CHINA’S IPO-BOUND DIDI PROBED FOR ANTI-TRUST VIOLATIONS

China’s market regulator has begun an antitrust probe into Didi Chuxing, three people with knowledge of the matter said, just as the ride-hailing giant is pushing ahead with what could be the largest initial public offering in the United States this year, Pei Li and Julie Zhu reported for Reuters.

The probe, reported here for the first time, is the latest in a sweeping crackdown on China’s so-called “platform” companies, including Alibaba Group Holding Ltd. and Tencent Holdings Ltd.

China's market regulator, the State Administration for Market Regulation (SAMR), is investigating whether Didi used any competitive practices that squeezed out smaller rivals unfairly, two of the three sources said.

The regulator is also examining whether the pricing mechanism used by Didi's core ride-hailing business is transparent enough, the three sources said. Didi declined to comment. SAMR did not respond to requests for comment.

In its IPO prospectus made public last week, Didi disclosed that it and more than 30 other Chinese internet companies had met with regulators, including the SAMR, in April. The regulators asked the companies to conduct a "self-inspection" and submit compliance commitments, it said.

The companies were asked to identify and correct possible violations of antimonopoly, anti-unfair competition, tax and other related laws and regulations, Didi said in the filing. Didi said it had completed the self-inspection and the "relevant governmental authorities have conducted onsite inspections."

Didi is also highlighting its creation of jobs to regulators, a key factor that could merit a more lenient attitude from Beijing, the source said. The company now employs about 13 million annual active drivers in China, according to its prospectus. It warned that regulatory bodies might not be satisfied with the inspection results and the firm may be subject to potential penalties.

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