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China opens anti-trust probe into Uber, Didi merger

[BEIJING] Beijing said on Friday it had launched a probe into the merger of Chinese ride-sharing giant Didi Chuxing and the local operations of its US rival Uber, saying the deal went through without its approval.

Didi, which claims almost 90 per cent of the China ride-hailing market, announced the tie-up on August 1, ending a ferocious battle for market share that saw it and Uber spending billions of dollars on subsidies for drivers passengers.

China's Ministry of Commerce said the transaction - which gave Uber a 20 per cent share in the combined US$35 billion firm - was completed the next day.

Ministry spokesman Shen Danyang said an investigation into the deal had been opened "based on the Anti-Monopoly Law" and other rules and has summoned Didi twice, ordering it to explain why it did not report the transaction for approval.

"The case ... drew wide attention in the society and informants reported to the ministry that the trading parties involved did not declare it with the ministry for approval according to the law," Mr Shen said in a statement.

"The Ministry of Commerce will push forward the investigation ... according to the law, to protect fair competition in the relevant market and defend the public interests of consumers and society."

The merger has sparked complaints among the firms' drivers and passengers in major cities who had been benefiting from the huge subsidies.

Earlier this year Uber said it lost US$1 billion annually in China, and Didi was thought to be losing similar amounts of money.

The structure of the agreement leaves Didi in unquestioned control of the sector in the world's second-largest economy.

By shedding its losses in China, Uber will help clear its way to a future flotation, previous media reports said.