GRAB-ER: THE SAGA CONTINUES

Written by Ashley Koh

What happened?

In the latest development of the Grab-Uber merger saga, the Competition and Consumer Commission of Singapore (CCCS) announced on July 5th that its investigations indicate that the controversial merger has infringed upon the Competition Act*.

From the investigations, it was found that the merger has eliminated competition between the two ride-hailing giants (Thanks, Captain Obvious), and has given Grab a greater potential to increase prices, which it has done, since the completion of the merger. The CCCS also found evidence that if not for the merger, Uber would have continued its operations in Singapore (Why, oh, why have you forsaken me Uber).

Meanwhile, Grab’s access to rider information and exclusive contracts on its drivers and car rental partners pose high barriers to entry for other ride-hailing companies like local firm, Ryde, Indonesia’s Go-Jek and India’s Jugnoo. Even then, Taxi booking companies hold a pitiful market share of less than 15%, too little to have a competitive constraint over Grab.

Naturally, Grab disagreed with the findings, mentioning that the CCCS had  taken a “very narrow approach in defining competition” and that they “are not the only players in the market”.

 

So, what could happen next?

For starters, the CCCS has proposed some remedies to address competition concerns, for example the removal of exclusivity obligations, lock-in periods and/or termination fees for Grab drivers and those who rent from Grab’s rental partners. The CCCS also proposed the maintenance of Grab’s pre-merger pricing algorithm and driver commission rates until competition is revived as well as for Uber to sell Lion City Rentals to other potential competitors other than Grab.

That’s not all, the competition watchdog also recommended both Grab and Uber to be fined as it found that both companies were aware of the potential competition implications that would arise from the merger. Grab isn’t too happy, claiming the “provisional decision and proposed remedies are over-reaching and violates Singapore’s pro-business and pro-innovation regulations”. However, local firm Ryde defended the CCCS, saying that the merger is ‘detrimental to innovation’ and that the proposed remedies are in fact still insufficient.

 

*In case you didn’t know, the Competition Act provides generic competition law to protect both consumers and businesses from anti-competitive practices of private entities.

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