sell its business in the country to rival Didi Chuxing, Reuters reported Tuesday. Uber, which has lost $2 billion struggling to compete with Didi in China, surrendered the market to its rival in exchange for a $7 billion stake in Didi.
But a potential snafu was revealed at a news briefing by Mofcom, China’s commerce ministry.
Reuters reports: “Mofcom has not currently received a merger filing related to the deal between Didi and Uber,” ministry spokesman Shen Danyang said. “All transactors must apply to the ministry in advance. Those that haven’t applied won’t be able to carry out a merger” [if they fall under applicable anti-trust and merger rules.]
With Didi claiming to control more than 87 percent of China’s private car market, and Uber claiming to control one-third (the two companies contest each other’s math here) the sheer enormity of these companies could raise the specter of antitrust issues.
Didi says regulatory approval isn’t necessary because neither company makes a profit, according to Reuters....MORE
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