INSUBCONTINENT EXCLUSIVE:
Uber and Grab have been hit with combined fines of $9.5 million after their merger deal was found to have violated Singapore
anti-competition laws.
Grab acquired (and then merged/closed) Uber Southeast Asia business in March, but the Competition Commission of
Singapore today declared the deal is &anti-competitive& following a months-long investigation into its impact on Singapore.
The CCCS levied
an SG$6,582,055 (US$4.8 million) fine on Uber and an SG$6,419,647 (US$4.7 million) fine on Grab, but it won''t unwind the deal, which had
The fines relate only to the businesses in Singapore, which is just one of eight marketswhere Uber and Grab competed
Grab has raised $6 billion from investors so it shouldn''t have an issue paying that back.
Chiefly, the CCCS found that Grab had raised
prices by 10-15 percent following the deal, whilst its market share grew to 80 percent
That despite Grab co-founder Hooi Ling Tan claiming that there is still plenty of competition across Southeast Asia.
At the conclusion of
its investigation, CCCS has found that the Transaction is anti-competitive, having been carried into effect, and has infringed section 54 of
the Competition Act by substantially lessening competition in the ride-hailing platform market in Singapore,& the agency wrote.
Grab, which
is valued at $11 billion and is pushing itself as an all-in-one ‘super app,&wasn''t legally compelled to notify the CCCS of its deal with
But the commission does warn companies to consider reaching out it if the deal in question leaves the merged entity with upwards of 40
percent market share, orthe post-merger combined market share of the three largest firms is 70 percent or higher
Grab contacted the CCCS only after the deal was announced.
It worth noting that the Philippines, the only other Southeast Asia country to
launch an investigation into the deal, approved the merger without repercussions last month.
Grab acquisition of Uber Southeast Asia drives
into problems
Through its investigation, the CCCS engaged with Grab to make a number of requests on its business, they included restoring
its pre-deal pricing and commission rates, cutting exclusivity agreements with taxi operators, and removing lock-in for drivers that use its
rental partners or Uber Lion City Rentals business
Those are broadly the same again — and the commission did note that Grab had changed its loyalty program post deal.
Mergers that
substantially lessen competition are prohibited and CCCS has taken action against the Grab-Uber merger because it removed Grab closest
rival, to the detriment of Singapore drivers and riders
Companies can continue to innovate in this market, through means other than anti-competitive mergers,& CCCS chief executive Toh Han Li said
in a statement.
In keeping with recent traditional around CCCS statements, Grab produced a lengthy response of its own
One part to highlight is its apparent insistence that the merger deal did not significantly impact competition.
Grab had, with its advisers,
assessed that the transaction would not result in a substantial lessening of competition,& so saidDaren Shiau, who is co-head ofAllen
Gledhill Competition Antitrust practice, one of the firm that Grab retained.
Shiau statement is something that the 80 percent market share
No doubt many consumers and drivers, who today have fewer options,will also disagree with.
Here Grab full statement in all of its glory:
We
have been working with the Competition and Consumer Commission of Singapore (CCCS) during its review over the past few months
Today, we are glad that the CCCS has completed its investigations on the Grab-Uber transaction and did not require the transaction to be
Grab completed the Transaction within its legal rights, and still maintains we did not intentionally or negligently breach competition
laws.
Grab agrees that keeping the market open and contestable is best for consumers and drivers, and we will abide by the remedies set out
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.
We recognise that the CCCS position on non-exclusivity arrangements is to
set the right tone for the transport industry
Grab agrees with, and has long advocated for, industry-wide regulations that allow drivers to freely choose which platform or operator they
For drivers to have full maximum choice, all transport players, including taxi operators, should also be subjected to nonexclusivity
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
In this respect, we welcome CCCS willingness to review the remedial measures as market conditions change
We also note that the LTA is reviewing the regulatory framework for the point-to-point transportation sector, which we hope will address
non-exclusivity across the industry.
Grab is committed to fair pricing and has not raised fares since the Transaction
Grab will continue to adhere to our pre-transaction pricing model, pricing policies and driver commissions
We have been and will continue to submit weekly pricing data to the CCCS for monitoring.
Grab is making every effort to serve our customers
better and we are adding more app features that will improve the user experience for customers and drivers
We want to contribute meaningfully to Singapore solutions to enhance urban liveability.
For example, we are studying data and vehiclesharing
services to play our part to optimise Singapore overall transport network
As one of the biggest tech employers in the country, Grab is making significant contributions to Singapore economic development and we will
continue to develop Singapore talent in product development and design, data science, artificial intelligence, machine learning, and
engineering.
Grab is heartened to receive the support of governments across Southeast Asia to enable us to serve Southeast Asians better
The recent decisions by Philippine Competition Commission and CCCS in not pursuing the route of unwinding the Transaction demonstrate a
deeper appreciation of Grab potential to serve the region.
