SINGAPORE: Singapore's competition watchdog has fined Grab and Uber a total of S$13 million over the two firms' merger, saying that the deal has led to the substantial eroding of competition in the ride-hailing market.
Uber was fined S$6.58 million while Grab was fined S$6.42 million. The Competition and Consumer Commission of Singapore (CCCS) said the penalties were imposed to “deter completed, irreversible mergers that harm competition”.
AdvertisementIn levying the fines, CCCS said it considered the companies' turnovers, the nature, duration and seriousness of the infringement, and aggravating as well as mitigating factors.
On Mar 26, Grab announced that it had acquired Uber’s Southeast Asia operations. The following day, CCCS said it had launched investigations on the basis that the transaction may have infringed the competition act.
As part of its investigation findings, the watchdog highlighted that Grab had increased its prices after the removal of its closest competitor, Uber.
It found that Grab trip fares, net of rider promotions, have increased by between 10 and 15 per cent after the acquisition deal.
AdvertisementAdvertisement[h=3]READ: Grab defends position in Uber deal to Singapore's anti-monopoly watchdog[/h]Additionally, CCCS said it has received "numerous complaints" from both riders and drivers on the fares and commissions.
It highlighted changes in Grab’s GrabReward Scheme, which reduced the number of points earned by riders per dollar spent on Grab trips, as well as a decrease in the number and frequency of driver promotions and incentives.
CCCS also found that Grab currently holds about 80 per cent of the market share, and that the “strong network effect” makes it difficult for potential competitors to scale and expand in the market, particularly given that Grab had imposed exclusivity obligations on taxi companies, car rental partners, and some of its drivers.
[h=3]READ: Commentary: Grab-Uber merger will lead to monopolistic prices? Flawed thinking[/h]The competition watchdog has also issued directions to lessen the impact of the deal on drivers and riders, and to open up the market and level the playing field.
The remedies include:
- Ensuring Grab drivers are free to use any ride-hailing platform and are not required to use Grab exclusively.
- Removing Grab’s exclusivity arrangements with any taxi fleet.
- Maintaining Grab’s pre-merger pricing algorithm and driver commission rates.
- Requiring Uber to sell the vehicles of Lion City Rentals to any potential competitor who makes a reasonable offer based on fair market value.
“Companies can continue to innovate in this market, through means other than anti-competitive mergers.”
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