"China Conducts Antitrust Investigation on Ride-Sharing Company Didi Chuxing"

Foreign Media Reports Antitrust Investigation Ahead of New York Stock Exchange IPO
China Drives Regulation of Platform Companies

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] Chinese regulatory authorities are reportedly conducting an antitrust investigation into Didi Chuxing, China's largest ride-sharing company. With Didi Chuxing's planned initial public offering (IPO) on the U.S. stock market this year, attention is focused on how this antitrust investigation might impact the stock listing.

On the 17th, major foreign media outlets cited sources familiar with the matter, reporting that the State Administration for Market Regulation (SAMR) of China is examining Didi Chuxing's anti-competitive behavior.

According to the sources, SAMR is investigating whether Didi Chuxing has engaged in opaque pricing policies and unfair competitive practices against other competitors.

Earlier last week, according to the IPO prospectus released by Didi Chuxing, it was revealed that over 30 Chinese internet companies, including Didi Chuxing, had met with regulatory officials. Didi Chuxing stated that various regulatory agencies, including SAMR, demanded these companies submit compliance pledges during these meetings.

Furthermore, these companies were reportedly required to identify any potential legal violations related to antitrust laws, unfair competition prevention laws, and other tax regulations, and to immediately rectify them.

Didi Chuxing stated, "We have conducted an internal compliance review, and a government on-site inspection has also taken place."

A source said that the issue under investigation by the government authorities regarding Didi Chuxing's pricing policies is considered minor, and the company believes the likelihood of disruption to the IPO plans is low.

This antitrust investigation comes amid the recent regulatory crackdown by the Chinese government on domestic platform companies such as Alibaba and Tencent.

Chinese authorities have reportedly concluded that the market dominance and influence of these companies have exceeded the government's control, leading to a crackdown on these firms.

Bloomberg News reported, "The Chinese government is taking preemptive action against big tech companies that are increasing their platform dominance," adding, "One factor is the government's perceived need to secure the vast amounts of big data these companies hold."

[Image source=Reuters Yonhap News]

In April, SAMR imposed a record fine of approximately 3 trillion Korean won on Alibaba.

Investors are closely watching how this antitrust investigation might affect Didi Chuxing, which aims to list on the New York Stock Exchange this year and is expected to achieve one of the largest IPOs ever.

Previously, in November last year, Ant Group, a fintech company under Alibaba, was expected to conduct the largest IPO ever, valued at $35 billion (approximately 39 trillion Korean won), but the listing was abruptly halted.

At that time, Alibaba founder Jack Ma criticized Chinese regulatory authorities in October, was summoned and reprimanded by the authorities, and Ant Group's IPO was indefinitely postponed.