China Investigates Uber’s Deal to Sell Operations There
HONG KONG — The authorities in China are investigating Uber’s planned sale of its Chinese operations to a local rival, complicating a deal intended to bring the American ride-share operator’s costly venture there to an end.
At a daily press briefing on Friday, Shen Danyang, a spokeman for the country’s Commerce Ministry, said the inquiry was prompted by local concerns about Uber’s plan to sell the business to China’s Didi Chuxing. The deal, announced one month ago, would create a new company worth $35 billion that would hold a strong position in the Chinese market for hailing cars via smartphone apps.
The ministry “will protect fair competition in the relevant market and safeguard the interests of consumers and the public,” Mr. Shen said, according to an official transcript of the press conference.
Neither Uber nor Didi Chuxing immediately responded to requests for comment.
The two companies had ratcheted up competition since last year, spending growing amounts of money to subsidize drivers and expand into more Chinese cities. Uber last week said it lost $1.2 billion in the first half of this year, with China accounting for a significant chunk.
The investigation comes as China looks to bolster its antitrust enforcement. The country’s antitrust law is only eight years old, but local experts say it is an essential part of nurturing a stronger consumer culture and greater competition in business. Foreign companies have sometimes complained that antitrust authorities unfairly focus on them, an accusation that China denies.
In his statement, Mr. Shen said that Didi did not initially notify the agency that it had struck the deal. In two subsequent interviews with Didi, he said, it asked the company for further explanations for the reasons behind the deal and to broadly describe industry trends.
The ministry could put conditions on the deal or even block it outright. A full block is unlikely given the purchaser is a Chinese company.