China's dominant ride-hailing service Didi Chuxing announced in August that the company was buying Uber operations in China. Within a month, China's antitrust body has started investigating the deal.
The Didi-Uber deal, which is worth $35 billion, is mainly aimed at reducing stiff competition in the ride-hailing service market in China.
"With the addition of the strong talents and experience of the Uber China team, Didi Chuxing will be even better-positioned to serve the Chinese people. Didi Chuxing will also continue to expand its international strategy. We look forward to working with our partners at home and abroad to create more value for drivers, passengers and communities," said Jean Liu, the president of Didi.
As part of the deal, Didi will fully buy Uber business operations in China. Uber will get a stake of 5.89 percent in the new entity. Additionally, Travis Kalanick, the CEO of Uber, will join Didi's board, and Cheng Wei, the chairman and founder of Didi, will become a part of Uber's board. Didi also announced that it will invest $1 billion in Uber.
Didi and Uber are the top two ride-hailing services in China. Didi claims to have about 87 percent of the market share while Uber operates in more than 60 cities in China.
After the announcement of the Didi-Uber deal, the Ministry of Commerce revealed that it has not received the necessary application for the merger. On Sept. 2, the Chinese agency announced that it has started an investigation into the deal. The agency wants to assess if the multibillion-dollar deal complies with the country's antitrust law.
Didi was not expecting an investigation. In August the company said that it did not apply for an antitrust review because the revenues of Uber's operations in China did not exceed the required threshold of $65 million in 2015.
Reports suggest that China's Ministry of Commerce has already had a couple of meetings with Didi, requesting more information about the deal and an explanation why the company did not apply for an antitrust review.
A spokesperson for the Ministry of Commerce says that the agency will continue with the investigation to protect fair competition in the Chinese market and safeguard the interest of consumers.
Uber has not commented on the government investigation but a Didi spokesman says that the company is in communication with the relevant authorities.
The investigation is ongoing and it remains unclear when the government probe will come to a conclusion. It is also unclear if the investigation will impact the Didi-Uber deal.
