China regulator says Didi, Uber deal will need Mofcom approval

Tue Aug 2, 2016 7:00am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

BEIJING (Reuters) - A merger between Chinese ride-hailing firm Didi Chuxing and the China unit of U.S. rival Uber could face its first hiccup after China's commerce ministry (Mofcom) said on Tuesday it had not received a necessary application to allow the deal to go ahead.

However, Didi said there was no need to seek regulatory approval, saying the two ride-hailing companies' lack of profits meant they weren't required to file with the ministry.

Didi's acquisition of Uber's China operations, announced on Monday, will create a roughly $35 billion ride-hailing giant and could raise monopoly concerns as Didi claims an 87 percent market share in China. Uber China is the second largest player.

Mofcom, one of China's anti-trust regulators, said at a news briefing that the two firms need to seek approval for the deal to go ahead. It had been unclear previously whether such a filing would be required as both firms are loss-making in China.

"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, he said.

In an emailed statement to Reuters on Tuesday, Didi contested Shen's assertion that the firm is required to apply for approval.

"We are in close communication with authorities," said Didi.

"Some of the financial metrics of the transaction did not meet the filing requirements. UberChina and Didi are not profitable yet, and UberChina's turnover in 2015 didn't meet the 400 million yuan ($60.30 million) trigger requirement for the anti-trust process."

Didi and Uber have been in a fierce battle in China, spending billions of dollars to subsidize rides and win users.   Continued...

 
People walk out of the headquarters building of Didi Chuxing in Beijing, China, May 18, 2016. REUTERS/Kim Kyung-Hoon