(Yicai Global) Aug. 3 -- Whether Didi Chuxing's acquisition of Uber China will face regulatory scrutiny has become a focus of domestic and global attention. The merger between the two biggest players in China's ride-hailing industry may have encountered its first bump in the road.
China's Ministry of Commerce has not received the obligatory application from Didi or Uber China, Shen Danyang, China's Ministry of Commerce's spokesman stressed yesterday.
Mr. Shen emphasized that all companies should report to the Ministry of Commerce in advance, in accordance with the reporting requirements of the Antimonopoly Law and the State Council's rules on standards for filing a merger. "Those who have not reported will not be allowed to implement mergers, if they fall afoul of applicable anti-trust and merger rules.", Mr. Shen said.
No relevant application was received when Didi Dache and Kuaidi Dache, two of China's leading taxi-hailing apps, merged, he disclosed. However, Mr. Shen reiterated that "Didi and Uber China are legally bound to make a proper filing, and without one they cannot move on."
Although Didi declared they were in close communication with the authorities, they took issue with the Commerce Ministry's stance -- "In our view, neither Didi nor Uber China is profitable, and Uber China does not meet the declaration standards based on its revenue for the last accounting year."
Beijing Xiaoju Technology Co., operator of Didi Chuxing, will take over Uber's assets in China, including its brand, its business and customer data, the company announced two days ago. Didi Chuxing and Uber will each take a stake in the other.
Didi Chuxing has a market share of 70 percent in the Chinese ride-hailing market and Uber China has a market share of 17 percent, according to second-quarter data on the Chinese ride-hailing market from research institution Analysys International. After their merger, the two firms will have a combined market share of nearly 90 percent. That has also sparked controversy over whether the deal constitutes a monopoly.