Regulars in China have launched an antitrust probe into the ride-hailing company Didi Chuxing just as it prepares for what could be the largest American initial public offering of 2021.
As Reuters reported Thursday, the investigation by the State Administration for Market Regulation (SAMR) is part of a larger crackdown on “platform” companies in China such as Tencent Holdings and Alibaba.
The SAMR wants to determine if Didi used competitive practices that unfairly squeezed out smaller rivals, sources told Reuters. The investigation will also look at whether the pricing mechanism used by Didi’s core ride-hailing business provides enough transparency.
Reuters said the SAMR did not reply to requests for comment and Didi declined to issue any comment on the investigation.
As PYMNTS reported last week, Didi’s filing with the SEC to go public in the U.S. shows the company with 493 million active users each year, 15 million annual active drivers and 41 million average daily transactions.
Didi logged 141.7 billion Chinese yuan in sales — $20.4 billion in U.S. revenues — for 2020. By way of comparison, Uber recorded $11.1 billion in sales for the same period. (Uber also owns a 12 percent stake in Didi.)
Reuters notes that the IPO prospectus also said that Didi and more than 30 other Chinese internet companies met with the SAMR and other regulators in April. The regulators asked the companies to perform “self-inspections” to look for violations of Chinese anti-monopoly or anti-unfair competition regulations.
“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,” Reuters says.
“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.”