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Grab-Uber Merger Sees Consequences: Both Fined Total Of $13M By S'pore Competition Watchdog

[Update: 24 Sep 2018, 5:50pm]

Head of Grab Singapore, Lim Kell Jay added:

“Grab believes it should not be the only transport player subjected to non-exclusivity conditions. This is inconsistent with taxi industry practices and does not create a level playing field.”

[Update: 24 Sep 2018, 12:12pm]

Grab has reached out with a statement from Head of Grab Singapore, Lim Kell Jay:

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 unwound. 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 by the CCCS. 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’s 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 wish to drive with. For drivers to have full maximum choice, all transport players, including taxi operators, should also be subjected to nonexclusivity conditions. 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’s 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’s solutions to enhance urban liveability. For example, we are studying data and vehicle-sharing services to play our part to optimise Singapore’s overall transport network. As one of the biggest tech employers in the country, Grab is making significant contributions to Singapore’s economic development and we will continue to develop Singapore’s 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’s potential to serve the region.

In March, the ride-hailing landscape in Southeast Asia changed drastically after Grab announced its merger with Uber.

With the merger, Grab took over Uber’s operations and assets in Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

As part of the deal, Uber also took a 27.5% stake in Grab.

However, the Competition and Consumer Commission of Singapore (CCCS) released a statement on the same day, stating that it was not informed of the merger.

A few days later, CCCS added that it had “reasonable grounds to suspect that the merger of Grab and Uber has infringed the Competition Act”, as the deal may lead to “substantial lessening of competition for the private-hire car industry in Singapore”.

Later in July, CCCS announced that its investigations on the deal “suggest the merger has infringed the Competition Act”, and also recommended imposing financial penalties on the parties (Grab and Uber).

In response, Grab said that it will be appealing against the provisional decision made by CCCS, and added that the watchdog appears to have taken a “very narrow approach in defining competition”.

It also stated that the provisional decision and proposed fines were “over-reaching” and “go against Singapore’s pro-innovation and pro-business regulations in a free market economy”.

Grab And Uber Fined $13 Million

Today, The Straits Times reported that CCCS has fined both Grab and Uber a combined $13 million for the merger.

Uber was fined $6.5 million, while Grab was fined $6.4 million.

CCCS also “directed both parties to lessen the impact of the transaction on drivers and riders, and to open up the market and level the playing field for new players”.

What this entails is that Grab drivers are now free to use any platform they desire, effectively removing Grab’s exclusivity arrangements with taxi fleets in Singapore.

Grab’s pre-merger pricing algorithm and driver commission rate will also be maintained, and Uber will need to sell the vehicles from Lion City Rentals to “any potential competitor who makes a reasonable offer based on fair market value”.

Featured Image Credit: Kentaro Iwamoto

 

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