Singapore says Grab-Uber merger hurts competition, proposes fines

Irving Hamilton
July 6, 2018

Singapore's anti-trust body proposed fines on Grab and Uber Technologies.

While proposed remedies offered by CCCS may open a window of opportunity to other ride-hailing apps such as Go-Jek, DBS analyst Andy Sim believes that this could also provide an opportunity for taxi operator ComfortDelGro to build "a more dominant presence in the private vehicle rental space, assuming it is able to partner Go-Jek" in a deal similar to its previous partnership with Uber which included the proposed acquisition of a 51 per cent stake in Lion City Rentals.

Under the deal, Uber received a 27.5% stake in Grab - worth several billion dollars - in exchange for the U.S. company's operations in eight southeast Asia countries.

The Competition and Consumer Commission of Singapore (CCCS) criticised both companies for going ahead with the "irreversible" deal despite restrictions imposed in March to pause the transaction while an anti-competition probe was underway.

The commission said in a statement on Thursday it proposed the fines because Uber and Grab carried out the transaction despite having anticipated potential competition concerns, leading to lesser competition in the sector in Singapore.

To counter this, the CCCS proposed getting Grab to remove exclusivity clauses for all its drivers, undo exclusivity deals with fleet operators, and revert to the pricing algorithm and driver commission rates in force before the acquisition.

Transport analyst Dr Lee Der-Horng said that CCCS' has "ignored" the fact the merger was the result of "evolution" following previous competition between the two companies.

On 26 March, the ride-hailing giants announced the merger, which saw Uber taking a 27.5 per cent stake in Grab along with a seat on the latter's board.

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CCCS has invited public feedback on the proposed remedies.

However, it stressed that it is now seeking public feedback on whether unwinding would resolve competition concerns caused by the merger and restore competition in the Platform Market, if practical issues would arise as well as the "proportionality of any unwinding remedy".

Grab had voluntarily informed CCCS before the deal was signed even though it was not required by law, the Grab spokesperson said.

Dr Walter Theseira, transport economist at the Singapore University of Social Sciences, said that unwinding the merger was "practically impossible" because the ride-hailing business does not constitute only physical assets.

He cited difficulties in separating Grab and Uber's drivers and customers, as well as dividing Singapore geographically.

Experts have previously said there was little the authorities can do to stop Uber from simply exiting the region.

"It doesn't have to be a total unwinding". It also competes with taxi businesses such as ComfortDelGro Corp Ltd. Indonesia's dominant player Go-Jek has also said it would launch services in Singapore.

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