Chinese regulators are considering serious, perhaps unprecedented, penalties for Didi Global after its controversial initial public offering last month, Bloomberg News reported Thursday, citing people familiar with the matter. From a report: Regulators see the ride-hailing giant’s decision to go public despite pushback from the Cyberspace Administration of China as a challenge to Beijing’s authority, the people said, asking not to be named because the matter is private. Officials from the CAC, the Ministry of Public Security, the Ministry of State Security, the Ministry of Natural Resources, along with tax, transport and antitrust regulators, began an investigation on-site at the company’s offices, the cyberspace watchdog said in a statement. Regulators are weighing a range of potential punishments, including a fine, suspension of certain operations or the introduction of a state-owned investor, the people said. Also possible is a forced delisting or withdrawal of Didi’s U.S. shares, although it’s unclear how such an option would play out.
Deliberations are at a preliminary phase and the outcomes are far from certain. Beijing is likely to impose harsher sanctions on Didi than on Alibaba Group Holding, which swallowed a record $2.8 billion fine after a months-long antitrust investigation and agreed to initiate measures to protect merchants and customers, the people said. “It’s hard to guess what the penalty will be, but I’m sure it will be substantial,” said Minxin Pei, a professor of government at Claremont McKenna College in California.
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