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Experts say Didi-Uber merger may constitute a monopoly, call for government intervention

By Yuan Can (People's Daily Online)    14:05, August 05, 2016

Experts at a seminar on Aug. 3 said that the Chinese government should investigate the Didi-Uber merger, as many suspect that the deal may cause a monopoly in the future. Discussions began after Beijing-based Didi, the dominant ride-hailing service provider in China, said in a statement on Aug. 1 that it would buy Uber's China operation.

According to a report by Beijing Evening News on Aug. 2, Didi said that its market penetration rate is only 1 percent in Beijing, which will not cause a monopoly. However, experts attending the seminar argued that it should be made clear whether the market included taxis, buses and the metro.

The government should focus on Didi's relevant market to decide whether or not it will cause a monopoly in the future, rather than focusing only on its market share, said experts at the seminar, discussing whether the merger should be stopped by anti-trust authorities.

Speaking from a law perspective, Cui Fan, a senior advisor at Beijing Dacheng Law Office, said that the key factor in merger cases is not the relevant market but the business volume. Dong Zhongwei, a partner at another Beijing-based law office, said that the Ministry of Commerce should undertake an anti-trust investigation. If the company's market share after the merger is expected to be over 90 percent, authorities should stop the deal, Dong added.

According to Chinese law, all businesses with large-scale operations that could potentially monopolize the market must submit business declarations to the Ministry of Commerce for record, as well as submit to anti-trust investigations. Afterward, companies without clearance are not allowed to carry out mergers and acquisitions in China.

The Ministry of Transport released the country's first nationwide regulation on car-hailing services on July 28, finally offering the booming industry a legal status. The new regulation actually encouraged car-hailing services in China. The merger, meanwhile, may not be in the best interests of customers, leaving them with fewer choices for their car-hailing travel, said Cong Lixian, a law professor from Beijing Foreign Studies University. Cong hoped that the Ministry of Commerce Ministry could do something to help customers.

In the mean time, Fang Xingdong, a professor from Shantou University, said the government should not interfere in matters of the Internet, as "Internet should be a free space." Fang held the opinion that the merger may have a negative impact on global Internet competition. He said that after Uber sells its China operation to Didi, the two companies could partition the global car-hailing market. He worried that two business magnates might rise in the wake of the merger.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor: Yuan Can,Bianji)

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