Uber and Grab have been hit
with combined fines of $9.5 million after their merger deal was found to have
violated Singapore’s anti-competition laws.
Grab acquired (and then
merged/closed) Uber’s 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 been an option. The fines
relate only to the businesses in Singapore, which is just one of eight markets
where 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’s 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 Uber. 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, or the 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’s 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’s 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’s 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’s 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 said Daren Shiau, who is co-head of Allen &
Gledhill’s Competition & Antitrust practice, one of the firm’s that Grab
retained.
Shiau’s statement is
something that the 80 percent market share stat suggests is untrue. No doubt
many consumers and drivers, who today have fewer options, will also disagree with.
Here’s Grab’s full
statement in all of its glory:
Levels Business
Opportunities Abide Acquired Adviser Antitrust Appreciation
Artificial Artificial
Intelligence Bill gates twitter Levels Business Opportunities Abide
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. 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’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 vehiclesharing 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.
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