Didi and Kuaidi accused of 'writing own rules'

Beijing-based Yidao Car Rental Company claims a merger between taxi-hailing apps is against anti-monopoly law and has lodged a complaint with Chinese authorities, a report by NetEase Technology said on Monday.

According to the report, Yidao reported Didi and Kuaidi to the Ministry of Commerce's anti-monopoly bureau and the National Development and Reform Commission's price supervision and anti-monopoly bureau for contravening reporting obligations. It is seeking an investigation and asking that the merger be denied.

Yidao claims that cut-throat competition on cash coupon subsides conducted by Didi and Kuaidi, backed respectively by Chinese Internet giant Tencent Holdings Ltd and Alibaba Group Holding Ltd, has seen the two create their own marketing rules.

"If the merger succeeds, well-balanced competition in the market will be eliminated," said a spokesman for Yidao.

Before the merger, the two companies provided subsidies, such as cash coupons to both drivers and users to promote brands and attract subscribers.

Ministry of Commerce spokesman Shen Danyang said the ministry has not received any centralized declarations from interested trade operators.

Before Yidao's accusation, Tao Ran, a senior vice-president with Kuaidi told Xinhua that since the two companies' combined revenue is far lower than the standard, they are not obliged to report to the bureau.

According to Xinhua News Agency, China's anti-monopoly law states that the companies which want to merge should report to the Ministry of Commerce's anti-monopoly bureau if their combined turnover in the last fiscal year exceeded two billion yuan (about $320 million) and at least two of them reported turnover of more than 400 million yuan.

A year ago, we posted a motion graphic report illustrating the history of Chinese taxi-hailing apps. Of the major contenders, Didi and Kuaidi barely survived after rounds of fierce competition.

Following four rounds of financing the survivors jointly announced an "engagement" on Saturday.

The merger was announced on Valentine's Day with Cheng Wei, chief executive of Didi, saying: "It is a gift to the Chinese people and our great journey is about to start from here".

Many users of the two apps have expressed concerns about the "marriage".

On China's Twitter-like Sina Weibo, some people asked whether coupons provided by the two firms are accepted by both sides and whether the subsidies will be reduced or cut completely as a monopoly develops in the taxi-hailing service sector.

An online survey conducted by Sina claims that, as of Sunday, 63.6 percent of users said they won't use the apps if coupon subsidies are reduced, while the remainder will continue to use them.

According to the two companies, the deal is believed to create China's biggest mobile platform for local transportation.

Jack Ma, founder of Alibaba, praised the move, saying it makes a contribution to the "mobile transport" sector.

"Internet plus transportation" will become a new Internet-based industry, said Ma Huateng, chief executive officer of Tencent Holdings Ltd.

Alibaba Group Holding Ltd and Tencent Holding Ltd, two of the nation's three Internet behemoths, have both invested in the two apps:

Didi and Kuaidi continue to be challenged in ride-on-demand services by new rivals.

Internet giant Baidu Inc bought a stake in fast-growing international car-hailing service Uber in December as the pair chase growth in one of the world's largest transportation markets.

Uber's driver services are available in nine Chinese cities including Beijing and Shanghai, according to Candice Lo, who heads the company's expansion efforts in China.

In addition, Beijing-based rental firm CAR Inc launched a ride-on-demand service in January.

Analysts believe that CAR Inc, as one of the main private car-rental service providers, has great experience, such as driver team training, security management and standard cars, and can compete with the newly-merged company.

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