Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive-China's IPO-bound Didi probed for antitrust violations - sources

Stock MarketsJun 17, 2021 08:12AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A Didi logo is seen at the headquarters of Didi Chuxing in Beijing, China November 20, 2020. REUTERS/Florence Lo/File Photo

By Julie Zhu and Pei Li

HONG KONG (Reuters) -China's market regulator has begun an antitrust probe into Didi Chuxing, three people with knowledge of the matter said, just as the ride-hailing giant is pushing ahead with what could be the largest initial public offering in the United States this year.

The probe, reported here for the first time, is the latest in a sweeping crackdown on China's so-called "platform" companies, including Alibaba (NYSE:BABA) Group Holding Ltd and Tencent Holdings (OTC:TCEHY) Ltd.

China's market regulator, the State Administration for Market Regulation (SAMR), is investigating whether Didi used any competitive practices that squeezed out smaller rivals unfairly, two of the three sources said.

The regulator is also examining whether the pricing mechanism used by Didi's core ride-hailing business is transparent enough, the three sources said.

"We do not comment on unsubstantiated speculation from unnamed source(s)," Didi said in an emailed statement. SAMR did not respond to requests for comment.

In its IPO prospectus made public last week, Didi disclosed that it and more than 30 other Chinese internet companies had met with regulators, including the SAMR, in April. The regulators asked the companies to conduct a "self-inspection" and submit compliance commitments, it said.

The companies were asked to identify and correct possible violations of antimonopoly, anti-unfair competition, tax and other related laws and regulations, Didi said in the filing.

Didi said it had completed the self-inspection and the "relevant governmental authorities have conducted onsite inspections".

It warned that regulatory bodies might not be satisfied with the inspection results and the firm may be subject to potential penalties.

Two of the sources familiar with the situation said that the probe by the markets regulator was in the initial stages, and that the regulator was yet to give the company detailed instructions.

The impact of the probe on the company's IPO, expected to be the biggest Chinese IPO in New York since Alibaba's $25 billion float in 2014, remains to be seen.

One of the sources said Didi believed pricing and unfair competition would be viewed as relatively minor offences, which had given the company enough confidence to move ahead with plans for the IPO.

ANTITRUST CRACKDOWN

Didi is also highlighting its creation of jobs to regulators, a key factor that could merit a more lenient attitude from Beijing, the source said.

The company now employs about 13 million annual active drivers in China, according to its prospectus.

In recent months China has sought to curb the economic and social power of its once loosely regulated internet giants, a clampdown backed by President Xi Jinping. In April, SAMR imposed a $2.75 billion fine on Alibaba, a record for the agency.

In March, SAMR fined the registered firm behind Didi's community group-buying platform Chengxin Youxuan 1.5 million yuan ($233,656) along with another four firms, citing "improper pricing behaviour".

Didi, the world's largest mobility-technology platform, operates in 15 countries and counts over 493 million annual active users globally, according to its prospectus.

It reached its dominant position in the online ride-hailing business in China after years-long subsidy wars with Alibaba-backed Kuaidi and Silicon Valley-based Uber's China unit, both of which were merged into Didi as investors grew tired of burning cash and demanded profits.

In 2016, Uber Technologies (NYSE:UBER) Inc sold its operation to Didi in exchange for a 17.5% stake in the Chinese firm, which also made a $1 billion investment in Uber.

The U.S. firm currently owns 12.8% stake in Didi, according to the Chinese company's prospectus. Some of Asia's largest technology investment firms, including SoftBank Group Corp, Alibaba and Tencent, have also invested in Didi.

In addition to ride-sharing, Didi operates different businesses around mobility, including electric vehicle charging networks, fleet management, car making and autonomous driving.

($1 = 6.4197 Chinese yuan renminbi)

Exclusive-China's IPO-bound Didi probed for antitrust violations - sources
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email