The Chinese government says it has a right to vet Uber’s landmark deal to sell its Chinese business to rival Didi Chuxing, subject to regulatory approval, according to Reuters.
Reuters reported that China’s commerce agency, which has authority over antitrust questions, said it believed the two companies needed to get their blessing for the merger. An agency official reportedly said the companies had not submitted a filing.
{mosads}“Mofcom has not currently received a merger filing related to the deal between Didi and Uber,” he said.
Didi told the news service that the merger should not be subject to approval because neither company is profitable yet.
The deal is likely to be closely watched around the world. Uber was losing roughly a billion dollars a year on its China business, according to reports, because it was sinking money into trying to beat Didi for control of the populous market. Removing those losses from its books is a step toward a potential initial public offering.
As part of the deal, Uber will reportedly get a 20 percent stake in Didi and Didi will invest in Uber. The leaders of both companies will sit on each other’s boards.
Ride-hailing in China has also attracted some powerful outside investors. Apple has a $1 billion stake in Didi, and Chinese giants Alibaba and Tencent are also investors. Chinese web firm Baidu has invested in Uber China.
The deal has also raised question about a nascent global alliance of ride-hail services that compete with Uber. Lyft, for example, has previously reached a deal with Didi that let its users cross platforms when they travel.