In a move to deter anti-competitive deals, the Singaporean anti-trust watchdog Competition and Consumer Commission of Singapore (CCCS) has fined ride-hailing companies Grab and Uber a combined total of US$9.5 million over their merger in March 2018, it said in a press release today.
While the CCCS had ruled the merger as ‘anti-competitive’, the penalties imposed were comparatively mild, considering the amount of capital that Grab has raised so far; this year alone, Grab secured US$2 billion in financing. The government agency had previously threatened Grab with the possibility of unwinding the deal.
Other countries are also examining whether the merger was anti-competitive. Legislators in the Philippines only approved it last month, with clauses involving fare transparency and non-exclusivity agreements. Vietnam’s investigation into the deal is still ongoing.
According to the report, Uber has been fined US$4.8 million while Grab has been fined US$4.7 million. The CCCS has also issued remedies and directions for Grab to follow in order to “restore market contestability”.
The directions include:
– Making sure that Grab drivers are not restricted by any exclusivity agreements and can drive for any ride-hailing platform in the market.
– Removing exclusivity agreements with taxi fleets in Singapore
– Maintaining pre-merger pricing algorithm and driver commission rates
– Requiring Uber to sell the vehicles of Lion City Rentals to any potential competitor with a reasonable offer based on fair market value, and not to Grab without CCCS’ prior approval
A Grab spokesperson told KrASIA that Lion City Rentals was not part of the original acquisition and will see minimal impact from the CCCS decision.
The CCCS had cited receiving “numerous complaints from both riders and drivers” on rising fares and commissions charged by Grab after the merger had taken place, adding that Grab holds “80% market share”, which the company said was based on a narrow definition of the industry.
“However, it is unfortunate that the CCCS is taking a very narrow market definition in arriving at its conclusion that the transaction has led to a substantial lessening of competition. Commuters are free to choose between street-hail taxis and private hire cars, and it is a fact that private-hire car drivers’ incomes are directly impacted by intense competition with street-hail taxis,” said Lim Kell Jay, Head of Grab Singapore, in a statement published today.
Lim added that the company agrees with the CCCS in that “keeping the market open and contestable is best for consumers and drivers” and that it will adhere to the directions given by the watchdog.
He further said that Grab is in favour of non-exclusivity arrangements and argued that “all transport players, including taxi operators, should also be subjected to non-exclusivity conditions”.
“Grab should not be the only transport player subjected to non-exclusivity conditions. This is inconsistent with taxi industry practices and we will continue our dialogue with the CCCS and the Land Transport Authority (LTA) to create a level playing field for all,” he said.
In addition, Grab noted that it has been submitting weekly pricing data to the CCCS for monitoring, and will continue to do so going forward, maintaining that it will continue to adhere to its pre-merger pricing model.
In the region, Grab’s strongest competitor is now Indonesia-based Go-Jek, which has recently launched its services officially in Vietnam. It has plans to enter Thailand and Singapore but has not done so yet.
In the Philippines, the decision not to pursue the route of unwinding the transaction demonstrates “a deeper appreciation of Grab’s potential to serve the region,” concluded Lim.
Editor: Nadine Freischlad
